Dien Rice - stock market investments...

...Sorry if this is a little off topic for this forum.

I know that your are very stock market savvy so I wanted to ask you if you ever heard of channelling stocks? And if so what do you think of the idea?

Scott S.

Hi Scott,

> I know that your are very stock market savvy
> so I wanted to ask you if you ever heard of
> channelling stocks? And if so what do you
> think of the idea?

To be honest, I hadn't heard of the phrase channeling stocks before you asked your question.... After doing some searching, it seems to describe the tactic of buying and selling stocks whose prices tend to repeatedly fluctuate between two values....

I'm not very knowledgeable about this, since I tend to be a long-term investor (I like to find growth stocks which I think are under-valued, then buy and hold them for a few years). However, I have a friend who uses these kinds of trading strategies, and I think he does make some money doing it.

I think the reason why he has some success while many others fail in using short-term trading strategies is because he uses firm stop-losses. I know he has a rule that if a stock falls 10%, he sells it, no ifs or buts! Many people tend to hold on to a losing stock in the hope that the price will come back up, though often it doesn't....

I'm not an expert in short-term approaches to investing, but using firm stop-losses seems to be a good approach which this friend of mine uses. Cut your losses before they are too large!

Hopefully someone else here knows more about channeling stocks and can shed some light on that....

- Dien Rice

> To be honest, I hadn't heard of the phrase
> channeling stocks before you asked your
> question.... After doing some searching, it
> seems to describe the tactic of buying and
> selling stocks whose prices tend to
> repeatedly fluctuate between two values....

Man, you could lose your shirt like that! Sounds like a day trading variant, and we all know how many people fell victim to that idea!

> I think the reason why he has some success
> while many others fail in using short-term
> trading strategies is because he uses firm
> stop-losses. I know he has a rule that if a
> stock falls 10%, he sells it, no ifs or
> buts!

Ironically, that's the rule I discovered for myself in this current nasty market. If any stock rises more than 15%, I sell it (no ifs, ands, or buts). If I like it, I wait for a dip in prices and rebuy it. I learned that one with one of my stocks -- went from a 16% gain to a 4% loss in the space of about 4 days (and there was no negative news on it or the industry. It just ...tanked.)

This is similar to the "rolling stock" methods touted by Wade Cook in his seminars. There's a book out called Rolling Stocks by a guy whose last name is Witt, a student of Wade Cook and his old Stock Market Miracle business.

The premise is that certain stocks trade within a range consistently, and you buy low and sell high within the range. Simple, but seems based on clairvoyance. It's not unlike cycle trading in the commodities markets.

I'm sure wiser heads than I can tell you more!

Regards,

Bob

Channellingstocks.com offers a subscription service for picking channelling stocks. IBM is a good channelling stock, as it has been trading between 80 and 130 for over two years. In fact most DOW stocks are stuck in a rut and the DOW has been trading sideways for over 3 years now. Some say it will continue to do that for the next 10 years. Warren Buffett says 4% annual returns will be the norm for a long time. The gravy train ride is over.

> ...Sorry if this is a little off topic for
> this forum.

> I know that your are very stock market savvy
> so I wanted to ask you if you ever heard of
> channelling stocks? And if so what do you
> think of the idea?

> Scott S.