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A “LITTLE SECRET” :

A HERETIC QUESTIONS BUY & HOLD DOGMA, AND OFFERS ASSISTANCE WITH SELLING Donald Cassidy Founder and President, Retirement Investing Institute pure investor education with NO sales agenda 303-988-2296 www . R-I-I . org. A “LITTLE SECRET” :. BUY & HOLD + RANDOM WALK =

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A “LITTLE SECRET” :

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  1. A HERETIC QUESTIONS BUY & HOLD DOGMA, AND OFFERS ASSISTANCE WITH SELLING Donald CassidyFounder and President,Retirement Investing Institutepure investor education with NO sales agenda303-988-2296www . R-I-I . org

  2. A “LITTLE SECRET” : BUY & HOLD + RANDOM WALK = NO REASON FOR OUR JOBS

  3. ACTUAL REALITY: THINGS CHANGE + PRICES TREND (TO EXCESSES) = THE NEED TO SELL

  4. WHAT WE DO… ELSEWHERE Trade-In the Problem Car Sell the House and Move Quit the Job Burn/Donate the Leisure Suits Change Majors/Colleges Elect a new Government Separate/Divorce … but HOLD the bad stock!

  5. AGENDA • Why It’s Important • What the Problems Are • What to DO

  6. WHY SELLING WELL IS CRUCIAL Things Change! Limit our Losses Capture Unreasonable Gains Perform in Range-Bound Market

  7. Cassidy’s RULE OF 3-4-5-6 STOCKS RARELY RISE, IN A ROW, MORE THAN… 3 Years 4 Months 5 Weeks 6 Trading Sessions

  8. WHY TO SELL • Humans Make Imperfect Choices! • Avoid Losses • Capture Unexpected Windfalls • Planned Target is Reached

  9. TRIGGERS FOR SELL ACTION • Fundamental Analysis • Technical Analysis • Behavioural Analysis

  10. FUNDAMENTAL SIGNALS TO SELL • Overall Market High • Adverse Valuation Change for Stock • Price/valuation metrics get too high • Corporate fundamentals deteriorate

  11. TECHNICAL-ANALYSIS SIGNALS TO SELL • Best: Price Up Too Far, Too Fast • Volume/Price Crescendo/Spike • MACD (moving average convergence/divergence) • Less Good: Price Pattern Breaks Down • Breaks below channel • Breaks below support level • Breaks Moving Average(s) (real late)

  12. Chart-Visible Reversal Clues Unsustainable Slope +/- Acceleration +/- Volume Spikes Volume Crescendos (yes, technical analysis; sorry!)

  13. FOUR BEHAVIOURALSIGNS TO WATCH…* Mutual-Fund Net Flowswww. IFIC .Ca (www. ICI . Org)

  14. A GREAT Contrary Timing Indicator (www .ICI .org)

  15. NOT CONTROLLING YOUR EMOTIONS

  16. BEHAVIOURAL SIGNALS TO SELL • Feeling Real Good (over-confident) • Stock Market is Broad-Public News • Market Headlines off the Business Page

  17. MORE BEHAVIORAL SIGNS TO SELL • Market is conversation topic socially and at work • Market is subject of humor, advertising, TV/movie plots • People Quitting their Day Jobs

  18. Don’t Over-stay!Our comfort is ways greatest when danger of loss is highest. ( We perceive risk180 degrees backwards.)

  19. FALLACIES in B&H Even zealots blink at the bottom! Pretends commissions/taxes are the main problem Assumes BUY decision was perfect Pretends no inflated price is too high Hopes bad companies will mend Ignores market’s emotional extremes

  20. DETERRENTS TO OVERCOME Long-term Trend IS up Fits non-judgmental culture Want to avoid mistakes (closure ends hope) Intuitive contradiction of selling on good news! Scary market, or company factors?

  21. BEHAVIOURAL FINANCEINSIGHTS: Endowment Effect Cognitive Dissonance Disloyalty and Closure Avoidances Decision Stress Avoidance Comfort Seeking / Perfectionism Vividness of Evidence/Social Proof Reinforcement

  22. BEHAVIOURS NOT TO IGNORE “It’s Different this time!” Other Rationalizations Celebration Behaviour Loud Media Drumbeat

  23. Good Selling: To-DOs Have a sell plan when buying Spend Equal Thinking Time Use an A-A discipline ASSUME change! Give up on being perfect Watch Behavioural Signs of Highs Sell on first to speak: fundamentals OR technical analysis

  24. SELLING: OPERATIONAL LEVEL Date, don’t marry, your darlings Graciously accept unreasonable returns Sell volume crescendos, spikes (Internet compression effect!) Believe the cockroach theory! Keep a notebook on yourself

  25. STOP AND LIMIT ORDERS * Enter target sells using P-S-T * Your cost not a valid factor * Stops not at arbitrary percent down * Use chart patterns to set stops * Avoid the bad odds of EPS time! - admittedly, more practical for smaller portfolios

  26. Good Selling: DON’Ts List Don’t let Taxes rule thinking Don’t view sale as permanent verdict Don’t confuse stock with company Don’t Fixate on meaningless numbers Don’t Rationalize Don’t reach for one more day or point Don’t sell @ open unless the bad news is corporate cancer or scandal Don’t lower or pull your stops

  27. The ACID-TEST Question !! W Y B I T

  28. Thanks for Your Kind Invitation ! Don Cassidy Retirement Investing Institutepure investor education with NO sales agendawww . R-I-I . org USA + 303-988-2296

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