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Slow bleeder strategy report for Big Ports - a very profitable experiment
Background
At the beginning of the year, I decided to try to capture some of the slow bleeders (stocks that lose pennies each day, consistently) as profits. In similar manner as the penny stock strategy (buying up everything under $0.10) which cost about 3 million initial output and has paid for itself over time, I thought about which stocks bleed. I then shorted for long term holding purposes, stocks above $2, but less than $5. (Note: some exceptions to the rule cause me to purchase others stock that ID as slow bleeders due to project being scrubbed, etc..., therefore are well above this mean/target value)
Method
I ID'd stocks as slow bleeders/long term losers through their value and/or their chart. I also used Kaigee's fancy spreadsheets to pick up movies that have consistently lost in the last week/month. For example, if Kaigee showed consistent loss for 18 days or more in the last month, and 6 or more in the last week, I bought them up (shorted).
Other than that, I shorted everything between 2 and 5 bucks, waited for a couple of days, then sold off those in the red. Usually, the loss was 10 thousand $ or less.
Stock Analysis
I currently own 301 stocks I have ID'd as slow bleeders. Some are priced as high as 34, picked up from the Kaigee method. Most are much, much lower. The average stock value at purchase is $7.04 (301 stocks / total invested). To date, I have invested $211,857,000.00 in this method, or 20% of my port.
Results
The value of these stocks is now $244,648,541.00. In less than 40 days, these have gained me $32,791,541.00 or 15.48% (dROI of .387). In Jan, I made 130 Mil. Almost 30% of that was from this strategy.
Observations
Sometimes day-trading messes with a stock that I am holding as a bleeder. When that happens, I sell it off and wait it out until day traders lose interest in it again.
I takes a couple of days to see what the stock is going to do long term (despite the chart), as I might have purchased it on the back side of the buy/sell curve.
News on any bleeder causes brisk movement (usually in the wrong direction for profit) and I sell them off/play the news.
If a stocks chart shows erratic behavior, I do not purchase it. If it is a project that I don't want to bet against, I skip it (and there are a few). These will likely drop but are too risky, because if they ever hit, they will hit big and I might not be around to flip the stock.
I have to monitor these every couple of days to make sure no stock has decided to become active.
Tip: I purchase/short 99996 of these stocks to easily identify them in my port. (I use 99999 for day trades/news, 99998 for penny stocks, and 99997 for 2 movie funds that I mirror (strategy discussion for another day))
AND I CANNOT STRESS THIS ENOUGH, this is not for small or even medium sized ports, as it ties up 200 million bucks.
Conclusion
When a stock IPO's, it has visibility, and therefore has action. Once it falls off the radar and interest wanes, they just bleed and bleed and bleed. Each day it may lose 5 cents or 50 cents, but after a while, that adds up to hundreds of thousands of dollars. This method is an effective way to catch some of that bloodletting as profit, without being overly disruptive in one's ability to play the main strategies like day-trading, news jumps, playing openers, star-bonds, etc...
For your consideration. Rocket.
PS, thanks for your charts, Kaigee.
Slow bleeder strategy report for Big Ports - a very profitable experiment Feb 12, 02:24
I have too many reds in my port.. maybe just one commission free day.. DMac ;-) {nm} Feb 12, 04:29
Those of us with small ports can read forums (aka billionaire advice column) and gain wisdom {nm} Feb 12, 13:34
I posted it for all, not just big ports. But I entitled it the way I did so that no-one misunderstood the level of play. {nm} Feb 12, 13:47
Hey! Giving away trade secrets here! ;) Feb 12, 07:07
Just trying to decrease your lead by increasing your competition. :) You=Frankenstein, Us=the mob. {nm} Feb 12, 13:24
Do I hear "Puttin' on the Ritz" playing? *gets my tophat and tails* {nm} Feb 12, 13:39
More like "Hello my baby, hello my darling, hello my night-time gal", *drops to floor*, "Ribit" {nm} Feb 12, 13:46
Check Please! :) {nm} Feb 13, 01:25
Wow, very insightful information from an HSX master. {nm} Feb 12, 09:01
Thanks! {nm} Feb 12, 09:02
HSX Green or Blue belt at best. Certainly not a master. {nm} Feb 12, 13:22
I would say this is more accurate. {nm} Feb 12, 14:28
