Sunday, August 30, 2015

Taking advantage of the plunge

The lesson is we have to prepare and I did pretty well this time. The market has been risky for several months (close to two technical indicators I followed). I started to accumulate cash. Before the fierce correction I had about 50% cash.

Guessing oil hitting the bottom, I bought OIL 2 times several days ago and it is up over 20%. Two days ago, RSI told me the market was far oversold, I bought 4 value stocks (AAPL, GILD, GM and GNW) and they ranged from 2% to 10% return in 2 days. Sold one as I believe the market is still risky.

It may not work all the time, but following technical indicators work most of the time as many investors do. Too nimble on them would give us too many false signals though. It is all described in my book The Art of Investing. I'm more conservative so I seldom go all the way (except all in in March, 2009).

One commentator at Seeking Alpha did not believe me. The following two posts are my proofs. This commentator wrote a blog on buying during market plunge. He refused to give me the proofs. What a hypocrite.

Click my proof on 4 value stock.
Click my proof on buying OIL two times.