Trading volume and investor strategy
Comments on trading volume and some investor strategy.
When small stocks wake-up and move up, trading volume often soars and its never really a problem to sell out, unless you are a large institution. That is the "nature of the beast", as prices surges are accompanied by often much heightened trading volume. Remember too, trading volume is always relative to how large of an investor you are. This is why institutions and their influenced publications/news services keep mentioning this as a negative, evenwhile not explaining it is all relative to the amount invested.
But what about the picks which did not soar in price and volume?
The laggards we had over the years, (all investors do) had to be dribbled out at lower prices and over time. This unless just dumped for a heavy discount. Another alternative is watch them for the occasional mini-surge and then get out.
Still then ever so often we can get stuck with a real dud, which sits in the portfolio “dead in the water” for a while, but 
even “a dog has its day” and eventually there is a "dead cat bounce" -allowing for an exit with a loss. Surely always there are various opportunities over time to cut loss -and get out.
Cutting losses and getting out is part of the investor long term success plan. When you sell a stock at a profit consider also right then, trimming one down which you remain concerned with. “Concern” is a very relative word as for example on UKEM (81), there I am not trimming down. It is one reason to be a member here as evaluation among uncertainty is always difficult -and so one so seeks the most information available. In the end, I sometimes just decide on experienced gut.
This is one reason that when stocks soar and a nice profit can be realized (like STPI as a recent example), it pays to get out and stay out. As a general rule, a stock gets increasingly less attractive as it moves higher. That is, once it has been discovered. In Demco’s case currently, I am willing to stick with it because there is such strong earnings momentum going forward.
Stock prices soar at times even for no apparent new news. When this happens speculators jump in and the trading volume soars. Most of the time however, a stock is rocketing up because of some good new fundamental news. The value investors (like the polar bear on the island), patiently awaits this.. , only so to take some profits when this happens. With the added caveat that you await the first pri e surge as there is likely more to come, or just stick with it as you strongly believe the story as I do with DEMCO which is just slowly inching up over the weeks and months.
In general a stock which slowly moves-up over time is more interesting then a sudden surge, out of nowhere. The former is more sustainable as compared to the one which just gushes in short moments and then invariably burns back out, like SALEE just did. Look at STPI, it in time got into speculators hands and then came crashing back down.
Putting it all together over the years and with help and despite occasional setbacks (i.e. investor duds), one still realizes superior returns, as the record here shows again and again.
If you never have any dudds, you are not trying hard enough to get the occasional big winner. Note how in recent months as over the years I always combine some larger cap stocks along with the smaller ones. One reason is so to balance liquidity -as well as offsetting market correlations.
If there is a need for cash one so always has the option in selling out only a few shares of the larger picks, if for some reason the others are then sleeping. The second reason, larger cap stocks often move when smaller ones are dormant and vis versa. It’s the combination of this together which makes it a superior investor strategy. Of course you still have to chose which ones to combine and how many changes to make.
Over the years members have noticed that my strong picks usually do best. True enough, I agree. Remember, its always mandated that a responsible investor-editor advocate a fully diversified strategy, even if he knows very well that something more punctuated should be implemented. That of course is only for the member/reader to decide.
Best Regards,
Paul Renaud.
