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Registered User
Joined: 1/27/2005
Posts: 3
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I've been a Ben Graham value investor for many years. This approach has worked very well for me plus it fits my personality, which I feel is very important. I have always felt that Graham's approach could improved by using better entry points for a stock. If you were using a value approach to investing what indicators would you find most successful and helpful? Perhaps you could provide several and their parameters. I could back test them on lots of Graham type stocks I've owned and see if they would have improved my buy levels. This would help me quite a bit and I could customize the indicators if need be for my own use
Again, thanks for your hard work with Telechart.
Mark
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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The trainers cannot give settings, interpretation or investment advice. I'll move this topic to the Stock and Market Talk forum where other traders are more likely to see it and comment.
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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Registered User
Joined: 12/19/2004
Posts: 457
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Hello.
Here is an approach I use with closed ended funds, where you can clearly see how much of a discount to NAV you are getting.
Shift to a monthly chart. Plot a 21 bar simple moving average. Plot 2 different sets of Bollinger bands--20 and 10, in separate colors.
Look for times when the stock has sold off viciously, on extreme volume, and managed to close outside the 20 width Bollinger band. Look to see if there is a momentum divergence on your indicators, suggesting a bottom is forming.
Being able to buy when the stock is outside of the Bollinger Bands is ideal, but anywhere between 10 and 20 is fine.
If your stock has been in a downtrend for a long time (ie. at least 6 months to 1 year), then you might be seeing signs that the price move down is exhausting itself.
If you are very familiar with the company, and are willing to hold the stock, you should be able to get in very close to the absolute bottom.
When to sell? First, determine what you believe the intrinsic value is. But I would not advocate immediately selling at this price range, unless your gain is substantial in a short period of time.
If a stock shoots up, and hits the target, it probably looks very good technically, and it will encourage trend followers and probably growth managers to jump aboard.
I'd advise holding until the 21 bar moving average (weekly) hits the price range, and place above market sell orders somewhere between the 10 and 20 Bollinger bands, unless technicals indicate otherwise.
As for stops, I don't think technicals can help you out here. You have to devise some fundamental criteria that will let you know when you made a mistake. Otherwise a time stop is likely to be best, to prevent you from holding a dog that doesn't move.
FWIW, I would only use this system on stocks with good cash flow and a history of paying dividends.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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1066680
I am making the assumption you are looking for something
long-term and long-only.
I would look into considering a stock a buy when a 21 day
exponential moving average crosses a 100 day exponential.
moving average.
I would set an initial stop at approx 8%. After the position becomes
profitable I would use the lowest low of 100 days as a trailing stop
or sell when the 21 goes below the 100.
(this will give the stock room to breath)
You can view these on the chart (top window)
-----------------------------------------------------------------
(Buy Mode)
Percent True Indicator:
XAVGC21>XAVGC100
----------------------------------------------------------
(Buy Trigger)
Percent True Indicator:
XAVGC21>XAVGC100ANDXAVGC21.1<XAVGC100.1
--------------------------------------------------------------
(Sell Trigger)
Percent True Indicator:
XAVGC21<XAVGC100ANDXAVGC21.1>XAVGC100.1
-----------------------------------------------------------------
(Lowest Low 100 days)
Custom Indicator:
MINL100 (be sure to click plot using price scale)
-----------------------------------------------------------------
I would consider not talking any positions when the SP-500
goes under its 40 to 45 week moving average.
(since this type of strategy will not respond quickly to bear markets)
Thanks
diceman
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Registered User
Joined: 1/1/2005
Posts: 35
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Ben Graham is rolling over in his grave.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Quote:"Ben Graham is rolling over in his grave. "
I think he would be happy.
(his methods are still being used)
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Registered User
Joined: 12/30/2004
Posts: 12
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10666...
My guess is that long ago you read Graham's "The Intelligent Investor"! Congratulations, I'm sure you've prospered! I only wish I had had the discipline to blindly follow his advice (as perhaps you and Buffett have). I still tell anyone who will listen that if you only have time to read one book cover to cover that's the one! That said, Ben Graham (to over simplify) gives you a buy at no more than a 12 P/E (his 4th Edition peg), so that would be one of your indicators, I'm sure!
Then, since Graham focuses on a "Margin of Safety" (ch.20), which depends on the industry you're buying into, the indicator might be TIE (times interest earned), or one of a myriad others to add to P/E. Per Graham "the function of the margin of safety is to render unnecessary an accurate estimate of the future"!
Another Graham chapter to take to heart is ch. 8...Market fluctuations (the Trend is your Friend). If both the stock and the market are doing higher highs and higher lows, then you've found a winner!...so RSI would be a valuable addition to your indicator list.
All in all,if you're a Graham value investor, you'll know how your portfolio looks by having done that fundamental homework to keep the bad decisions to a minimum, and with telechart keeping an eye on things, a leg up on other value investors!
Oh, and Shatterd, I'm with you...mebbe this will quiet Ben's Grave rolling down a bit!
Bruce
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