Chapter 9

A fresh breakout is better than trying to catch an old move. Let's look at Netflix for 2014 and 2015. The fresh breakouts are marked as A and C. At those points the stock moved above the previous high price. This was a better place to buy the stock for a popular company. The other two markers B and D are at least 6 months after the best time to buy the trending stock. Naturally there are investors that will buy at any time along this chart. For an investor that wants a growth stock, the trend is desired. Hesitating and buying later than the start means buying closer to the end of the trend and is less profitable.

It takes some courage to invest in anything. Being hasty to buy any stock at any random time is more risky than taking the time to learn stock market behaviour, as well as the better times to buy a stock. Naturally, we can use any style of investing. Success comes from testing the investing style using previous stock movements. The goal is to be right most of the time, and know when to get out of the investment. For example, how far down would the price fall after B before you sold the investment? You need to know that point before you are buying it. Would you get out when the price fell to A? Having a set of rules means you can test your success using historical charts and prevent yourself from losing any money in the markets.