Re: The Secrets of Zach's Success

Because I can, instead of commenting, I will reply in a post.
As someone who also dabbles in the market, although not too much lately, I will agree and disagree with a few of Zach's points.

1. I completely agree with taking your money and running. I would agree that you cannot be greedy. Pick a return you want and stick with it. But, here is where my logic is a bit different...to make playing the stock market worthwhile, you need to have a better return on your investment than what the current high yield savings account/CoD/mutual fund would be. Basically, you need to beat your alternative investment. My USAA high-yield savings account last month was at 4.74% APR. So, if I don't make at least that in the market, there would be no point in me playing.

2. Losses are not for losers, mainly because the longer you wait for that stock to come back up, the less your return on your money over time. If you make that 1% after 3 months, then it totally wasn't worth it. So, set the amount (%) you are willing to lose and get out. If you hold a loser, you lose the potential to continue your strategy with other stocks (whatever that may be).

3. Research can definitely help. I lost a while back because I did not follow the research I did. I knew a drug company had a report about a clinical trial and I knew it potentially wasn't going to go well. I did not dump the stock the day before the report, like I should have, and it took a big dive. This also applies to earnings reports. The general consensus is to not hold over when a stock reports its earnings. Even if they have a positive earnings report, it still may not have a positive impact on the stock. Buy on rumor, sell on news.

4. Some say buy low sell high. Some say buy high sell higher. I'm not recommending either way, but like Zach said, pick a strategy and stick to it. In this sense, I disagree with picking up a stock after bad news, like Zach suggested. It may work if you're only looking for a 1% return. But, I would recommend NOT trying to pick a market bottom or top (or in this case stock bottom or top). If this was possible, then everyone would make money in the market, every time. But, unfortunately, everyone does not.

Personally, I use optionsxpress.com, which has fees, so it makes it harder to follow Zach's strategy due to the fixed costs of commissions. The more money you play with, the less impact commissions have on you return. The opposite is also true, hence my problem.

And perhaps I am a bit more conservative in my approach. When I was in high school, I played strictly options and did well. But, at that time the market was good. Now, when I play the short term, I tend to write covered calls to try and get a little more of a return.

Currently, I am following a long term strategy and haven't been doing anything short term. At some point, I really have to start paying attention.

Please do not take my advice too seriously, these are my opinions and my opinions alone. If you take my advice and do poorly in the market, I am not responsible.