Investing the Bits and Pieces

 Investing the Bits and Pieces

 

As always, let me preface by saying that this is not investment advice, but this is my plan for investing in stocks.  Here we go.

A big part of my investment plan hinges on two things:

1.            1.  Weekly small wins of 3-5% growth

2.            2.  Exponential growth from reinvesting earnings

I would like to give a real-world example of trades I made this week that illustrate both of these hinge-points.  Since most of my investment is currently tied up in Humanigen  (HGEN), that leaves me with few investment options.  However, most accounts will end up with some cash on-hand available for trading just because it is hard to invest 100%.  I would like to show how investing the bits and pieces can grow that uninvested portion of an account.  It may not be much, but it does make a difference.

 

So I looked for a stock that was at or near its low and selling around $2-3.  I decided on Windtree Therapeutics (WINT) which I have previously traded.  The stock has been in decline since last summer when it hit around $10/share.  But it met my criteria for trading since it hit a 52-week low and would support my growth plan of 5%.  The growth support is derived by averaging the range of previous day lows to next day highs.  If that range supports a 3-5% gain, then I go ahead with the trade even if the stock is in decline. 

WINT stock recent average range will support 3-5% growth since the previous day low to next day high average is greater than 5%.  It is important to target a good leverage entry point, so if my Low-from-Open (LFO) is 5% average, I want to target an entry point that is 4-5% lower than the daily open.  So on 5/12 I entered at $1.80.  It took a big drop on 5/10 and had a low of $1.77 on 5/11, so I thought it was set up to increase.  It is like pulling on a rubber band.  There was tension in the stock price leveraging upward, so I did not want to put a bid in that would likely not be picked up.  It felt like the bottom, so I went in at $1.80 and it was right in the middle from the open.  It bottomed out at $1.78, then it took off, but since I am trading in an IRA, I couldn’t sell the same day as I bought.  But the next day I targeted my 5%.  Good thing I was not greedy!  It sold on 5/13 at $1.89 (exactly 5% growth), then the stock tanked again.  The trade cleared sooner than I thought it would, so I was able to buy again the next day at $1.67.  It closed 5/14 at $1.76, right at my next 5% growth sell price.  No point in being greedy, so I follow the plan.  This stock has some history of not gaining in a day, so I have set my sell price at $1.76 for Monday, and I have confidence I will hit it. 

 

This technique is what I will exclusively use after I sell my HGEN stock.  Waiting around for a parabolic seems to me a waste of time.  I’ve made good money doing it, but I think the low-growth strategy seems more certain and risk adverse.  I was able to make 2 trades in a week, which is twice as fast as my stock growth strategy plan.  That’s ok, but I am not a fan of rushing into things, so one positive trading cycle a week is still success.  Two is the max.  Besides, there isn’t a CD or a savings account out there that can give a 5-10% return a week.  So I’m pretty happy with this strategy. 

 

Regarding the exponential growth, since I only had enough money for 6 shares on the first trade, I then had enough for 7 shares on the 2^nd trade, thus investing a greater portion of my stagnant account.  So in 2 trades targeting 5%, I actually end up making 10.8% off of the original investment.  I am always amazed at the power of exponential growth in trading stock.

 

Thanks for taking the time to read this and, if you trade, I hope you found this encouraging. 

 

-Johnie