Monday, June 15, 2009

High Quality Stocks...........

Day after day, year after year I hear the mavens on financial TV tout how they only buy "high quality" stocks and stay away from "low quality" stocks.

Let me be very clear on the amount of risk one should incur in owning either high or low quality cars, wives, bonds, guns, boats or stocks.

Risk should be the amount of money you are willing to lose on the trade before you exit the trade. To that end one must only trade in a "liquid" market. As a matter of full disclosure wives are not liquid.

When high quality stocks go down as much as low quality stocks in normal market corrections and when low quality stocks go up faster in the next up-leg of the market who decides what is high and what is low. Isn't high quality what goes up and low quality what doesn't go up or goes down?

Ladies and gentlemen, boys and girls. They all are risky. Control the risk. Decide how much you can stomach to lose on paper before you exit the trade. Simple.

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