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Fire Your Stock Analyst!: Analyzing Stocks on Your Own
book

Fire Your Stock Analyst!: Analyzing Stocks on Your Own

by Harry Domash
January 2006
Beginner
416 pages
8h 7m
English
Pearson
Content preview from Fire Your Stock Analyst!: Analyzing Stocks on Your Own

The Risk Zone

If you’re a growth investor, you often won’t be the first to discover a hot prospect. Growth stocks often experience strong price run-ups, then falter, often retracing much of their recent progress. Jumping on a fast-moving stock after it has already made a big move adds risk.

I’ve settled on an unscientific rule of thumb for determining when a stock is in that condition. I measure the difference between the stock’s closing price and its 200-day moving average. It’s in the risk zone when the stock price is 50 percent greater than the moving average.

Being in the risk zone doesn’t mean that the stock isn’t going higher. Qualcomm moved into the risk zone when it crossed $10 in March 1999, on its way to $180.

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Publisher Resources

ISBN: 0132260387Purchase book