It usually means the company is doing something right. Before into our specific strategy, consider this business example. Lets say youre in the Tshirt business. Of course we didnt know this at the time, nor did anyone else. They are playing the game without system, so theyre really doing nothing but gambling. But what would you do next? Would you simply continue to bet 5,000 on every marble you pulled from the bag? Well, because the odds of this game are heavily stacked in your favor, that strategy would probably mean youd end the game with more money than when you started.

At the end of the first year, your golf shirts are already showing profit of 20,000. Youve made ton of money on your Tshirt business in the states, and youre in The Bahamas looking for new opportunities. The basic reasoning behind this technique is that once youve found winner, you absolutely dont want to sell it. We were either in on it, and loved the thrill missed out on many of the greatest investment opportunities of our time.

And all it takes is one big loss to set an investor back for years. Lets say you start off with 10,000. The hard part is knowing when to sell. But remember, that doesnt mean that you can only invest 2 in any one position. Youve made ton of money on your Tshirt business in the states, and youre in The Bahamas looking for new opportunities. Thats an average return of over 26 per year, much better than youd think. For one thing, in particularly volatile stocks, you can stopped out at price much worse than you had hoped for.

And he thought the chance for the fund to dive significantly below our trailing stop was remote. Tharp believed he could unlock the very essence of investment success. Only this time, instead of selling when your stock falls 25, youll be adding to your investment whenand every timeit rises 33.Now let me pause for just moment to issue warningAt about this time, average investors will begin to worry. So, when the price dipped below our 5. 80 trailing stop, we held on.

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