1 month NOOB INVESTING update

[DesertCat]

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William O'neill's 7-8% stop rule is part of his trading system, which is based on extensive analysis that he has done to determine what works!



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His analysis is called "back-testing" and it's notoriously inaccurate. To use a poker example, it's like saying I reviewed my pokertracker database, and found that if I reraise with 32o on mondays, wednesdays and thursdays, it's profitable (even though a huge loser on other days), so I'm going to do that in the future and have a positive expectation.

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Fundamentalists, use different methods, but they also use "stops" that relate to the changing value of a company.


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If you are using stops, you aren't a fundamentalist, you just say you are. All of the leading value investors that I'm aware of (including Buffett, Graham, etc, etc), none uses or used stops. And every one would laugh at the suggestion.