Winston Churchill once said:
However beautiful the strategy, you should occasionally look at the results.
We humbly agree with him. As investors, we all fall in love with a particular way of analyzing the markets and deciding which stocks to invest in and which to avoid. We may believe that the specific process we use is effective and will make us money. But to confirm the viability of the strategy, and to prove to ourselves that we are in fact traveling down a profitable path, we have to sometimes pause and take a look at the results.
At ChartMasterPro, we combine both fundamental and technical analysis in our investment and trading process. If what we see on the charts reflects what we can extract from the fundamentals, we decide to jump into a trade. We trade leverage options because they reduce the amount of time we have to be in the markets to turn a profit on a trade - most of the time this works to our benefit, but sometimes it hurts our returns.
In Q1 2017, we closed 54 trades. Of those 54 trades, we made money on 41 trades and lost money on 13 trades, for an overall 76% winning trade percentage.
In Q2 2017, we closed 38 trades, making money on 30 trades and losing money on 8 trades, for an overall 79% winning trade percentage.
We also believe that a picture is worth a thousand words. So below is a review of 7 of our past stock picks from the second quarter of 2017 (5 winners and 2 losers), with the corresponding charts that were included in the Seeking Alpha articles in which we made the recommendations.
Greenbrier Cos. (GBX)
On March 14, 2017, we recommended going LONG GBX in our article, Greenbrier Revisited: Still a Strong Buy. In the article, we had forecast an upward target price of $49.00 over three months. The shares hit $49.00 three weeks after our recommendation. We booked a gain of 131.43% on our GBX call options.
CarMax Inc. (KMX)
On April 20, 2017, we recommended going LONG KMX in our article, Carmax: Cautiously Optimistic. In the article, we had forecast an upward target price of $65.00 over three months. The shares hit $65.00 on May 22. We booked a gain of 44.78% on our KMX call options.
Rockwell Collins (NYSE:COL)
On May 25, 2017, we recommended going LONG COL in our article, Rockwell Collins: The Signal is Bullish. In the article, we had forecast an upward target price of $111.00 over three months. The shares got as high as $109.00 on May 31. We booked a gain of 41.76% on our COL call options.
Dr Pepper Snapple (DPS-OLD)
On June 13, 2017, we recommended going LONG DPS in our article, Dr Pepper: It's Gonna Pop! In the article, we had forecast an upward target price of $96.00 over three months. The shares hit $96.00 on June 20. We booked a gain of 72.00% on our DPS call options.
HCA Holdings Inc. (HCA)
On May 6, 2017, we recommended going LONG HCA in our article, HCA Holdings: Buy for Consistent Growth. In the article, we had forecast an upward target price of $91.00 over three months. As of June 30, the shares had climbed to the $87.00 level. We booked a gain of 68.75% on our HCA call options.
Bed Bath & Beyond Inc. (BBBY)
On April 6, 2017, we recommended going LONG BBBY in our article, Bed Bath & Beyond: Buy Low and Hold. In the article, we had forecast an upward target price of $44.00 over six months. The bullish breakout that we were anticipating never materialised. On April 28, we closed out the trade for a loss of 31.46% when the shares closed below our stop-loss exit price of $39.00. On June 30, the shares closed at $30.40. This is an example of a well-managed losing trade.
Take-Two Interactive (TTWO)
On April 14, 2017, we recommended selling or going SHORT TTWO in our article, Take-Two Interactive: Game Over. In the article, we had forecast a downward target price of $51.00 over three months. The bearish breakdown that we were anticipating never materialised. But instead of exiting the trade when the shares closed above our stop-loss exit price of $59.00 on April 19, we decided to hold on. What a mistake! The shares continued to rocket higher and our put options expired at zero on June 16 for a 100% loss on the trade. This is an example of a poorly managed losing trade. When we don't follow our rules, bad things happen.
In this business, you're never going to be right 100% of the time. And even when you are right, you may a) not stay in the trade long enough to maximise your gains, or b) lose money on the trade by getting stopped-out before the trade can move in your direction. And then sometimes when you're wrong you may make money if the trade moves in your direction for only a few days.
But as the Spanish say: It is not the same to talk of bulls as to be in the bullring! When you're in the trade, you're in the bullring with the bull six feet in front of you, snorting and kicking dirt; once you're out of a trade, you can calmly talk about the bull while sipping some wine in the comfort of an outdoor patio.
At the end of the day, if you can make money every month, I would say that you're on the right path, and that you should continue down that path.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: We trade options. Sometimes our trades last a few days, sometimes a few weeks, sometimes a few months.
Please review our trade history listed in our BlogPosts to get a feel for our trading style.