Rational Investing UsingVectorVest combines fundamental and technical analysis People looking for easy money invariably pay for the privilege of proving conclusively that it can not be found on this earth. - Jesse Livermore

Basic Traits of Successful Investors 1. They look at objective indicators. Removing the emotions from the investing process, they focus on data instead of reacting to events; 1. They look at objective indicators. Removing the emotions from the investing process, they focus on data instead of reacting to events; 2. They are Disciplined: The data drives decision making with pre- established rules. External factors do not influence them; 2. They are Disciplined: The data drives decision making with pre- established rules. External factors do not influence them; 3. They have Flexibility: The best investors are open-minded to new ideas, or revisiting previous thoughts; 3. They have Flexibility: The best investors are open-minded to new ideas, or revisiting previous thoughts; 4. They are Risk adverse: Not always obvious to investors, it is a crucial part of successful investing. 4. They are Risk adverse: Not always obvious to investors, it is a crucial part of successful investing. Investors always will make mistakes, and many of them. The only difference between winners and losers is that winners have small losses and losers have large losses Observations by Ned Davis

Key Elements to Successful Investing Disciplined use of decision rules for: Direction Direction Selection Selection Injection Injection Rejection Rejection The trader’s deadly enemies are: Ignorance, Greed, Fear, and Hope. - Jesse Livermore

Basic Uses of Timing 1. Determine direction to select strategy 2. Pinpoint major pivot-points for entry and exit of strategy and positions Markets are never wrong; opinions often are. - Jesse Livermore I’ve found that the big money was never made in the buying or the selling. It was made in the waiting. - Jesse Livermore

Home Page Quickly Reveals Market Direction Wait for the fat pitch Warren Buffet

Three Holding Styles 1. Calendar Hold for a period and then refresh list Hold for a period and then refresh list 2. Fixed Foray Hold positions until signal reversal Hold positions until signal reversal 3. Managed Foray Monitor for stop-outs, replenishing each... Monitor for stop-outs, replenishing each cherry-pick selections to go into... cherry-pick selections to go into... Or let market make you more liquid... Or let market make you more liquid

Selection Which strategy to use? Which strategy to use? Standard screens vs customized Standard screens vs customized Which holding style to use? Which holding style to use? Calendar, fixed foray, or managed foray Calendar, fixed foray, or managed foray How many positions to hold? How many positions to hold? Which entry and exit rules to use Which entry and exit rules to use Backtesting Portfolio Manager or Simulator

A Paper Trading Exercise to Learn Position Trading 1. Scan MTI chart for dates of “fat pitch” (CUp) 2. Examine 3-year charts of top 15 VST stocks a. Smooth price patterns b. EPS gains and favorable Earnings Yield (GARP) c. Price above MA50 and 5 or 10 day MAs 3. Establish short-list of good prospects 4. Note technical entry/exit points (set-up rules) 5. Determine profitability of your rules

Injection Once you have market tailwind, refresh “monthly” or look for the trading “set-up” 3 short-term MAs “bundling” and above MA50 3 short-term MAs “bundling” and above MA50 RSI>50, P>MA50, MACD>0, positive DMI & CMF RSI>50, P>MA50, MACD>0, positive DMI & CMF New highs, on volume and with follow-through New highs, on volume and with follow-through Breakouts from consolidation, with surging volume Breakouts from consolidation, with surging volume Stocks are never too high to begin buying or too low to begin selling. - Jesse Livermore

Rejection Only paper profits, until gains locked-up with a sale. Only paper profits, until gains locked-up with a sale. Discipline, not denial, is crucial Discipline, not denial, is crucial Monthly refresh culls weaklings & brings in fresh horses Monthly refresh culls weaklings & brings in fresh horses Position trading uses the TA indicators or Position trading uses the TA indicators or Breach of moving average (10, 20, or 50) or trendline Breach of moving average (10, 20, or 50) or trendline Triggered trailing stops ($ or % from most recent high) Triggered trailing stops ($ or % from most recent high) Volatility-based stop (chandelier) Volatility-based stop (chandelier) Being wrong and not taking the loss is what does damage to the pocketbook and to the soul. - Jesse Livermore Hope fathers many orphans - Robert Rhea

Enter when Above MA50, RSI>50 and MACD>0 Even during horrible market periods, rules can be very profitable Exit when two rules are violated

AnyQuestions? Before we move chairs and take a Break