Dow Theory  |  MAY 2002

Working Money: Trends And The 4% Solution by David Penn

Working Money: Trends And The 4% Solution by David Penn Can you improve your odds of buying bottoms and selling tops? Use both trend-following and momentum-shift approaches to learn when to hold ’em and when to fold ’em. From a technical perspective, there are two general schools of thought when it comes to buying and selling stock. The first is that a position should be entered only when the stock has begun a trend (that is, a series of higher highs and higher lows — an uptrend — or a series of lower highs and lower lows — a downtrend). This, the trend-following school, believes that the easiest way to take profits from the marketplace is to wait for a reliable trend to begin, and to ride that trend until clear and convincing evidence develops that it has ended.

by David Penn