Invest where you have an advantage over professionals

Cont'd discussion about Guerilla Investing: Winning Strategies for Beating the Wall Street Professionals

Here are some areas where the amateur investor has an advantage over the professional investors.

1. Small cap stocks and stocks ignored by analysts

2. Buy and hold.

3. Change market directions before the professionals are able to change theirs.

4. Wait until the professionals all go in the same direction and then take the opposite position. Look in the Investors' Business Daily at the Sentiment Indicator. A bearish signal occurs when more than 55% of investment advisors are bullish or fewer than 20% bearish. A bullish signal occurs when fewer than 35% are bullish or more than 50% are bearish. Also, look at analyst ratings of a stock. If all of them are bullish, then you have a short selling opportunity. If all of them are bearish, then you have a buying opportunity.

5. Take advantage of the professionals' need for short term performance. On the last day of any quarter, professionals sometimes bid the price up on stocks they already own to make their performance look better. So look at public information to see what stocks professionals already own and buy along with them as they bid up the price near the end of any quarter. At the same time, look at public information to see what stocks professionals already own which have been poor performers and short sell while they start to sell those to eliminate them from their portfolio at end-of-quarter.

...cont'd tomorrow...

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