Maximizing Profits

It is difficult to avoid trying to capture short term gains while still pursing a long term strategy. A 15 day chart is noise against the backdrop of a 5 or 10 year trend. A sound investment policy can help avoid that pitfall, which eventually leads to over trading or high turnover. High turnover only means that your initial decision was either unsound or not thoroughly worked through. A sound policy will help minimize emotionally impulses and allow your strategy or system to work. While reading "Winning the Loser's Game", Charles Ellis mentioned that investors get jubilant when stocks are rising and depressed during a fall, but who among us, reacts that way in the mall. When prices rises we shun items and when they fall we buy more than we need, however securities are treated completely contrary. Again a sound policy will aid in quelling the urge to push prices up with the rest of the market. A word of caution, I am not advising buying on dips or averaging losses. If you like the actually enterprise at a market cap of $3 billion and it falls to $1.5 billion because of systematic market movement, you should buy twice as much. If you are trading, cut your losses promptly and move on.