Did you know that Phil Town describes what the 10 Day Moving Average (MA) is, in his RULE #1 book? There Phil Town shows you how to get you in quicker, so that you get the maximum amount of upsurge in the investment price.
If you are not so sure about all four M’s, then you could be in for a lot of volitility as we’ve seen in some recent examples in the stock market.
Doesn’t mean that these folks didn’t pick good businesses available at attractive prices… but it might mean that something is going on in the industry or economy relative to that industry, or maybe some problem is cropping up in that company that is still undercover, and the price just keeps drifting down.
Remember everyone, that the moving average trend really is your friend and fighting it just doesn’t work out well. If the Big Guys are consistently moving out and the trend is down, then it’s time to take shelter in Cash and wait patiently for the bottom and a new uptrend to get established. During this time, find another great business at an attractive price… or just hang out and do nothing. Doing nothing turns out to be the right answer more often than not since you are still showing no loses.
So here is a way to think about this: If you are not dead sure about the value of this business based on experience as a Payback Time investor and this thing is trending down, don’t touch it.
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