Matthew R. Kratter Quotes
Books by Matthew R. Kratter
Best 103 Quotes by Matthew R. Kratter – Page 1 of 4
A Beginner's Guide to the Stock Market Quotes
“- Take profits when you are so excited and happy about your trade that you are losing sleep.
- Take profits if a stock moves up 100% in 2 weeks or less.
- Take profits when you are up 300% from your entry price.
- Take profits when all of your friends and CNBC begin to talk a lot about the stock. At this point, the trade has become crowded, and hence much more dangerous.
- Take profits if a taxi driver or barber tell you to buy the stock.
- Exit (with a profit or loss) when the stock closes below its 50-day moving average. Use this method to capture shorter moves.
- Exit (with a profit or loss) when the stock closes below its 200-day moving average. Use this method to capture longer moves.
- Exit (with a profit or loss) when the 50-day moving average crosses below the 200-day moving average. Use this method to capture longer moves.
- Use a 10-day or 20-day exponential moving average (EMA) as a trailing stop. Exit your position if the stock has a daily close below this EMA.
- You can also scale out of a profitable position. Sell 25% of your position every Monday for 4 weeks in a row, or something similar. That is a good way to lock in some profits, while still keeping”
“A great time to invest in an index like the S&P 500 is during a bear market. If stock prices have been falling for 6 months or more, and there is a lot of pessimism in the air, it might be a good time to invest some extra money into index funds.”
“Also, I like to look for growth stocks that have a market cap of $5 billion or less. It takes a lot less money to push a $5 billion stock higher than it does a $500 billion market cap stock.”
“An even easier route might be to just buy some B-shares of Berkshire Hathaway (ticker: BRK-B). One share of stock in this company will cost you $203.27 today. You can then sit back and relax and let Warren Buffett, Charlie Munger, and their successors do all of the hard work.”
“At its most basic level, value investing is about buying something for less than it is worth.
It is a very appealing strategy, since who doesn't like to get a great deal?”
“Blue chips or blue chip stocks are large, mature, profitable, and fairly stable companies.”
“Buying a stock index like the S&P 500 is a great way to get started investing. If you can, you should just buy some SPY and not look at it for the next 30 years. When you are indexing, it doesn't make any sense to check daily stock or index prices.”
“Companies that are growing their revenues or earnings quickly ('growth stocks') tend to have P/E's above 25. Companies that are in trouble often have P/E's below 10.”
“Don't ever expect to find good stocks in the bargain bin — unless perhaps you are at the end of a multi-year bear market.
Even then, you are often better off buying a higher-quality company that has a higher P/E.”
“Don’t buy stocks that are hitting 52-week lows. Don’t trade penny stocks. Don’t short stocks. Don’t trade on margin. Don’t trade other people’s ideas.”
“Don’t buy stocks that are hitting 52-week lows. It bears repeating, simply because so many new traders lose a lot of money trying to catch the proverbial 'falling knife'.
In spite of what everyone will tell you, you are almost always much better off buying a stock that is hitting 52-week highs than one hitting 52-week lows.”
“Don’t ever let anyone tell you what you can or cannot do with stocks.”
“Don’t trade penny stocks. A penny stock is any stock that trades under $5. Unless you are an advanced trader, you should avoid all penny stocks.
I would extend this by encouraging you to also avoid all stocks priced under $10. Even if you have a small trading account ($5,000) or less, you are better off buying fewer shares of a higher-priced stock than a lot of shares of a penny stock.
That is because low-priced stocks are most often associated with lower quality companies. As a result, they are not usually allowed to trade on the NYSE or the Nasdaq. Instead, they trade on the OTCBB ("over the counter bulletin board") or Pink Sheets, both of which have much less stringent financial reporting requirements than the major exchanges do.
Many of these companies have never made a profit. They may be frauds or shell companies that are designed solely to enrich management and other insiders. They may also include former 'blue chips' that have fallen on hard times like Eastman Kodak or Lehman Brothers.
In addition, penny stocks are inherently more volatile than higher-priced stocks. Think of it this way: if a $100 stock moves $1, that is a 1% move. If a $5 stock moves $1, that is a 20% move. Many new traders underestimate the kind of emotional and financial damage that this kind of volatility can cause.
In my experience, penny stocks do not trend nearly as well as higher-priced stocks. They tend to be more mean-reverting. Mean reversion occurs when a stock moves up sharply from its average trading price, only to fall right back down again to its average trading price.
Many of them are eventually headed to zero, but they are still not good short candidates. Most brokers will not let you short them. And even if you do find a broker who will let you short a penny stock, how would you like to wake up to see your penny stock trading at $10 when you just shorted it at $2 a few days before?
I learned that lesson the hard way. It turned out that I was risking $8 to make $2, which is not a good way to make money over the long term.
To add injury to insult, a penny stock might appear to be liquid one day, and the next day, the liquidity dries up and you are confronted by a $2 bid/ask spread. Or the bid might completely disappear. Imagine owning”
“Each ETF represents a certain index. So the ETF for the S&P 500 trades under the ticker SPY. The ETF for the DJIA trades under the ticker DIA. And the ETF for the Nasdaq 100 trades under the ticker QQQ. You've probably heard of the QQQ. It is a great trading or investment vehicle.
When you buy shares of the QQQ, you are getting exposure to Apple, Netflix, Google, Amazon, Facebook, and many other tech (and some non-tech) stocks. If you buy the QQQ and hold it for the long-term, you will be able to profit from the long-term growth of the tech industry.”
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“Every stock has a bid price and an offer (or 'ask') price. The bid is the price at which someone is willing to buy the stock. The offer is the price at which someone is willing to sell the stock.
Memorize this phrase right now: You sell to the bid, and you buy from the ask.”
“Find a stock that is gapping up on good news (like a better than expected earnings report). Wait 15 minutes after the market's open, and note the stock's price at that time.
Put in a limit order to buy the stock at that price. If your order is not executed in the next 15 minutes, cancel your order and walk away.
If your order is filled, hold on to the stock for the rest of the trading day, and then take profits a couple of minutes before the market closes that day. Exit the stock early if it trades below the lowest price of that first 15 minutes of morning trading.”
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“I believe in analysis and not forecasting.”
“Has a company that you own just reported some really bad news? If so, remember that there is never just one cockroach. Bad news comes in clusters.
Many investors recently learned this the hard way with General Electric, which just kept reporting one bad thing after another, causing the stock to crash from 30 to 7.
There is no such thing as a 'safe stock'. Even a blue chip stock can go down a lot if it loses its competitive advantage or the company makes bad decisions. A cascade of bad news can often cause a stock to trend down or gap down repeatedly. If you own a stock that does this, it is often better to get out and wait a few months (or years) to reenter.
Again, there is never just one cockroach. Never buy a stock after you have seen the first cockroach. When a stock goes down a lot, it can affect the company's fundamentals as well. Employee and management morale will deteriorate, the best employees may leave the company, and it may become more difficult for the company to raise money by selling shares or issuing debt.
Conversely, when a stock goes up a lot, it can improve the company's fundamentals. Employee and management morale will be high, everyone at the company will want to work harder, it will be easier to recruit new talent, and it will become easier for the company to raise money by issuing stock or debt.
If you stick to stocks that are trading above their 200-day moving averages, or that are hitting 52-week highs, you will do much better than trying to catch falling knives.”
“I almost always use limit orders in my trading, even with highly liquid stocks.”
“I almost always use limit orders in my trading, even with highly liquid stocks. So if I want to buy a liquid stock like Microsoft, I will look where the ask is, and then just enter a limit order using that ask price.”
“I also like to look for growth stocks, where the float is less than 20% of the total number of shares outstanding. The 'float' is simply the number of shares of a stock that are actually available for trading.
To calculate the float, you just take the total number of shares outstanding and subtract all closely-held shares (those held by founders, employees, and original investors that are locked up and thus unable to be traded).”
“I am both a trader and an investor. I like to have many different strategies running at the same time: long-term strategies, short-term strategies, as well as strategies that involve bonds, options, futures, currencies, venture capital, and real estate.”
“I want to make sure that the stock is trading above its 50-day moving average; and that the 50-day moving average is above the 200-day moving average. When a stock looks like this, you know that it is in an uptrend.”
“I would just urge you to learn how the stock market actually works.
Many people never take the time to learn this. Many people like to yell at the stock market and tell it what to do.”
“If you are going to trade before the market opens or in the after-hours market, always use a limit order.”
“If you are looking for a good long-term investment, buy a company that has the highest sales in its industry.
So for home improvement, you want to own Home Depot; for fast food, McDonald's; for toothpaste, Colgate Palmolive; for payments, Visa; for smart phones, Apple; and for social media, Facebook.”
“Ignore the high P/E.”
“Investing in dividend stocks is one of the best ways to build wealth. The reason it works so well is that you can take the cash from a dividend payment and use it to buy more dividend stocks. Then those dividend stocks will pay you more dividends.”
“Investing is about buying something for less than it is worth.”
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“It's important to remember that Buffett is the consummate insider. He's not just a folksy country bumpkin who sits around eating hamburgers and drinking Coke all day.
When there is a sale of Goldman preferred shares with a 10% coupon, he gets the call. Not you or me.”
“Just be sure to never add to a losing position. Pick a stop loss level when you enter the trade and stick to it.
Only losers average losers. Rocket stocks go up fast, but they can also go down fast.”
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“Talking to management is the most important thing I do as a microcap investor. Businesses aren't spreadsheets. Businesses are people. I want to meet them.”
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