This post originally appeared on RealMoney Silver on Jan. 21 at 7:41 a.m. EST.
Doug put together a list of his lessons learned this week:
1. There are substantive risks to momentum-based investing.
2. Even in a bull market, mo-mo investors in the highfliers see increasing risks Examples: Coinstar (CSTR), F5 Networks (FFIV), U.S. Steel (X), Freeport-McMoRan Copper & Gold (FCX), Gold (GLD).
3. Price action in certain market-leading stocks suggests a lot of the company-specific news has been discounted.
4. The market’s unrelenting advance is not likely unlimited, as trees don’t grow to the sky. Beware as monetary stimulation wanes.
5. If investing/trading in highfliers, particularly in light of a relatively low VIX, buy cheap protection by purchasing out-of-the-money puts. (Shorts,can buy cheap protection with out-of-the-money calls).
6. Being more flexible and opportunistic by identifying group rotation, rather than buy-and-hold.
7. Always be prepared for surprises.
Kass: Seven Lessons Learned
TheStreet.com 01/21/11 http://www.thestreet.com/story/10981468/1/kass-seven-lessons-learned.html