Seven Lessons from Doug Kass

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
Doug Kass 01/21/11

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