Buy Low, Sell High, Go Short & Cover Summary

stock market cycle

Continuation from yesterday…..(Why Warren Buffett Is Wrong About Trading In and Out)

Summary & Conclusion

We have started this book with a simple premise of trying to figure out which investment approach is the best. During the process we have looked at number of investment strategies most commonly associated with the industry. Including value investing, growth investing and various disciplines of active trading. We have discussed short selling and why the process is not as risky as industry insiders make it out to be. Shortly thereafter and rather quickly we have arrived at a juncture where our priorities were clarified. At the end of the day, most investors want the following.

A massive capital gain.
In the shortest possible period of time.
While taking on very little, if any, risk.

Yet, most of the traditional investment strategies had failed in satisfying all three requirements. As it stands, most commonly practiced investment approaches concentrate on either risk minimization at the cost of ROI or higher returns at the risk of capital. A new approach was needed.

The author introduced such an approach in the form of Buy Low, Sell High, Go Short and Cover investment strategy.

Although the strategy initially appeared to be complex and unattainable, in reality, it was straight forward and fairly easy to implement. A simple set of rules was provided.

Rule #1: Buy Substantially Undervalued Securities (Minimizing Risks & Maximizing Returns).
Rule #2: Sell & Go Short When Technical and Timing Indicators Confirm (Trading)
Rule #3: Cover Your Short Positions & Go Long When Technical and Timing Indicators Confirm (Trading)
Rule #4: Know Exactly Where You Are At All Times.