Sleeping stocks

Value investing and growth investing
While two different sounding methodologies, both share a common principle - we want to see price increase.

Note:
The rate of growth may be different. Value investing would generally be slower price growth, while growth investing would generally be faster price growth.
However, at times value stocks can act like growth stocks when it comes to price action - and vice versa. This is what we will be looking at in this article.

Let's assume value investing entries are those stocks in a 'sleeping' phase, and growth investing entries are as the stocks move into a 'waking up' phase.

When we look to enter a stock, what we are ideally seeing displayed is:

• volume increase,

• momentum, and

• general bullish activity.

This is a simple enough approach to look to get into a trade.

However, the difficulty might be when a stock has already been entered into - but then goes into that sleepy stage (which Javid often refers to as a breather).
What do we do then?
Get out of the trade and look for opportunities elsewhere?

All long-term stocks will enter a sleepy phase at some stage.
How we choose to handle it will depend on a number of factors, for example:

1. Which portfolio is the stock in and how are other stocks are performing in comparison?
   If we assume the stock is in the growth portfolio - and the performance compared to its peers has been good - then we do not necessarily want to exit the trade.

2. Do we want to add to the trade?
   Depending on what percentage the stock has already moved, from our original entry, we may want to add to the trade on a pullback.

As always, we want to be guided by a metric that is unbiased and measurable.

So, during this whole sleepy stage, it is good practice to see how many days the stock has traded from its 52-week high and 52-week low - then compare this to other stocks in our portfolio and against the stock's peers

Most traders find pain when stocks stop moving up (and start to fall asleep).
During these sleepy periods, there is often a new group of stocks or assets that are all the rave - and the majority of retail traders turn their attention to this buzz.
We know it as the shiny penny syndrome - a distraction that steers us off course.

So, patience is needed during this phase - with a dab of discipline.
And, this is also when we look to buy into the sleeping stocks (while other traders are not paying attention).

We then just sit tight and wait patiently.
Our stocks will hopefully wake up from their nap with twice as much energy!

Let's go trade!