My Favorite Trade for a Bullish Market: RIMM

It is not uncommon for stock market gurus to forecast the year ahead each January. Some are more lucky than good, which, in my opinion, is always better. That's not to say that a good forecast is not important. In fact, I am going to show you my time-cycle chart for the upcoming year, but with the following caveat: It is virtually certain that this forecast will change dramatically as the weeks unfold in 2011.

This is why it is so important to see these charts on a daily basis. Exogenous events can and will occur with more frequency than we would like to admit. One-off events are virtually impossible to predict and one-off (exogenous) events are certain to occur.

You may believe it is impossible to predict the future. I have no argument with that position, but if you do not have a plan that is capable of handling virtually any possible outcome, then your investment strategy could have far too much risk exposure.

I have found that the best way to plan for any contingency is to have a clear set of rules to use for your trades. Always know what your plan will be for the downside and for the upside. As I have often said in this venue: "Buying is easy... Selling is hard!" The successful result of selling the right stock at the right time is what separates winning trades from losing trades. If you haven't developed a solid set of investment/trading rules, I recommend my book "10: The Essential Rules for Beating the Market." (more)