This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Melvin: When and What to Buy

There are those who maintain that if you are buying quality stocks, it does not matter when you buy, due to the long-term upwardly drift of the market. There are also those who think that you should buy stocks as they move to new highs. As for me, I wait until prices have fallen, when no one else is buying and stocks are cheap, and then I buy.

In an interview with the Ladies' Home Journal, Benjamin Graham once said that investors should buy stocks the way they buy groceries, not the way they buy perfume. Too many investors buy the most popular darlings of the day at or close to new highs, which is more of a traders' shopping playground than it is one for investors. To buy and prosper as a momentum buyer, you have to be a very nimble and adept trader. You also have to be in front of the screen full time and not working another career to pay the bills and build wealth.

Robert Rodriguez said that his shopping list was the new-low list, not the new-high list. I apply the new-low philosophy to individual stocks as well as sectors. I start shopping in the unloved sectors that are lagging the market. (I utilized this approach at the end of 2011 to select three homebuilders, all of which have since rebounded by more than 20% in just six months.)

When looking at underperforming sectors, the first question that should come to mind is whether the industry is viable. At some point in time, typewriter manufacturers and buggy-whip retailers dominated the new-lows list, but these sectors were beaten up for a good reason -- they were no longer viable. On the current new-lows list, the for-profit education business model appears broken, and without a substantial overhaul, I do not think these companies are viable. Solar is also underperforming, and I think this industry is a decade or so away from real viability. As a result, I have no interest in these companies.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
DOW 16,960.57 -123.23 -0.72%
S&P 500 1,978.34 -9.64 -0.48%
NASDAQ 4,449.5640 -22.5440 -0.50%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs