Buying at Highs vs. Buying at Lows

Published on
October 8th, 2018
Topic
Trading, Valuation, Technical Analysis
Duration
12 minutes

Buying at Highs vs. Buying at Lows

Technical Trader ·
Featuring Louis Llanes

Published on: October 8th, 2018 • Duration: 12 minutes • Topic: Trading, Valuation, Technical Analysis

Is it better to buy stocks near their lows or near their highs? Louis Llanes, founder of Wealthnet Investments, answers this age-old question. He reviews the data and presents his conclusion. Filmed on July 31, 2018 in Englewood, Colorado.

Comments

  • MS
    Michal S.
    24 October 2018 @ 13:10
    Fantastic analysis. It would be nice to also put the link to the slides next time in the video description, when I pause the player the slides are barely visible.
  • FC
    Frank C.
    22 October 2018 @ 23:43
    Great job, Louis. Very insightful.
  • SB
    Stewart B.
    14 October 2018 @ 10:05
    Great stuff. More analysis of past (Like this) would be appreciated. Perhaps some similar statistical analysis of end of quarter, and of month, out of hours and factor/effects analysis. Keep it short and punchy like this one.
  • PW
    Paul W.
    11 October 2018 @ 22:23
    Good stuff but why is something recorded in July only coming on to the website now?
  • CT
    Christopher T.
    9 October 2018 @ 23:24
    He's quickly becoming my favorite guest
    • LL
      Louis L. | Contributor
      10 October 2018 @ 00:41
      Thank you!
  • GF
    George F.
    8 October 2018 @ 19:07
    Someone who does similar type analysis is John Dorfman : https://dorfmanvalue.com/our-columns/ I think Ed Yardeni might also do debunking analysis.
    • lD
      lance D.
      9 October 2018 @ 16:57
      yeah but why would you put the add here ? the bloke in video deserves first bite -clown
  • ev
    ernie v.
    8 October 2018 @ 12:57
    For the average trader, this advice pretty much covers what actually happens to most stocks. The key is most. The ones you will land up with and do not perform like the examples are the ones powered by fake news. Just like Louis says. The regression to the mean is powered both by the fake news afterglow and those other trading factors [like profit taking] but not nearly as exciting as fake news. You can make a living shorting Crammer
  • AC
    Andrew C.
    8 October 2018 @ 11:23
    thanks Louis; this seems logical to me, but good to actually realize it. My opinion in brackets for your clarification.. 1 - wide distributions in beaten down stocks (because some companies will go bankrupt). 2 - Narrower distributions for those at new highs (rising markets lifts all boats pretty much equally). 3 - In bear markets companies at new highs are better (counter-trend, or these companies still profitable in pro economy) 4 - bull markets shows beaten down companies outperforming market (as they are rising from a lower base & have a good economy to improve their balance sheets) can you clarify you took the bias out, by completely omitting companies that disappeared, so your SP500 probably had even less companies - perhaps closer to 400?
    • LL
      Louis L. | Contributor
      8 October 2018 @ 19:19
      The historical constituents in the S&P 500 were included. Each stock actually available to trade each day! So companies that went to zero went to zero. Companies that were added were added etc. this is used to eliminate survivorship bias. Very important.
    • LL
      Louis L. | Contributor
      8 October 2018 @ 19:28
      #2 is false based on these results. This test showed stocks near high have distributions with higher Kurtosis in BOTH bull and bear markets. So it is not a rising boat lifts them up uniformly as you suggest. It’s independent of market direction. Very distinct difference.
  • MP
    Mirjam P.
    8 October 2018 @ 10:35
    Great! More of this please. I‘m aware that Louis is not a pure technician, but still he shows how it‘s done. One thing that could have been explained in more detail: How exactly was the bias caused by changes in the index constituents removed or dealt with?
    • SC
      Sean C.
      8 October 2018 @ 16:27
      Agree. More statistical analysis and explanations like this. Less "I think it's going up" pieces.
    • LL
      Louis L. | Contributor
      8 October 2018 @ 19:21
      Each day constituents are included in the dataset. It’s a very intense database. If a company went to zero or removed from index or added etc each day included it. So it represents what could actually have been traded. It eliminates survivorship bias.
    • LL
      Louis L. | Contributor
      8 October 2018 @ 19:42
      Thank you. Yes, you are right. Although I have a Chartered Market Technician (CMT) designation, My process uses a variety of disciplines including fundamental bottom up, quantitative, and macro approaches. My leaning is toward quantitative analysis and macro approach.

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