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Stocks 405: The Fat-Pitch Strategy

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1.
When following a fat-pitch strategy, why would you not want to trade very often?
Choose wisely. There is only one correct answer.
The odds are that the stock's underlying value will continue increasing. Why sell a stock when it keeps rising year after year?
2.
If you are going to succeed at holding a concentrated portfolio of stocks (say, fewer than 20), then your stocks should be held _______.
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At least 3 years. It may take this long (or longer) for the market to recognize the value of a company.
3.
Companies with wide economic moats tend to have _______.
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Long-term staying power. Their competitive advantages help to ensure that they will survive for a long time.
4.
Say you are considering two different companies to invest in. One is very risky and the other has only average risk. Which of the two would require a bigger margin of safety?
Choose wisely. There is only one correct answer.
The very risky one. Given the bigger risk of loss, a bigger margin of safety will do more to protect you.
5.
Fat-pitch strategy argues that you should be comfortable holding cash instead of being invested in stocks when the market is already rising.
Choose wisely. There is only one correct answer.
True. Fat-pitch strategy argues that it is an advantage to forego buying strong companies when their prices are rising and instead wait with your cash in hand for when their stock prices dip.