Ask Colin

In your April 2004 article in Shares magazine, you describe springs and upthrusts, but the ideas behind them seem at odds with your investment plan. Why is that?

It is important to appreciate that everything I write in Shares or elsewhere is not necessarily my trading plan. Often an editor will ask me to write on something I don't use myself. Also, in looking for ideas for articles, I might have come across something interesting lately that is worth passing on to readers, even though I do not use it myself.

There are many ways to trade and invest. Even with one particular broad investment plan, there are different tools that can be used. I may choose one tool, but others may make a different choice. I would not for a moment try to say which is right or wrong. I may have a view or argument, or I may not. A common example is whether we act on a stop based on the low or on the close. I act on the low, which is based on the logic of trend definition. However, I would be very reluctant to tell someone who wants to use the close for their plan that they are wrong, or even that they will not do as well as I will.

Finally, no plan is set in concrete. We all should be continuing to learn and to test new ideas. I think that I have always recognised that a stock that breaks out and keeps going is stronger and therefore a better buy than one that breaks out but then hovers or even slips back. The upthrust idea is simply an expression of this idea. It could therefore be quite useful if I had to choose between two stocks to buy. I have probably been using the basic idea for years without being aware of uptrhusts or of putting a name to them.

I hope this helps explain why I sometimes write about things I don't use myself or only use in very general terms.