The following is an example of RCH’s 20% rule to be used when investing with an income philosophy:
RCH buys 261 shares of Proctor and Gamble (PG) at a cost of $76.69 per share. The total cost of this transaction is $20,016.
RCH will track PG on a daily basis.
If stock goes up 20%:
If PG goes up to $92.03 per share, which is equal to a 20% increase from the purchase price, RCH will sell off 43 shares for a transaction value of $3,957. With this sale, RCH locks in a profit of $659 while recapturing $3,297 of the principal investment amount. In addition, RCH still maintains a substantial position in the stock. Maintaining our strategic position in the stock is important when investing in income stocks because of significant dividend distributions that are paid on a quarterly basis. Presently, PG is yielding 3.14%.
If stock goes down 20%:
If PG goes down to $61.35 per share, which is equal to a 20% decrease from the purchase price, RCH will buy 65 shares for a transaction value of $3,987. With this purchase, RCH is attempting to buy a trusted stock at a lower price. This is all assuming that the value of the stock went down due to market fluctuations that the company will eventually overcome, hence RCH still considers it to be a buy rating.
The following is an example of RCH’s 10% rule to be used when investing with a growth philosophy:
RCH buys 261 shares of Proctor and Gamble (PG) at a cost of $76.69 per share. The total cost of this transaction is $20,016.
RCH will track PG on a daily basis.
If stock goes up 10%:
If PG goes up to $84.36 per share, which is equal to a 10% increase from the purchase price, RCH will sell its entire position for a transaction value of $22,017. With this sale, RCH realizes a profit of $2,001.
If stock goes down 10%:
If PG goes down to $69.02 per share, which is equal to a 10% decrease from the purchase price, RCH will sell its entire position for a transaction value of $18,014. With this sale, RCH realizes a loss of $2,001.
RCH buys 261 shares of Proctor and Gamble (PG) at a cost of $76.69 per share. The total cost of this transaction is $20,016.
RCH will track PG on a daily basis.
If stock goes up 20%:
If PG goes up to $92.03 per share, which is equal to a 20% increase from the purchase price, RCH will sell off 43 shares for a transaction value of $3,957. With this sale, RCH locks in a profit of $659 while recapturing $3,297 of the principal investment amount. In addition, RCH still maintains a substantial position in the stock. Maintaining our strategic position in the stock is important when investing in income stocks because of significant dividend distributions that are paid on a quarterly basis. Presently, PG is yielding 3.14%.
If stock goes down 20%:
If PG goes down to $61.35 per share, which is equal to a 20% decrease from the purchase price, RCH will buy 65 shares for a transaction value of $3,987. With this purchase, RCH is attempting to buy a trusted stock at a lower price. This is all assuming that the value of the stock went down due to market fluctuations that the company will eventually overcome, hence RCH still considers it to be a buy rating.
The following is an example of RCH’s 10% rule to be used when investing with a growth philosophy:
RCH buys 261 shares of Proctor and Gamble (PG) at a cost of $76.69 per share. The total cost of this transaction is $20,016.
RCH will track PG on a daily basis.
If stock goes up 10%:
If PG goes up to $84.36 per share, which is equal to a 10% increase from the purchase price, RCH will sell its entire position for a transaction value of $22,017. With this sale, RCH realizes a profit of $2,001.
If stock goes down 10%:
If PG goes down to $69.02 per share, which is equal to a 10% decrease from the purchase price, RCH will sell its entire position for a transaction value of $18,014. With this sale, RCH realizes a loss of $2,001.