Being Bold and Able to be Bold

In my previous post about Trading Plan - I stressed the importance of having a trading plan. A trading plan should have at the very least, three elements:
1) Entry position
2) Position sizing
3) Exit position

By having a trading plan, effectively, an individual has an added edge over the others. One would know what, when and how much to enter for a particular stock. The price is 0.50 now, should I enter now? The price is 0.49, is it now a bargain (since its cheaper than earlier 0.50) or does it render the plan null and void (since crucial support is broken)? I don't know, but your trading plan should already tell you that.

Ok, so we know whether we should enter or not. Question is how much? Should it be 1 lot? 5 lots? 10 lots? Should it be 5% of your funds, or 10% or 20%? Again, I don't know. Your trading plan should also tell you that.

Exit. Now comes the really difficult part. When to exit - irregardless of whether the exit is made on a profit or loss, when do we need to exit? If we purchased at 0.50, should we exit at 0.48 or 0.45? If the price moved to 0.60, should we take profit, or should we let it run?

Point is actually, when the market is ongoing, we barely have time to analyse or to think. Most of the work should have been done the day before. On the market day, we merely execute the plan - entry and exit should be planned. And when the time comes, we need to be bold to carry out the plan.

Say the plan calls for entry at 0.50, but we hesitate, the next moment, its going to be 0.52. Then, we ll tell ourselves, it ll pullback later, it will. But we re merely consoling ourselves. Price went up to 0.55. Should we still enter? Now its 0.05 or 10% higher than our original planned entry price. What do we do now?

Same with exit - whether its profit take level or stop loss - should we exit at 0.50 as planned? Heh, heh, I can tell you from experience, the moment we hesitate, the price is not going to go our way, its going for 0.48, the next moment we hesitate again, its going to be 0.45, and then 0.42 and lower and lower.

So be bold my friends. Be bold in taking and making the decision. And have the trading plan in hand - to be able to be bold.

"Boldness has genius, power, and magic in it. Begin it now."
- Johann Wolfgang Von Goethe

Ebook: Jesse Livermore

Jesse Livermore was touted as the World's Greatest Trader.
Why? Is it because of his successes in becoming the World's Richest Man from zilch?
Or from his successful bear raids?
Or cornering of many commodity markets?

Perhaps. But to me, the title was worthy but for a different reason.
Jesse Livermore was perhaps one of the earliest to lay down the rules of trading.

Never risk more than 20% of your capital.
Do not buy a stock because it has had a big decline from its previous high.
Profits always take care of themselves, but losses never do.
Never average losses.
Markets are never wrong —opinions often are.

And he did so with much glory and pain as well. His phenomenal rise and fall is all summarised and offers a great learning to us all. I believe it even paved the way to the emergence of Money Management Concepts.


Reminiscence of a Stock Operator


How To Trade Stocks


How To Trade Like Jesse Livermore


Legacy of Jesse Livermore

As usual, you are advised to download the ebook(s) soonest possible before the link expires or removed. I m not responsible of providing fresh links if they are no longer working.

The HOLY GRAIL

In the ancient tombs of Pharaoh Tutankhamen of Egypt, it was said that there resides the Holy Grail for centuries. For centuries, many searched for this magical instruction on how to profit in the stock market but to date there has been no evidence of anyone succeeded in the quest. Rumor has it though that an elite few managed to unlock its secrets and earned vast fortunes from the market.

But beware! It is also rumored that the scroll of the Holy Grail is protected by the spirits of the Pharaoh’s himself! One wrong move, and the ancient spirits will descend a terrible curse on the unlucky one for seven generations.

This however, would merely mean nothing to the treasure hunters. Every year, new bands treasure hunters would emerge to embark a journey to seek this magical scroll of the Holy Grail.

Haha, thanks for indulging me with a little drama – just for humor J

Holy Grail, I m sure each and everyone of us, has at some point of our trading/investing lives, searched for this Holy Grail. And we would conclude that there are no such-a-thing as this rumored Holy Grail. And, oh, if you re still looking for it and have not given up hope on the Holy Grail, I must apologize for bursting your bubble. :P

However, allow me to share an excerpt from Van Tharp’s Trade Your Way to Financial Freedom, in which, I owe my gratitude to Mr CS Ong, I presume :)

The “Holy Grail” is not some magical source that is the key to the markets, as most people believe. The metaphor of the “Holy Grail,” according to scholars like Joseph Campbell, is all about finding yourself. Similarly, the “Holy Grail” in the markets - the key to unlocking profits - is all about finding yourself.

To unlock the “Holy Grail,” you need to appreciate your own ability to think and be unique. People make money by finding themselves, achieving their potential, and getting in tune with themselves so that they can follow the flow of the market.

Getting in tune with yourself means finding an inner peace inside. It means finding a balance between profits and losses. The Holy Grail is not a magical trading system; it is an inner struggle.

Once you’ve discovered that, and resolved the struggle, you can find a trading system that will work for you

Van Tharp couldn’t have said it better.

“If you look far, it’s very far away,
If you look near, it’s right before your very eyes”

- Chinese Proverb

EBooks: Nicholas Darvas

How I Made $2 Million in the Stock Market
Darvas Flow Chart

These ebooks are available for download in Blisswind Google Group.
And many more! Join today!
Hehe, good promotional gimmick, huh? But hey, it won't cost you anything :)

Game Plan

Sun Tzu said,
“Warfare is a great matter to a nation; it is the ground of death and of life; it is the way of survival and of destruction, and must be examined thoroughly”

In which Maxforce interprets,
“Investment/Trading is a great matter to our financial wealth; it is the ground of financial ruin and of financial success; it is the way of unlimited riches and of bankruptcy declaration, and must be examined thoroughly.

Sun Tzu continued later,
”Therefore, those skilled in warfare establish positions that make them invincible and do not miss opportunities to attack the enemy.
Therefore, a victorious army first obtains conditions for victory, then seeks to do battle.
A defeated army first seeks to do battle, then obtains conditions for victory”

in which Maxforce again interprets,
“Therefore, those skilled in investment/trading establish positions that minimize their risks and do not miss the opportunity to maximize their gains.
Therefore, a victorious investor/trader first place as many factor in their favor, then enters the trade.
A defeated gambler first seeks to make entry, then looks for conditions in their favor."

There can be no sufficient emphasis on to have a trading plan. Before one enters the trade, it is best to have a trading plan. This is not unlike warfare, before one gives battle, an attack or defense plan is drawn. Before a football game is played, the manager of the club would have communicated the formation, the game plan for the day.

In addition, Warren Buffett, also once mentioned, “To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound framework for making decisions and the ability to keep emotions from corroding that framework”

Buffett basically had summed it all up.
However, all in all, a trading plan is only as good as a plan, if it is not being carried out.
Plan your trade, trade your plan.

Happy Trading!

Trading Style and Timeframes

Trading is an activity of buying and selling an instrument for profits. The instrument could be a stock, commodity, futures, currencies, you name it. Today, allow me to share with you the classification of trading style via timeframes. Some of these classifications, again, is not mainstream. It’s a mere opinion of mine.

1) Scalping

This involves a large number of trades for miniscule profits. The idea of scalping is to take small profits, a lot of times. Example, say you identified a stock with high volume, you enter the trade with large order. You exit the next moment for a profit of one tick movement. Instant profits.

This is only possible when you are constantly monitoring the market, able to key in your orders, orders are executed immediately, commission rates are superbly low.

In matured markets like the US, many could make a living via scalping. A scalper could easily scalp USD200 per day. Not bad for one tick movement per trade, huh?

2) Day trading

As the name suggest, day trading merely means that a trade is open and closed in the same day. A daytrader could use scalping methods and enter many trades for small profits each trade, or the daytrader could open a position at the start of the market and let the profits run until end of the market day.

This also requires a fulltime job to monitor the market, commission is best to be low, ability to key in own orders and the immediate orders execution are definitely a plus point.

3) Contra trading

Sadly, we only have T+3. I remember those days, it was T+21 or something like that. Anyways, contra trading refers to the method of utilizing the T+3 timeframe before settlement is needed.

The requirement for a constant monitoring reduces slightly. However, the risk remains high. Danger of overtrading is very real here. Many who have other fulltime jobs with this method have not produced good results. Problem is often the T+3. Timing must be so impeccable – for otherwise, losses will amount.

4) Swing trading

We had T+3 contra. So this method goes for week(s). This method attempts to identify small trends and uses oscillators to assist in finding possible retracements.

Advantages of using this method includes easily maintained for working professionals. Risk is lower as actual cash is required for the T+3 settlement. Also, successful capturing of the market fluctuations would be very rewarding.

5) Trend following

As mentioned in my previous post, Why I say ROI 20% pa is no big deal, the method used is actually a trend following method. This is not unlike the Turtle System by Richard Dennis. Identify the start of a new trend. Liquidate near the end of the trend. Movements in between are merely noises, however, could be used to plan for additional entries.

The strength of this method is that it does not need a constant monitoring. This style is suited to a busy working professional. Risk is generally lower too, as one is in to ride the longer haul.

Of all the five methods listed above, there is none which is clearly superior than the other. It is merely a personal preference. Another is the time factor – the time to monitor the market. Which style is yours?

PS: Trading style mentioned above is not exhaustive. I may have missed a trading style or two.

Rewarding the Shareholders

Ever wondered what exactly it means to be a shareholder? What it means when you purchase the scripts of paper (or rather the numbers in the statement)? And why does certain counters are more preferable by many than the other?
You may think its the charisma of the CEO, or maybe the strong management team, or perhaps the strong branding of the company or maybe the stock just have chemistry with you. These are perhaps all important, but to the end, it all boils down to dollars and cents. Rewards.

There are a number of ways a company could reward its shareholders. How? Let's look at it more in depth:
1) Dividends

This is something many loved. There is even groups of people who merely invests just for the dividend. These are normally the more risk adverse investors whose strategy is to keep buying good dividend stock. With good money management, this strategy works.
Basically, the idea is like savings. Every month, instead of saving it in a bank, you purchase a dividend stock. The return per annum is higher than the bank. And you stand to gain for more if there is a capital gain. This strategy works best for working professionals who want a retirement fund.
Another shorter term strategy is to look at historical dividend declaration dates. Anticipate when the next dividend would be declared and purchase the stock. Once dividend is declared, stock price will spike up, normally. Instant gain, low risk.
The theory from textbooks is that your wealth really doesn't change. Once you purchase the stock and receive the dividend, the share price will fall - so you re back to square one. However, in practice, the norm is that the share price will appreciate back to at least where it started.

2) Capital Repayment
This normally comes as a sudden surprise. Everybody loves them.
The idea is the same as dividend play, however, the anticipation would be much more difficult.

3) Bonus Issue
Free shares for every certain number of shares held. Simply great!
One point to note is that once a bonus issue is given, the liquidity of the shares increases. There are more shares now in the market. Hence price may take some time to consolidate prior to recovering to its previous price.
Again, the idea and theory is similar to Dividend Play. Anticipation, however, are difficult.

4) Rights Issue

Frankly, this is not exactly a reward to shareholders. More like a threat, if you ask me.
The idea is this, the company needs cash. Instead of borrowings from the bank, the company declares rights issue. If you hold a certain number of shares, you are eligible to subscribe to a number of shares for a fixed price.
The theory from textbooks is simple - if you exercise your rights issue, your wealth does not change. If you don't you lose out, as share price will fall, but there is no additional shares from rights issue to compensate the drop.
Do take note of the difference between Rights Issue and Bonus Issue.

5) Share Buyback

This is interesting. How does share buyback affect the share price?
Direct impact - as a support to the share price. As the company conducts share buyback exercise, this would serve as an additional support to the share price. Confidence of retailers may also be boosted and may charge in to support alongwith the company. Hence, a falling dagger may be stopped.
Indirect impact - Imagine a pie is to be shared among 8 person. So each gets 1/8 of the pie. Now what happens, if the pie is only to be shared by 5 person? Each gets 1/5 of the pie.
The pie remains the same, but each person gets a larger slice.
Same theory applies to share buyback exercise. What share buyback also achieves, is reducing the number of shares in the company. Since there are less people to share with, there ll be more for everyone, even if the earnings remain the same.

6) By retaining all profits to expand the business

It is often very easy to jump the gun and say that if a company does not declare dividend, it has bad management. However, this may not be the case. A business needs to retain its profits in order to survive, to stay competitive and to expand. Depending on the business model, some industry require heavy reinvestment in order to stay competitive. Failure to do so, would spell disaster for the future of the company.

One notable example is Proton, who has failed to keep its technology up to date. For decades, Proton has dominated the Malaysian car market and they took this for granted. There weren't new models around to replace its old ones. Quality remained an issue after 30 years. Simply a disgrace! This would be a case of bad management. And it has nothing to do with dividend declaration or not. The idea is cash management.
How does the Company manages its cashflow tells us a lot about the company.

Also, in a fast moving industry, such as the IT industry, the company should ensure that there is sufficient cash for Research and Development. Otherwise, its competitive edge, will be lost when its rivals gain key technology which could render the Company's technology obsolete!

In addition, there may be instances where the company would be best to delay or reduce its dividend policy to finance an expansion. This is especially if the expansion would yield a key strategic importance to the company.

All in all, this is in view of the longer term of the Company.

Misuse and Abuse.

Above are all theories and concepts in an ideal world. In real world however, misuse and abuse are rampant.
As you know, most directors are major shareholders in the companies in Msia. The main reason for a large dividend payout is not to benefit shareholders per se, but to ensure their own benefit is secured. It may also be done at the expense of the future of the company, shorttermism rears its ugly head.
Furthermore, there are also companies who misuse the funds of the company to pursue a share buyback program. This is so that they could dispose their large block of shares at a higher price while the company buys them back. In the end, once the share buyback program ends, share price would be unsustainable and fall. The unscrupulous director who was the one that initiated the share buyback program, sold his shares, can now buy back his own shares at a much lower cost.

So let us all be aware of all the aspects that there is. Cheers!

Why I love the news

Never thought I am such a fan of news, heh?
Read on, let me illustrate with the following news from reputable publishing houses.
Its an observation made which has never cease to amuse me. :)

Dow Average, S&P 500 Advance as Higher Oil Lifts Energy Shares
March 22 (Bloomberg) -- The Dow Jones Industrial Average and Standard & Poor's 500 Index advanced for a fourth day as a surge in oil prices lifted energy companies.

I see, as oil prices go up, stocks will go up. OK. Got it.

Dow: 5-Day Rally, Back In Black
NEW YORK (CNNMoney.com) -- Stocks inched higher Friday, gaining after unexpected strength in home sales, but worries about rising oil prices limited gains.

OK, if there was no worries that oil prices may go up, stocks would have gained more. OK. Got it.
WAIT a minute... I thought, when oil prices go up, stocks will gain? But how come now oil prices' potential to go up, and stocks are limited from rising? Hey, something's not quite right here...

Well, hold on your horses. There's more :)

U.S. Stocks Rise on Employment, Wage Growth Data; GM Advances
Sept. 1 (Bloomberg) -- U.S. stocks rallied to four-month highs after the government said employers added more jobs and wage increases slowed last month, easing concern that higher interest rates would lead to an economic slump.
Ah, this rationale is simple - more jobs, means economy is good. And economy good, I suppose it means stocks will go up. OK. Got it.

U.S. Stocks Advance, Sending Dow Average to Third-Highest Close
May 5 (Bloomberg) -- U.S. stocks surged, sending the Dow Jones Industrial Average to its third-highest close ever as a smaller-than-forecast increase in the number of jobs last month eased inflation concerns
Ah, logical indeed. Lesser jobs, means economy not so good. Economy not so good, Federal Reserve (US' equivalent of Bank Negara) would not raise interest rate. And that means borrowing costs will not increase. So, stocks go up. OK. Got it.

WAIT a minute! Which is which now? So I know more jobs during good economy and less when bad economy. But good economy = stocks up right? Or bad economy = stocks up? Hmm, or did I even get the jobs as an indicator of the economy correct? :P

The human mind constantly look for reasons as to why things happen the way they do. It is our nature to find the reason. The journalists merely provided the justifications we so seek. Often with much logic in it that we cannot distinguish between what is real and what is not. It is said, "If you re looking for a bull, everything looks like a bull. If you re looking for a bear, everything looks like a bear." The human mind merely recognises the pattern which we so want to seek.

Stay objective. Don't believe everything you've read or heard. Stay objective.

Where is the Value of Intrinsic Value?

This write-up is credited to Blue who requested for it. :)

Before I begin, allow me to do a little background.
There are 3 major schools of investing:
1) Fundamental Analysis
2) Technical Analysis
3) Efficient Market Theory


Fundamentalist has long advocate that any purchase of securities (stock) should be based on its intrinsic value, or the true value of the company.

According to Investopedia, intrinsic value is the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value.

Note the following:
1) Investopedia says, may or may not be the same as current market value, i.e. share price. Fusion Trader says, it will NOT be the market value. Market moves in accordance to the Supply and Demand. Not based on true value perception.

2) Investopedia says, it is based on the perception of its true value including all aspects of the business, in terms of both tangible and intangible factors.
Fusion Trader says, "Great definition. How are we to value these intangibles?"
Terminology: Tangibles are those with physical form. This would include assets such as Machinery, etc. Intangibles are those with no physical form. This would include assets such as Brandname, etc.
3) Investopedia says, value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value.
Fusion Trader says, "Would like to highlight the words - estimate and hopes."


Let's proceed to the many valuation models which could be used to estimate the intrinsic value. The list is not exhaustive.

1) NTA plus
NTA or Net Tangible Assets measures the balance tangible value of the company. Its main use is for safety reasons. It does not measure Intangibles, hence does not fully measure the intrinsic value. The idea is this:
Say, Company A is trading at 2.00 per share.
NTA is 2.50.
Undervalued. Buy.
Logic: Company's NTA is 2.50. And that is without the intangibles! Surely, if the intangibles are accounted for, it would be worth more than 2.50!!! What's more, the share price is only at 2.00!!! What a superb bargain!!!
Problem with Logic: Market is not based on Logic. It is based on Supply and Demand.
Problem with Approach: A self fulfilling prophecy. If all the market players uses this approach to invest in the stock market, it will work. If none uses this approach, it will stay as a "hidden gem" forever.

On another note. Some may think that should this company decides to close its operation, would it be an instant 0.50 profit? You bought it at 2.00 while the the NTA is 2.50.
Logically, the NTA means after liquidating all the assets and repaying all the liabilities, there should be a 2.50 per share sitting around to be distributed to its shareholders. So, if you bought it at 2.00, it wouldn't it be an instant 0.50 profit?

Sadly, I would have to burst your bubble. NTA is not NRV. NRV is the Net Realisable Value.
NTA is based on historical cost. Simply said, it means the cost of which it was acquired.
NRV is based on realisable value. Simply said, it means what you could sell it for.
Notice the difference?


2) Capital Asset Pricing Model (CAPM)
Investopedia says, it is model that describes the relationship between risk and expected return and that is used in the pricing of risky securities.
Its formula:


OK, you lost me :P.


3) Modigliani & Miller (M&M)
Investopedia says, it is a financial theory stating that the market value of a firm is determined by its earning power and the risk of its underlying assets, and is independent of the way it chooses to finance its investments or distribute dividends. Remember, a firm can choose between three methods of financing: issuing shares, borrowing or spending profits (as opposed to dispersing them to shareholders in dividends). The theorem gets much more complicated, but the basic idea is that, under certain assumptions, it makes no difference whether a firm finances itself with debt or equity.
Fusion Trader says, "Can't wait for it to get more complicated" :P


4) Black Scholes Model
For options, many experts, e.g. Alan Voon, the Malaysian Warrants Specialist, uses this model.

Investopedia says, it is a model of price variation over time of financial instruments such as stocks that can, among other things, be used to determine the price of a European call option. The model assumes that the price of heavily traded assets follow a geometric Brownian motion with constant drift and volatility. When applied to a stock option, the model incorporates the constant price variation of the stock, the time value of money, the option's strike price and the time to the option's expiry.
Also known as the Black-Scholes-Merton Model.
Fusion Trader says, I have the formula in my ACCA textbooks, but I seriously doubt anyone would be interested into it. The basic idea is good. However, too many subjectivity is involved.
For those who are interested, you can always refer to Mr Alan Voon. I think he wrote an article about this in his site - http://www.warrants.com.my/


If you don't understand what has been transpired so far, I congratulate you.
This is my whole point. I do not see the value of intrinsic value.
While many advocate looking for "hidden gems", I do not advise so.
I understand that my believe in this is radical to many traditional investing views.
It would be a direct contradiction to Benjamin Graham, the father of Fundamental Analysis.

However, let me ask you a question,
"Was Warren Buffett, the World's Greatest Investor, the student of Benjamin Graham?"
"Who was more successful, Benjamin Graham or Warren Buffett?"
"Are their approach 100% the same?"

I am neither advising against using Fundamental Analysis, nor am I discrediting it.
To me, Fundamental Analysis is merely an additional tool. It tells us WHY should we buy.
I would rather use another approach - Technical Analysis to tell me WHEN to buy.

PS: Fusion Trader is an accountant, an investor and a trader. His views are formed based on his accounting knowledge, market knowledge and personal experience. His views may or may not be accurate. However, he speaks freely and candidly on his opinions. Feedbacks are always welcomed, irrespective of whether it is positive or negative in nature. Thank you.

Main Board Transfer: Tanjung Offshore

This is my first Case Study post.
I love to make comparisons of similar cases with different stocks to ensure that a "pattern" exists. How accurate is this? Really, I have no idea. I could only tell you that it works for me.

OK, today's case, what happens to share price when a company listed in a 2nd Board trensfers to the prestigious Main Board?


Case Sample: Tanjung Offshore Berhad
Main Board Listing Transfer Date: 8 Sep 2006 Label 6
Bonus Issue transfer Date: 29 Aug 2006 Label 5
Ex Date Bonus Issue Date: 17 Aug 2006 Label 4
Bonus Issue Announcement: 2 Aug 2006 Label 3
Bonus Issue Proposal: 24 Jul 2006 Label 2
Proposed Transfer & Bonus Issue: 27 Apr 2006 Label 1



Let's mark the dates on the chart.
Attached the chart with dates marked with horizontal blue line.
Chart is bonus issue adjusted.


Observations:
Label 1
Price movements upwards. This is most likely due to insider pushing up the stock and the public chasing after the stock when announcement was made.
Thereafter, share price weakens due to punters selling on news.
However, notice that there is a support on this stock.
This is probably due to longer term investors seeking bargains or punters seeking reentry levels.

Label 2
Bonus Issue is proposed.
Everyone jumps on the bandwagon now.

Label 3
Now we even have ex-date etc.
Price movements paused. Most likely reason is that there will be some who would rather not wait for such a long period and decides to cash in.
About 20% ROI in about 3 months? Not exciting but sufficient :)

Label 4
Ex Date. Perfect scenario for punters ;)
Why? Bonus issue have yet to be credited. Liquidity is low.
Assumption is that syndicates or any large beneficiaries of the bonus issue would want to distribute at a higher price when the bonus issue is credited.

Label 5
Bonus issue credited.
Would you have expected the share price movement to move otherwise? :P
Short term investors are all rushing to the exits now.
Not a bad return if you ask me. About 40% ROI in 4 months? :)

Label 6
Transfer completed.
Previous distribution took another 2 days to complete before fundamentalists bargain hunted. A stock in Main Board, generally, gets into the radar of institutionals and performs better than their 2nd Board counterparts.
If you managed to catch the near top thereafter, you would have obtain an ROI of about 70% in 5 months, assuming you have entered during the Label 1 period.

Now, do you believe that ROI 20% per annum is no big deal? :)

Why I say ROI 20% per annum is no big deal

For those who know me, you must have seen my postings about ROI 20% pa is not a problem.
Some may think I am crazy. Some may think I am boastful.
But since I have launched this blog, allow me to share my observation and experience in KLSE.


Consider this: Stock market in general moves in cycles.
We have many theories revolving around this concept.
Buddhism believes in recarnation, that's a cycle.
The Economic Cycle theory states that the economy moves in a cycle.
The Dow Theory (one of the oldest theory still applicable) states that the market has three phases - accummulation phase, public participation phase and distribution phase. Sounds like a cycle to me.
The Elliott Wave revolves around cycles.
Everything is a cycle.

OK, let's look at charts. Enough theory for now :). Below is the KLCI chart from 1990 to 2007 (Friday). Chart data courtesy of Mr Lim of www.bizfun.cc

From the charts, what can we observe?
Now if you have said, Cycles, no prize for guessing it right :P

Now, let's zoom in to the more recent developments.

What do you see again?
Yeap, cycles.

Perhaps, the zoom is insufficient, indulge me, look at another zoom.

What do you see?
One complete small cycle.

Question: So from our observation, we concluded that stock market indeed move in cycles. So how to we profit from it?
Question: Why is this post titled: Why I say ROI 20% per annum is no big deal.
Question: Why does every Tom, Dick and Harry say, Buy Low, Sell High
(Or, in Ben's terms, Buy Sheep, Sell Deer, hahaha)


Hmm, so you must be thinking, "Ok, so your point is that stock market moves in cycle and if we want ROI 20% pa, we should buy low sell high. Big deal. How the heck are you going to do it? Can you actually catch the bottom and the peak?"

If so, then allow me to answer you, I cannot pick the exact bottom nor the exact high.
However, let me ask you another question, (you know what they say, one question leads to another :) ), Do you seriously need to pick the exact bottom or the exact high to achieve ROI 20% per annum? Note 20% pa. Not 30% pa. Not 50% pa. Not 100% pa.


To traders, this is insufficient. We ll cover some trader's techniques in the future.
To investors, 20% ROI is a heaven sent gift! The banks are not going to give you an FD rate of 20% pa. Neither does any stock issuing a Dividend Yield of 20%.

Of course, now that I have your attention, and possibly your belief that ROI 20% is possible, and its no big deal, you must be thinking, So how do you identify the cycle?


Well, this is the fun part. Now that the curiousity has been aroused, I m going to leave you with that thought. Hahaha. Curiousity may have killed the cat. But as Ben say, Satisfaction will bring it back. So, imagine if you solve the riddle all by yourself. Imagine the satisfaction :)
Otherwise, worry not, stay with us at Fusion Trader.
One day, you know what I mean :)