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Buying on macro “trends”

Just read a Motley Fool article titled: 4 Critical Errors You Must Avoid http://www.fool.com/news/commentary/2005/commentary05122308.htm which reminded me of another Fool article titled: How to Double Your Money The lesson is the same. Basically, do not buy a company _just_ purely based on a peceived macroeconomic trend (aka hype). E.g. Nanotech is the next big thing, … Continue reading

Rate of growth of earnings

I have the faint impression that I read somewhere in one of Buffett’s writings, that a gauge of the rate of growth of a company’s earnings can be estimated by Expected GDP growth + Expected inflation Hence say Expected GDP growth = 5%, Expected inflation = 3%. Then a company should be able to grow … Continue reading

Trading Note #7: Entering into a Position

Since my capital currently is very limited (no spare cash sitting around like a $40bn cash hoard =), everytime I want to enter into a new position, I typically have to sacrifice an existing one. The usual question that pops up is — at what price should I liquidate my existing position? I realise that … Continue reading

How to Double Your Money

Read: http://www.fool.com/news/commentary/2005/commentary05120908.htm Summary: Large, high-quality stocks can double in 5 years. High-quality stocks can double in 3 years if their industries are in favor. One-year doubles are crazy. Can happen if there is exceptionally strong growth, and a recognition of that growth from the market at large. Takeaways: Need to look for one-year doubles. Cannot … Continue reading

Trading Note #6: “Dollar-cost averaging” Revisited

Doing intra-day dollar-cost averaging is bad. When stocks tank, they usually tank for a few days. Hence the same tactic for spotting intra-day lows should be applied to a more "macro" picture of using days. Doing that over "days" allows time for the good/bad news to be widely reported, caught on by other investors, acted … Continue reading

Trading Note #5: “Dollar-cost averaging” Intra-day trading

This note follows some thoughts arising from the events that was reported in Trading Note #4. So far, all my stock buys have some basis of fundamental analysis attached. As I have not yet cultivated the long-term buy-and-hold strategy, I am still interested in benefitting from intra-day price movements. If I would like to go … Continue reading

Trading Note #4: The Psychology of a Tanking Stock

The past 2 weeks have really been painful, instructive, and thankfully quick. The short story: Bought in when it just started plunging, sold it when it bottomed. And later during the day that I sold, the stock shot back up and over my original purchase price =(. Things can't get worse much than that =) … Continue reading

Trading Note #3: Intra-day bottoms

Key takeaways: When an intra-day bottom has hit, it should be _OBVIOUS_ that that _IS_ the intra-day bottom (i.e. prolonged plunge to the 'low' level) High/lows due to spikes up/down in the first 1 hour of the market opening, should be ignored.

Trading Note #2: Buying in on a rally

Just missed a short-term rally yesterday. Points learnt: When deciding at what price to enter into a position, consider: Is the stock price very volatile? Will the recent good news cause the stock price to jump to a higher and stable level? If the answer to both questions is yes, then you have to be … Continue reading

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