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"The Secret Psychology of Wealth"
A Weekend That Will Change Your Financial Life Forever! |
Stocks
In my opinion, there are 2 ways to invest in stock, which depends on your personality and mindset, and finally the time you are able to spend with your stocks analysis and trading.
Long term investor
The long term investor is a person who is risk adverse. This means that he will only buy good stocks at a discount, with high potential upside. He is able to sustain short term losses without fear, due to his confidence that the good stock will eventually give him good returns. He select his stocks based on fundamentals. The fundamentals easily available to normal investors are:- Consistent Revenue Growth Consistent Earnings Growth Competitive Advantage Return on Equity Strong Institutional Support
In general, a long term investor will buy the good fundamental stock on his watchlist only when it becomes cheap enough. In general, this comes into place when the market goes into correction or when something happens to the company. The decision to purchase depends on a few factors:- Historical E/P Whether the current downturn is only temporary Whether company is well managed
Short term investor
The short term investor is willing to take on slightly more risk than the long term investor. He will buy stocks that is moving up, ride the uptrend and sell before the downtrend. He will cut loss quickly if the stock moves against his position. He should also select his stocks base on fundamentals.
However, their purchase decision depends on technical analysis, which basically consists of the following few factors:- MACD Stochastic, slow RSI EMA Parabolic SAR RSI Reverse Bollinger Band
The detailed writeup on how to analyze stocks will be discussed in the following sections |
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