Picking rules - the Lynch methodBack in 1977, the still famous investment company Fidelity Investments entrusted the management of a small fund of $18 million to this very man. The next 13 years were impressive for the Magellan fund and its manager - the famous Peter Lynch. The fund's assets grew to $14 billion, more than doubling the average annual growth of the S&P500 stock index.
When he stopped actively managing assets, Peter shared his approach with the rest of us. Some of his thoughts inspired me to create my approach and may be useful to you as well.
1. The private investor has an objective advantage over institutional investors (e.g., funds) because he is more agile. He is not burdened by the need to coordinate his actions with the management of the company, and his purchase requests are easily satisfied by the market. Agreed, it's easier to buy for $1,000 than it is to buy for $1 billion. Thus, the private investor can catch prices that the big "players" will have a hard time getting.
2. Don't spend everything you have under your belt on stock investments. The trades will not be able to close "in the plus" just by your own volition. So first provide yourself with a financial safety cushion, a stable job and a place to live, and then start investing.
3. Admit to yourself: are you a patient person who is capable of making independent decisions, diving deep into analysis and soberly reacting to plus and minus changes? If not, practice, but on small volumes.
4. Never buy a company's stock if you can't explain what it does and can't talk about its financial performance. The stock market is no place for gambling. There are slot machines, etc., for that.
5. The company works for profit and grows because of it. So keep an eye on everything that affects profits. Evaluate the company not in monetary units, but in the number of profits.
6. Watch where the company invests its profits. If it's mostly capital investments that will probably make a profit someday, in the distant future - think about it. After all, the beautiful future as conceived may not come. If, on the other hand, the company is allocating its profits to buying its own stock, it means that management thinks the current stock price is attractive enough.
7. The success of the stock may be unrelated to the company's financial success. Beware of such investments.
8. A company's financial success may not be reflected in its stock price for a long time. However, the longer the period in question, the more direct the relationship. So if you select companies based on an analysis of financial performance, be prepared to make a long-term investment.
To this day, these thoughts help me look at assets consciously and not give in to spontaneous decisions.
What do you think of this approach?
Long-term
Daily review of BTC interval 1DHello everyone, let's look at the BTC to USDT chart on the 1D time frame. As you can see, the price from the fall after the problems with the FTX exchange moves sideways, we can also mark the triangle with yellow lines that BTC must keep and go up.
Let's start with setting the support and as you can see in the first place we have a support zone from $ 16931 to $ 16700, but if the support does not hold the price, we have another zone from $ 16170 to $ 15477 when the second zone is broken we can see a drop down to $ 14360 and further $13,606.
Looking the other way, we see that when we manage to break through the resistance from $17,158 to $17,621, we will open the way towards the resistance at $18,196, and only when the price breaks it will move towards strong resistance at $19,218.
Looking at the CHOP indicator, we see that there is still some energy on the one-day interval, the MACD indicator indicates that we are in an uptrend, while the selling candles prevail on the volume.
CHZUSDT LONG-THERM Hello everyone, let's look at the CHZ to USDT 1 day chart. As you can see, the price has been moving in the downtrend channel for a long time.
As we can see, we have marked two support zones, the first short-term zone is from $0.1446 to $0.1028, while if the price goes lower, we can see a drop to the second zone from $0.0487 to $0.0279.
However, if the market changes its trend to an upward first zone of resistance, we have from $ 0.2187 to $ 0.2584 only when the price goes up from it, we can see greater increases around the second zone from $ 0.5186 to $ 0.7728.
Looking at the CHOP indicator, we see that on a 1-day interval, the energy on the CHOP index has been exhausted, and the MACD indicator indicates a downtrend.
I dream of entering the stock market. The question is: What for?Read the previous part of the post here .
Having received only denials, the owner of the workshop decides the following: it would be great if shares were sold and bought not in the offices of banks, but in one single place - the stock exchange. Then those who want to vote would be able to buy as many shares as they need votes. Those who want a discount will wait until the price on the stock exchange falls to an acceptable level for them. And those who bought one share would be able to sell it at any time at the exchange price. The owner likes this idea and decides to list his shares on the stock exchange.
Another term to remember is listing. Listing is the service of the stock exchange to allow the shares to be traded on the stock exchange.
Now the shares can be bought or sold in one place, simply by connecting to the stock exchange trading through brokerage companies. The banks, which have brokerage licenses, also liked it. The main thing is that now they do not have to convince clients to buy shares for dubious rights, you can just say that the price at the exchange is constantly changing, and if you buy shares at $ 1000 now (in the bank office), then a month later at the exchange you can sell them already at a higher price. This created a real stir around the company's shares, and they were bought up from banks at the IPO price - that is, at the original price of $1,000 per share.
A significant advantage for any investor is the ability to buy or sell shares quickly and easily. That is exactly the kind of opportunity stock exchanges provide. If there were no stock exchange, the owners of shares would have to look for buyers on their own. But now they have the opportunity to connect to the exchange and make a deal at any time.
As soon as the stock exchange started trading, the share price of the workshop came to life. This attracted new investors who tried to buy cheaper shares and sell at a higher price. Such investors include you and me.
So what we know so far:
- A company needs stock to sell a share of its business and get real money.
- Shares can only be issued by a public company.
- Shares give its owner rights: to vote, to receive agreed dividends, and to receive a share from a bankrupt company.
- The initial sale of shares to the public is called an IPO (initial public offering).
- During an IPO, shares are sold not on the stock exchange, but through brokers or banks.
- The first day of stock trading on the stock exchange is the completion of the IPO process.
- In order for the shares to be traded on the stock exchange, the company has to go through the listing procedure.
- It is only possible to buy shares on the stock exchange through a licensed broker.
- The exchange price is constantly changing during trading.
The workshop story may give the impression that we small investors are only being used to get money from us in exchange for unnecessary rights. However, it is important to understand that we are more interested in the opportunity to profit from the growth of the shares than in gaining formal rights. It is this desire that unites all shareholders of a company, whether you have one share or a million.
A joint-stock company can be compared to a hotel with many identical rooms. One share is one room. If the hotel is doing great and making a profit, investors will want to buy more rooms, and sellers will want to sell more rooms at a higher price. If the hotel performs poorly and makes a loss, then room owners will get rid of them (i.e. sell even at an unprofitable price to get money and find another hotel that is more attractive for investment).
The strategy I will share will be to find, figuratively, great hotels (in fact, joint stock companies) during a room sale (i.e., a period of declining stock).
We'll figure out how stock prices are formed on the stock market soon. See you next time!
Are you ready VET? The market is probably ready for a pull back - but at the same time VET is (soon?) ready to break the long weekly downtrend. I think the risk reward "Long VET" right now is fantastic. See where the pull back take VET, set a stop loss and then ride. Hopefully you can use the trend line in the triangle as a support. Weekly close for VET could be a nice starting point for a long ride.
Stock Company. Selling something that no one will buy piecemealSo, here we go. Start of the story here .
What next? How will he sell something that no one will buy in pieces?
He turns his company into a joint-stock company, which is a form of company organization that allows it to be split into shares. Our owner issues 1 million shares, that is, he sort of divides the company into 1 million pieces. Then he calculates how much his whole business is worth - let's say $1 billion. And if $1 billion divided by 1 million shares, you get $1,000. That's how he calculated the value of 1 share. Recall that our owner has decided to put only 25% of his business up for sale, that is, 250,000 shares. And if we multiply 250 thousand shares by the price of $1 thousand, we get $250 million in total - this is the value of the share of the company he plans to sell.
Now he has to decide: will he sell 25% of the shares to one or more buyers, or even an unlimited number of people. First, he was approached by one large investor who has $250 million to buy all 25% shares. But the investor shared with the owner a plan to grow the company and asked him to place his managers in high positions. The owner of the company didn't like it because he didn't want to lose control of the company, so the deal didn't go through. Then he was approached by several investors who promised him they would stay out of the company's business, but were willing to buy a 25% stake not for $250 million, but for only $200 million. That option did not suit the owner either. Then he decided this way: instead of negotiating with big buyers, I will offer my shares to anyone who is willing to pay 1 thousand dollars for 1 share. This offer is called IPO (initial public offering) . Remember this term, because you'll come across it quite often.
Our owner had agreed with the banks from which he borrowed money, that for a small commission they would sell his shares at $1,000 apiece to absolutely any buyer. But the first buyer asked the bank the question, "What's in it for me to own one share?" Through this question, we come to the point where we find out what owning stock gets us .
The bank answers the prospective buyer that:
- You will be able to manage the stock company by voting on matters of the general meeting of shareholders. The weight of your vote will be one in a million votes.
- You will be able to receive dividends if a majority of the general meeting of shareholders votes "yes" to pay dividends.
- If the company goes bankrupt, you will receive one millionth of its assets left over after all of the company's debts to banks have been paid.
The buyer decided he was being mocked and rejected the offer. After all, why should he have the right to vote if 1 his vote means little in the overall background. Why does he need dividends if they may not be assigned. Why would he need property that would be impossible to sell after bankruptcy.
But more about that in the next post.
#AUDCAD potential long term selling opportunitytake a look at where price currently is sitting on and the long term resistive cluster around price...
price at the moment is testing a bearish weekly channel resistance line and also at weekly high which means if the downtrend in weekly scale wants to resume price cannot close above this high. although that price can whipsaw above it but it can't close above it.
for taking a position depends on the kind of a trader you are say risk averse or risk seeking you may enter now or wait for a more and clear confirmation in lower timeframe. and perhaps waiting to see a shift in market structure or chart pattern formations.
Also we can see a bearish divergence between price and RSI indicator in Daily time frame.
A chart to watch 👀A beautiful view of a pentagon, if you like Geometry you'd probably like this chart, if you like time, you'd probably like it more.
If you know about the Square of 9 Angles, you probably understand how beautiful this chart is.
Market is random and uncertain, but that randomness is well organized or that's what they say.
Just wanted to share this, for fun, let's just watch 👀👀.
DAX Short - High Probability Current Macro Environment is very bearish:
Inverted Yield Curve :> showing that Market Participants are forecasting that rates are being cut in the future
Purchasing Manger Indexes are at contractionary levels - combined with the current situation in the money market - I do not expect that the real economy is going to relief from here
Current Technical Analysis is very likely to turn:
We are sitting at the golden pocket, range high and are currently forming an rounded top
I am expecting an fakeout H&S with early shorts getting stopped
Even if we have already formed an bottom - it is very unlikely that we go trough this level without an rejection
I am expecting at minium that we are able to take at least 1 take profit until it might turn more to the upside
What is a stock? Let me tell you a storyNow let's talk about what a stock is, why companies issue them, and why they attract investors.
To do this, imagine a story. Imagine a small shoe workshop with a single owner. Suppose he makes boots out of crocodile leather. His product is unique to the city and in demand, because these boots are very durable and comfortable. At this point, he can only produce one pair of boots a day, and the number of orders for boots is 2 pairs a day. To meet the demand of his customers, he hires an employee and buys twice as much crocodile leather and other necessary materials for the job. With what money? With all the profits previously accumulated. The workshop now meets the demand of two pairs of boots a day.
Later, the workshop receives a corporate order for 90 pairs of boots per month. In order to meet the new order, three more pairs of boots must be produced in addition to those two. But with what money to buy so many materials and hire three more employees? After all, even all of the previously accumulated profit is not enough for such a batch. In order not to miss out on a major customer, the workshop owner goes to the bank for a loan. The bank is happy to give him a loan secured by the workshop (which means that if the owner will not repay the loan, his workshop will be taken away). But all goes well, the owner hires three more workers, buys materials, and puts out five pairs of boots a day. With the proceeds, he pays the loan and interest.
Now, let's go back to that beautiful day when the shop received an order for 90 pairs. The owner could have declined the loan and waited for the accumulated profit, but to do so he would have had to negotiate with a potential buyer for a longer lead time for the entire batch, and that could have resulted in the loss of the order.
What it turns out: he needed the credit in order to ramp up production quickly, and thus the size of the business.
Taking advantage of the credit and constant demand, our workshop owner goes nationwide and becomes the most famous manufacturer of crocodile leather boots with many workshops all over the country. And a lot of people around him want to buy the successful business.
Then he starts thinking: on the one hand, he has a huge business that is profitable, and on the other hand, he has an opportunity to get money in exchange for workshops, stock of materials, employees' labor, business connections and reputation. In short, in exchange for everything he has created with his own hands and head, which is very difficult to sell individually.
He likes the idea, but in order to keep part of his business, he decides that he will sell only a share of his company - 25%. He did the math and realized that this money is enough for the rest of his life (and even to live another life).
What next? How does he sell something that no one will buy in pieces? Let’s continue next time.
EURUSD weekly view!By a long-term look at the chart, the bearish channel is obvious. I think it's soon for EUR to recover! It seems that currently the Fed does not intend to stop the interest rate increase policy. Recent weeks may were just a correction.
As long as EURUSD is under 1.07 and over 0.85, this analysis is valid, I consider a little bearish bias in long-term analysis.
BTC massive 2 year wedge (No one mentioned before)BTC printed massive 2-years falling wedge
And no one is talking about it ,we need some more time to spend inside it ,but once price breakout the falling wedge resistance …new bullcycle will start
The bottom seems to be located in the confluence between :
- target of double top ( bearish patten)
- lower trendline of falling wedge
According to many indicators We are in capitulation stage of the cycle so don’t give up ..bottom should be very close
Bear cycle is a pain for majority of traders but an opportunity for smart ones
Bitcoin Long Term Possible MovementAs you see the #BTC Chart, We have been in a Down trend for almost a year .
In High time frame , in this case Weekly, we are moving down with a weekly compression, you may call it a wedge.
In my opinion, We are gonna complete the down trend in a 3Drive Style, Touching Monthly Demand (12K - 9K ) .
The Demand is so powerful that pushed the Bitcoin Price to 60K last time!
So I believe this order Block can Reverse the downtrend and send the BTC Price to 30 k Supply and then the Market can range for a while between 12K and 30K until we reach Halving and the start of the new Bullrun !
Good Luck my Hodlers!
This is Just my Personal point of view , NOT FINANCIAL ADVICE!
USDJPY MORE SELLING PRESSURE (REDUCE RISK ENTRY)It's still going smooth and likely more profitable n on Higher Time frame there's a correction and now I'm looking for a lower time frame correction to continue the trend. I'm selling this when I see a lower time frame continuational correction completion.
Thanks for reading
AS ALWAYS TRADE SAFE AND STAY SAFE!!
ETH long buyEth is previously broken the daily trend line which was really strong and alos it has broken the 4H trend too.so we could expect will go higher and complete the "w" pattern in the weekly resistance.we can see potential move to the upside.now the eth is crating higher highs and higher lows.so it will continue it.
The lifestyle of your savings, and why Big Mac?I've mentioned the word "risk" many times before, and it really is a very important word in the investment process.
Today I would like to focus on a risk that you should pay much attention to as a future investor: market risk, or in other words, the risk that you will have to sell the shares you bought cheaper than the price at which you bought them, and suffer a loss in doing so. You will face this risk all the time, which is absolutely normal, because at any time events can happen which will cause the value of the stock to fall.
It can be said that investing in stocks is a series of profitable and unprofitable operations. So don't get discouraged and pour ashes on your head if your first trades are unsuccessful. That's part of the process. Investing is not a one-time transaction to make a quick profit, it's a way of life for your savings.
Remember the fundamental and simple rule of investing - the expected return is roughly equal to the risk you take. So, when you place money in a bank deposit, the only risk you take is that your money will depreciate by the difference between the rise in prices and the deposit rate.
The easiest way to explain this is with Big Macs. Let's say you have the money to buy 100 Big Macs. But you don't spend it, you put it under your mattress. A year later, because of a price increase of, say, 7%, you can buy not 100, but 93 Big Macs with the money from under the mattress. Every time you put money "under the mattress," you reduce the purchasing power of your savings. To preserve it, you can put your money in a year's deposit at the bank. That way, in a year, you'll withdraw the original amount from the deposit, plus a profit in the form of interest. Even if prices go up, as in the last example, you can buy 99 Big Macs, not 93.
Why not 100? Because the interest rate on a deposit is usually less than the percentage increase in prices (that is, inflation ). In our example, it was 6% versus inflation of 7%.
If you choose not to keep money "under the mattress" and not to open a deposit, but to invest in stocks, then at the end of the year you can buy, for example, 150 or only 50 Big Macs, because you are dealing with a potentially more profitable and therefore more risky instrument.
This is how the fundamental law of investing works, let me remind you again: as much risk as possible profit.
Thanks to this law we can refine our formula: investing in stocks is buying a share of a company with the goal of getting a future profit from its sale and being aware of the risk of a possible loss. Awareness of the risk of possible loss is an obligatory variable of our formula, an obligatory ingredient of our investment recipe.
Awareness of the problem is already a big step towards its solution. It's impossible to completely eliminate risks, but with proper management their impact can be minimized.
So, after studying the entire series of posts, you will get the necessary knowledge and practical skills to:
- find shares of companies interesting for investment;
- evaluate the financial condition of companies;
- determine the conditions for buying stocks;
- determine the conditions for selling stocks;
- manage risks;
- take into account the results of your operations.
You will have a ready-to-use strategy that will always help you find the answer to what to do or not to do with the stock at the current moment in time. You will not have to chain yourself to the monitor and do it all your time. You won't spend any more time doing it than you do watching the news or social media. You will learn to think like a intelligent investor, and you certainly will become one, if you are prepared to open yourself up to a very interesting and fascinating field of knowledge - stock investing. I sincerely wish you success on this path!
BTC, PYR, LINK, VET time to DCA?!Market can still capitulate and altcoins will in that case drop 40-50% or so. But lets assume that the market will recover fast. If the short time downside is 40-50% and the longtime upside is multiples...I don't think "waiting for the perfect entry" is the best choice. Don't wait to long to DCA into your favourite altcoins that you believe will survive the bear market. If the market suddenly turn bullish, you will quickly lose that big X-factor, upside (multiples to all time high) that the market offers you right now. Here are three of my favourite coins to DCA into - VET/PYR/LINK.