Decoding Markets and Marwood Research
Download 1.87 Mb. Pdf ko'rish
|
101 Lessons For Aspiring Traders PDF
01
02 The most reliable way to succeed in long-term investing is to utilise a dollar cost averaging approach. Save some money every month and stick it into a diversified portfolio of high quality stocks or ETFs. The less experienced you are, the more diversification you will need. 03 04 Leveraged ETFs are a waste of time for long term investors and should be avoided. Most of them have a negative long-term expectancy due to time decay. Always read the prospectus before investing in a leveraged ETF as some have unusual clauses and have blown up in the past. The stock market is the ultimate leading indicator. It will usually go down well before an economic recession hits and it will go up before the recovery starts. Therefore you cannot wait for a recession to begin shorting the market and vice versa. 05 06 07 08 09 A recession does not mean stocks will necessarily go down. Stocks can go up during a recession and down even if the economy does well. There is no magic formula. It’s better to follow a trusted system and not lagging economic indicators. Investing is a game of opportunity cost. The only reason to buy one stock over another is if it offers a better rate of return. In fact, the only reason to buy a stock at all is if offers a better rate of return than a bond. And the only reason to buy a bond is if it’s better than cash. Throughout many times in history, bonds have provided a better return than stocks but over the long term stocks win out. A stock can go anywhere over the course of a few weeks or months but in the long run it’s the earnings that moves the stock price. The more a company earns the more the stock will rise. Peter Lynch said “an extremely high P/E ratio is a handicap to a stock, in the same way that extra weight in the saddle is a handicap to a racehorse.” The stock market is an example of a complex adaptive system. There are thousands of participants, inputs and factors that impact where the market goes and there is no way to model all the different forces at play. That’s why trying to predict the market with precision is futile. Far better to find a robust strategy for regular investment that you can stick to. Political shocks, natural disasters and major events can all move the stock market. But the biggest driver is company earnings. What is the outlook for profits? 101 LESSONS FOR ASPIRING TRADERS 10 The market moves in anticipation of an event. Stanley Druckenmiller says that the market is usually 12 to 18 months ahead of what is happening now. Learn how to ‘buy the rumour and sell the fact’. Stay one or two steps ahead of what people are talking about on the news. The P/E ratio is virtually meaningless on it’s own. But it can be useful when understood in context such as historical and industry averages and when combined with other variables such as growth, cash flow and trend. Remember that a sudden change in earnings will dramatically affect the P/E ratio. Download 1.87 Mb. Do'stlaringiz bilan baham: |
Ma'lumotlar bazasi mualliflik huquqi bilan himoyalangan ©fayllar.org 2024
ma'muriyatiga murojaat qiling
ma'muriyatiga murojaat qiling