Hello /r/Stockmarket
This is a very interesting time in the markets, and after a very extended bullrun, we have found us in a situation of a first correction, if you want to call it that. Some people might have felt their first fear during what happened here, and even if these points are said over and over everywhere, it bares repeating. As a very heavy fundamentals investor, I want to plug my own view on the situation.
There are many different ways of making financial investments. You can look at chart and technical indicators or you can look at trends and news. Or you can pick one of the many thousand ways to try to “guess” what the market will do in the future. Problem is, that tons of information is unreliable. You hear someone say something online, and you believe it. Maybe amazon is more expensive than apple because the individual shares costs more. Maybe you are told that all stocks @80 USD is worth 120 USD because of psychology. Perhaps you saw a chart that predicts the future using tons of lines you do not understand. I want to make this very clear. If you want to find a way to profit and learning you need one thing and one thing only.
You need a plan.
You need a strategy that will hold up. You can not be unsure about this plan. And this is something I preach CONSTANTLY. There is nothing stressful about the investing market, as long as you firmly believe in your own beliefs. If you evaluate $SQ to be worth $46, buy it at $40, and it drops to $30, you just lost 25% of your investment. Stressed? Well, you should not be. It’s about belief. The only reason you would be stressed if you doubt the reason you bought it. That is why absolute belief will remove all psyche issues with investing, and why it is so important to pick what you choose to put your belief in.
I put my belief in fundamental analysis. It is the only thing I believe in. While technical analysis and trends are something that most definitely works to some extent, if the market drops, your trend or technical indicators stop mattering. Fundamentals is the only thing that do not change as the price of the company drops. And therefore I, among many other people, trust what you actually buys. If you buy a new laptop, you don't care about how the price change over time. It only matters what you are actually buying, how strong, fast or heavy the laptop is. Feel free to disagree, everyone should have their own belief. But once you picked your belief, it must be absolute, and it must be the correct way to see things.
Before you buy a stock, always:
Why am I getting this instead of an index? Where is the upside? If the stock goes up, what action do I take? When do I sell? At what price or % gain. What action do I take? If the stock goes down, when do I sell? At what % loss or a price. What action do I take? What risks are there? How does the worst case realistic scenario look like? Why am I making this investment right now? Is there a better time? What exactly am I buying?
If you can’t answer these questions for every single equity, security or paper you own, you have failed. I choose fundamental analysis as my weapon, and I am absolute. Are you?
Submitted February 07, 2018 at 09:02AM by lykosen11 http://ift.tt/2EbwjoF
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