Turnaround 2020

22 Feb 2020

Dear Fellow Investor,

Turnaround  2020

There is a powerful market strategy which has stood the test of time and has an investing edge.  It works in stock markets, commodities and currencies.  It identifies a relatively low risk entry for a high profit opportunity.

It is also simple and straightforward but does require discipline, analysis and effort to implement.

For shares, the first step is to identify the strongest sectors. In Malaysia and most world markets it is the technology sector. 

We identify shares that have strong uptrends over a 6 month to 1 year time frame.  We then wait for a substantial one month pullback before entering. Risk is below a weekly support . Position sizing is also important so as not to put all your eggs in one basket.

I would not recommend to buy shares making new highs as they are vulnerable to steep corrections. These are crowd favourites heavily promoted by the talking heads in the financial news.  These experts are in some cases  the sellers who are looking for fresh buyers to offload to.

Once these shares are identified it is important to do a thorough financial analysis of the company.   If the share passes the financial filter; that is a share with a solid balance sheet, reasonable valuations and reputable management  then I will check for insider buying which shows that these insiders  have confidence in their company.  Insider transactions must by law be reported to the exchange and are available  to the public. I use the Bloomberg work station to track the insiders.    Profits can be taken if there is a big run up and there is evidence of insider selling.   Insiders know the value of their company and being prudent business people will not overpay and will buy after a step correction  and take some profits when the share is overvalued.

That’s all there is to it.

I met Martin Wong last week who operates tradevsa.com to update me on his stock filters. He has come up with a powerful sector filter as well as a filter for shares to identify the pattern I described- (buy into a strong trend after a pullback )  This is real time. He also has developed a fundamental filter which ranks shares by financial strength.

If you are active in the markets, you should check it out. It can save you a lot of time and potentially  boost your profits.

I will be focusing on this method for the balance of  2020 to counter the negative market sentiment and extreme pessimism  of the overall market and economy.  It can find rays of light in the dark gloom.

Invest well and grow your wealth
Bill

Critter of the week is an Indonesian crocodile

Reward Offered To Anyone Who Can Remove The Tire From This Crocodiles Neck

This Indonesian crocodile has survived a Tsunami and earthquake 

but the tire remains and we pray that someone comes to his aid..