What is an investment or trading plan? A plan come with a logical believe. You can choose to not use logic but this will not be me. When logic tells me we are at all time high and there is no clear direction, I told myself to change my strategy. My current strategy is to harvest business that are ripe with low margin of safety. Why? a) If the market starts to correct, I can wait for a good price to re-enter, at my first entry price or lower. Do I have to cash out on all my position? No. You do not need to cash out a position if you have Good Margin of Safety and give you Good Dividend Yield? Why? b) If the market choose to stay bullish, we have capital appreciation plus good dividend along the upside. Now come the Million Dollar Question. With a few counter showing upside at this moment, if I dont enter the market, I would lose the chance of making money. This is the time to give yourself some thoughts. 1) Are you sure we are at a low price for the buy low and sell high concept? Do note, i dont mean you are not able to buy high and sell higher. 2) If your logic tells you the market might going into correction, (i) and the market goes higher, you have nothing to gain but you have nothing to lose too. (ii) and you choose to enter, the market did go into correction, you will be facing a decision to stay vested or cut loss according to your plan. What i just mentioned is very general but the concept is there. If you have a Good Plan and stick to it, you can definitely increase your winning vs loss position to make decent profit. If you are confuse, why take the risk? I hope this post will stop any heart ache in missing any ride up or falling any side down. Invest and Trade Safely Everyone! Another Good Deed Done!
Posted on: Thu, 11 Sep 2014 14:08:05 +0000
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