Zachary

Thanks for sharing! Nice to read your blog about stock market investing. You are right when you said the 7 steps look very simple and I hope it is.

I wonder if someone has tested it for a longer period (say 15 years) or did the 40% happen only this year? I asked this because I have also gained that rate this year when the stock market came from the bottom around March to continuously rise until today. I also listened and read from Robert Kiyosaki that technical analysis is the way to go since fundamental analysis may actually backfire in market sentiment-based investing. In fact, he mentioned that one could actually buy a fundamentally sound stock at 50% upside but will go on to loss value due to negative market sentiment. On the other hand, one can gain 100% return on a lousy company (e.g. internet-based IPO) just because the market is upbeat about it even when the fundamentals are not in place. In summary, he said that technical analysis is a more important skill for a great trader as against a fundamental stock picker.

What are your thought on this? Would really love to hear from you!

God bless!

The 40% only happened this year. I agree that technical analysis is a just as important if not more important than fundamental analysis. I am actually adjusting to include technical analysis to time my entries and exits. However, my Seven Steps are geared towards people who are just starting to move into the Philippine Stock Market. Technical Analysis will take time to learn so in the meantime if a person is not yet well-versed in the market, it is much better to focus on accumulating stocks in fundamentally sound companies. Later on, as an investor gets more comfortable with the market and is able to spend more time learning, that would be the best time to adjust to active trading.

Juanis Barredo of Citisec Online differentiates a Trader from an Investor. An investor is one who is geared more towards Buy and Hold. To a Buy and Hold investor, fundamental analysis is more important since long-term growth and profitability is the key to success. The daily or even weekly gyrations of the market do not matter to a Buy and Hold investor. He is only concerned with 2 major things: Is it a good price and will it grow in the future?

For a Trader, Technical Analysis (TA) is an essential tool for success. A trader will not survive without knowing TA. Some traders can go as far as focusing solely on technical analysis, totally disregarding fundamentals. Trading is all about market timing and only TA will give the buy and sell signals you need to do your trades. Any other strategy without TA is doomed to fail.

So in a sense, RK is right as he is talking about trading. And I also agree with the need to learn TA to supplement any investment strategy. But to me, it is not essential to start. In my case, I did not use any TA in my stock picks. Because I was not bogged down with having to learn TA, I was just able to start. I purposely ignored market movements and just continued to buy as long as the price of the stock is cheaper compared to it’s fair market value. However, as I accumulated stocks and started to get an idea how the market worked, I recognized that TA will either improve my gains or protect my profits.

Hope that helps and feel free to comment back. God bless.