Determining which shares to buy recently has not been that difficult as what I have experienced 2 years ago when I started "analyzing" a share with its price chart. There are no short cuts and all I had to do is spend 1-2 hours a day reading informative documents.
In comparison, the time spent in researching for the right stock is like shopping in a grocery store. While most people have their premeditated list on hand so that it would be less time to pick up the necessary stuff and go to their next agenda. Having this premeditated list tends to make the shopper ignore the ongoing clearance sale (50% off, etc) on quality products. This demonstrates the instinct of the shoppers' willful blindness.
On the other hand, setting in and providing time when you are shopping (with the premeditated list on hand) will give a different, but worthwhile result. You would soon observe and realize some answers to queries that may appear nonsensical at first. Such as, why are you shopping in this grocery among other establishments? Is it the excellent customer service? Is it the grocery's set up? Ambience? Fellow shoppers? Great pricing? Quality of products?
Translate that into taking time and analyzing a company. An example of which is the
China XD Electric Co Ltd; I have nothing against this company and had just happened to breeze through its financials.
For a chartist, this company presents the best opportunity to wait for a dip, go long and hope that the company would then exhibit the bullish cup and handle pattern.
In comparison, the time spent in researching for the right stock is like shopping in a grocery store. While most people have their premeditated list on hand so that it would be less time to pick up the necessary stuff and go to their next agenda. Having this premeditated list tends to make the shopper ignore the ongoing clearance sale (50% off, etc) on quality products. This demonstrates the instinct of the shoppers' willful blindness.
On the other hand, setting in and providing time when you are shopping (with the premeditated list on hand) will give a different, but worthwhile result. You would soon observe and realize some answers to queries that may appear nonsensical at first. Such as, why are you shopping in this grocery among other establishments? Is it the excellent customer service? Is it the grocery's set up? Ambience? Fellow shoppers? Great pricing? Quality of products?
Translate that into taking time and analyzing a company. An example of which is the
China XD Electric Co Ltd; I have nothing against this company and had just happened to breeze through its financials.
For a chartist, this company presents the best opportunity to wait for a dip, go long and hope that the company would then exhibit the bullish cup and handle pattern.
This assumption can wipe out an unsuspecting trader when, for example, the price drops more than he was expecting; especially if he had bought it with leverage. Thus, magnifying his losses.
In contrast, after I spent 2-5 minutes reading through the company's margins, the company looks like it is experiencing some difficulties maintaining its margins and profitability over the years. Though the management seems prudent in maintaining and improving the company's excellent liquidity. It is having difficulties maintaining its Return on Capital (slight negative trend).
With this information, I would rather not invest and dip in to this "opportunistic" pattern with my own subjective findings, but rather find a different company with better economics at the time being.
References:
1. The Financial Times LTD. (2015). China XD Electric Co Ltd. In Financial Times. Retrieved from: http://markets.ft.com/research/Markets/Tearsheets/Summary?s=601179:SHH
2. Investopedia, LLC. (2015). Technical Analysis: Chart Patterns. In Investopedia. Retrieved from http://www.investopedia.com/university/technical/techanalysis8.asp
In contrast, after I spent 2-5 minutes reading through the company's margins, the company looks like it is experiencing some difficulties maintaining its margins and profitability over the years. Though the management seems prudent in maintaining and improving the company's excellent liquidity. It is having difficulties maintaining its Return on Capital (slight negative trend).
With this information, I would rather not invest and dip in to this "opportunistic" pattern with my own subjective findings, but rather find a different company with better economics at the time being.
References:
1. The Financial Times LTD. (2015). China XD Electric Co Ltd. In Financial Times. Retrieved from: http://markets.ft.com/research/Markets/Tearsheets/Summary?s=601179:SHH
2. Investopedia, LLC. (2015). Technical Analysis: Chart Patterns. In Investopedia. Retrieved from http://www.investopedia.com/university/technical/techanalysis8.asp