There are at least 20 types of short term trading and long term investing strategies to make money in stocks (mostly covered in 5 days Ein55 class, including the Optimism + FA + TA + PA strategy):
– Swing/Cyclic Trading, Position Trading, Momentum Trading, Price Action / Breakout Trading, Shorting, Market Cycle / Long Term Cyclic Investing, Short Term Investing, Crisis Investing, Index/ETF Investing, Discounted Asset (Undervalue/net-net) Investing , Growth Investing, Value Growth Investing, Dividend Investing (non REIT), REIT investing, life-time value investing, forex-stock investing, property-stock investing, commodity-stock investing, bond-stock investing, hedging/spread trading, excluding other speculative and intra-day trading methods, etc.
Each stock trading and investing method has its own unique application, usually Ein55 graduates would form a dream team portfolio of 10 giant stocks aligned with own personality, integrating a few of these strategies as defenders, mid-fielders, strikers, in additional to cash as goal-keeper.
In the current high optimism global stock market (Level 4), for an investor who understands probability, one may adopt wait strategy for global financial crisis to buy low. However, each investor has different level of patience, some could wait only for a few months and lose the patience and confidence. Some could wait for a few years. Therefore patience is one of the unique personality to consider as it affects the timeframe of investing and holding power. This is similar to lion waiting patiently, fighting against hunger to ambush a potential prey. Remember what Charlie Munger (business partner of Warren Buffett) said: “The big money is not in the buying and selling, but in the waiting.”
Short term investing is a nice integration of investing (buy strong fundamental stocks) and trading (entry/exit in short term), suitable for current high optimism stock market, for investor who does not want to miss the possible last rally of bullish stock market. A lion could ambush for a long time but when see the golden opportunity, it will take action to strike for gain. When the prey is running too fast than expected, a lion would give up as well, reserving the energy (capital) for the next prey (stock opportunity).
3 local major banks will announce next quarterly results next week. Since the results are likely to be positive (supported by increasing interest rate), market fear on trade war is reduced, recovery of global stock prices over the past 1 week support the confidence in short term for bank stock prices, therefore some have started to go in. Position as a short term investor could leverage the uptrend in bullish bank sector while as flexible as a trader to exit when trend in global and individual stocks become bearish, more than one’s risk tolerance level.
Facebook (NASDAQ: FB) is a strong fundamental stock, also a strong momentum stock last year but a few corrections this year has affected the momentum because the global investors have higher expectation each quarter, share price dropped more than 20% yesterday when emotion turns bearish suddenly. Venture (SGX: V03) is another example, medium term business performance over the past few years have been excellent but share price has dropped from peak of $29 to $16, nearly 50% correction so far. A short term investor may also integrate optimism (short term to long term) to understand the relative risk and opportunity, not to apply pure value investing nor only on price action.
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