28 October 2011

Buy Low and Sell High - Short Term Trading Method

Normally I encourage my clients to have At Least two strategies, one is the short term trading strategy, another one is long term investment. Most of the time, Long Term Investment is meant for "BUY ONLY WHEN MARKET CRASHED A LOT", and Short Term Trading is meant for "PORTFOLIO REBALANCING - BUY STOCK A AT LOWER PRICE AND SELL STOCK B AT HIGHER PRICE". Hope this can help you too.

Try to find out undervalued stock and buy it. Sell it when it near to the intrinsic value or when you find out another undervalued stock. But how to find out undervalued stock? And how to know whether it is near to the intrinsic value? Frankly speaking, I am still learning on finding a more accurate way to do so. So far, I only know that:

- If the company keeps on 'Shares-Buy-Back', means that it is giving confidence to the investors that the stock is considered as 'Undervalued'
- If there are a lot of privatization activities in the market, means that there are more companies are currently undervalued
- If there is no company willing to IPO or extand the date to IPO, means that the market is actually 'Undervalued'

How to find out whether the market/company is Overvalued? So far I only know that:

- If the company keeps on issuing right issues to get money from the investors
- If the company management starts selling their shares to the market
- If the company management over confident on their business and Trade Receivables and Inventory Levels keeps on moving up very fast

1 comment:

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