Written by: Mike Simonato, Ontario Presenter: “Investing for the Long Term, presented to the Feb. 6, 2021 International Online Forum, you can watch by CLICKING HERE.
“Back to Basics”
I was born in 1953 My dad raised me to work hard and do my best always. He said you work hard and be loyal to a company that gives you a comfortable lifestyle and pension for a good retirement. Back then the usual investing was either in Mutual Funds or buying stock in the company you worked for. (My Dad’s case part of it was his compensation package) Trading was left to the pros. Over time, however, Greed and expensive lifestyles not only crept into the markets but also who was buying stock and how. This led to crashes through the 70s and 80s and of course, the Hunt Brothers trying to corner the Silver Market and of course the big Dot-Com bubble bursting in 1999/ 2000. Now to recover losses Greed really takes over leading to the 2007/2008 Financial Crisis (The subprime mortgage disaster) Since this event more and more people enter the market and make good money during the 2009 – 2020 Bull Run south of the border. Then the Covid Crash in 2020 and now even more people enter the market and the level of Greed/ Stupid and Corrupt reaches new levels and make no mistake this will not end well.
In the ’50s the market was set up so people could buy stock in companies they worked for or new well or via Mutual Funds
Then in time people bought stocks based on what the TV talking heads said or if the right lines crossed.
Then since the Covid Crisis lines crossing/ Technical indicators lining up with Jupiter or activists manipulate the market (Reddit/ Robin Hood brood)
Let’s look at Risk:
It’s safest if you buy a stock in a company you know well ie Online Shopping, Credit Payment Systems, Building Reno companies ie Lowes/ Home Depot. If you buy because this line crosses that line or this Technical Indicator says one thing the risk increases. The lower the number the higher the risk ie 3EMA and 8 EMA (while an exceptional system) has a higher risk than say the 50 or 100 SMA crossing the 200 SMA.
If you buy because Elon Musk Tweeted something or Reddit flocks to a stock one day (ie Silver), extremely high risk.
NOTE All of the above can both make you money and lose you money. You have to Trade a style that suits your abilities and personality.
Personally, I can never understand buying a stock just because one line crosses another. For me, I must know the company, understand the working parts as well as its future prospects.
eg My business. Extremely successful, no shortage of work and well established in a well established and rapidly growing area. No limit to the earning potential. All sounds good. Value and earnings good however the owner/worker is 68 years old. He doesn’t have the stamina he once had and the tolerance for stupid is rapidly evaporating. So while lines and indicators may look good, when you look at the big picture you may realize there may be better companies to invest in.
Also, with my conservation with the TD Bond Trader, he mentioned that the new hires are all about themselves (What’s in it for me) The older Traders are Team players whereas the new ones are selfish and self-centered which is completely changing the industry which will greatly increase the risk for us as traders as he said last year the Redditt group caused havoc in the industry
Fortunately, Vector Vest gives us all the information needed to make wise trading decisions.
While we all have to do what’s best for us as individuals and our risk tolerance, note that going forward risks may increase.
Nothing more than my 2 cents and I hope it’s of value and interest.
Now for the Markets
USA C/DN, Confirmed Down
DOW JONES: Fell back below previous resistance but got back above Friday
NASDAQ: Wedge forming. Double top and higher lows
S&P 500: Same as Dow however Friday close was below resistance
MKT TIMING: 3rd time back to 79 SMA. Still below resistance level. Stochastics is Bearish
READ Views, Strategy
CANADA C/UP, Confirmed Up
PTSE: Still using 20 SMA as support RT still in downtrend
VENTURE: Still really weak
MKT TIMING: Price held 65 SMA Thursday. Other Indicators weak
READ Views, Strategy
Europe: C/UP Read Strategy
Britain C/UP Read Views and Strategy
Australia C/DN Read Strategy
NOTE: after the week that was, for those in Ontario Shoppers Drug Mart has “Pepto” on sale for $7.99.
Stay safe everyone