As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

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Value Investing
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Thursday, 15 July 2010

Fishing and Stock Market - III

 read? Fishing and Stock Market - II

Fisherman's strategy in the stock market

1. Be on the lake when the fish are feeding.


Know what sectors the market likes - sector rotation in play.

2. Don't go fishing when the lake is packed with tourists.

You probably won't be able to get near your favorite fishing hole, and even if you do, all those churning propellers will scare the fish away.

If everyone is playing the same stock idea, the easy money has already been made and stock price has already been push high up.You probably won't be able to get near your favorite fishing hole mean you cannot buy the stock at your price that you wish too)

Since the stock price has already pushed high up, potential buyers will become wary and will hesitate to buy up (all those churning propellers will scare the fish away). Sooner or later old buyers will turn to sellers to take profits.

3. Come prepared with well-maintained fishing equipment, an adequate supply of bait, lures and sharp hooks, and an extra supply of patience.

Give your newly purchase stocks some time to work, but don't use margin to see them out as daily interests paid to your broker will cause you much anxiety.

Do your homework. Set your profit target and action plan.


4. Don't make noise; you will scare the fish away.

Stay calm after buying. There is no need to fear when the market against you unless you are buying on margin or you need the money next week. Good luck to you!

5. Don't fish where there are no fish. Know the structure of the lake and the habits of the fish you are trying to catch. Electronic fish finders can help you locate fish, but it won't make them bite.

Avoid low liquidity stocks. Don't waste time on those stocks that Big Boys are not interested as they are the ones who can move your stocks up.

6. Despite your best preparations, sometimes the fish just won't bite.

Be patient. Buy slowly and sell slowly. The market is like the tide. It will come and it will go.

7. Sometimes you find yourself in the middle of a school of feeding fish. Keep your hook baited and in the water. Correct equipment problems quickly, and get the bait back in the water.

When your stocks are running fast up, stay with the trend and don't sell too earlier or just take partial profits.

8. When a big one takes your bait or hits the lure, set the hook firmly, keep tension on the line at all times and play the fish until it tires. Keep the landing net out of sight.

Don't sell winners too soon and leave some for multi-baggers.

9. When a really big one breaks your line, take it in stride. He may still be in the area, so always have a backup fishing outfit aboard.

Do proper money management and have enough money to buy on further dips.

10. Know when to come back to shore, particularly when whitecaps start to appear or there are storm clouds in the distance.
 
If the market gets too crazy sometime it is better for you to stay out.

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