How To Be Your Own Hedge Fund Manager
Are you a contrarian investor that loves a good bargain stock but have had mixed results. You can’t forget the pain of averaging down on a handful of value stocks that cost you a lot of capital. I understand your pain. You read all the value investing guru books and were told great value investors have to endure the pain of being early. That you can’t time the markets.
I do agree that you can’t time the markets perfectly but you can improve your odds dramatically by just recognizing a stock’s trend.
My eBook “How to Create Wealth Investing in Turnaround Stocks,” exhibits a handful of these classic bottom formations. Yes, you won’t buy at the exact bottom but you will have avoided the pain of averaging down in a value trap. The time to buy value stocks is when your fundamental analysis is confirmed by the stock’s price chart entering a bottoming formation or a change of trend. Why is it so important to see the stock price chart confirm the fundamentals?
Because value stocks are only created due to problems a business is currently experiencing. Despite all the fundamental analysis, you perform, such as speaking to competitors or customers etc. that rarely confirms a fundamental bottom for the business is in sight. The reason is that everyone in an industry is too optimistic. They are hoping and praying for things to get better and at every corner is an upturn in their mind.
The beauty of technical analysis is that it coverts information. All investors whether it’s you or the biggest hedge fund in the world are looking for information. But no one knows if they have the right info at the right time and in the right place. In today’s markets, there are thousands of investors researching fallen angels all scurrying for information.
Technical analysis tells us when all the information seeking investors have more buying power than sellers. When you see a stock react positively to bad news or just stop falling after years of declining, it’s a large clue no one is left to sell and buyers are entering. We don’t know who these buyers are but they have enough confidence and buying power to halt a stock’s decline in a fog of war and bad news. See my blog post on how technical analysis was correct during World War 2
This bottoming price action confirms our fundamental analysis. In addition, technical analysis keeps us away from stocks that will never turnaround. The technical analysis puts the probabilities in our favor. The fundamental analysis puts the reason in our favor. The reason tells us what to buy and the probabilities tell us when to buy.
Forget the value investing gurus who earn all their money getting fees from gathering assets. Look to your own wisdom and intellect and learn how to buy, find and manage a portfolio of turnaround stocks so you can be your own hedge fund manager. To find turnaround stocks for your portfolio consider becoming a member of turnaround stock investing.
