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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Unscripted daily drama.Traders are uncertain whether to buy or sell. Stock market for beginners

Unscripted daily drama.Traders are uncertain whether to buy or sell. Stock market for beginners

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Asoka Samarakone


Expert
Expert

Unscripted daily drama.Traders are uncertain whether to buy or sell. Stock market for beginners 


Uncertainty still exists in the markets. Take comfort in knowing you’re still able to profit during these events. There will always be trading opportunities, so be patient and strike.The key is to keep making them. 
The stock market just like everything else, runs on cycles. What goes up comes down and what goes down comes up. What goes up the most can come down the most and vice versa. After every bear comes a bull. After every bull comes a bear. After every correction comes a recovery.Be ready to adapt when circumstances demand it. Remember that the goal is to reach the destination you’ve chosen.
Good luck and safe trading!
Asoka Samarakone 

madukp, judecroos and Wolf86 like this post

judecroos


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Asoka Samarakone wrote:Unscripted daily drama.Traders are uncertain whether to buy or sell. Stock market for beginners 


Uncertainty still exists in the markets. Take comfort in knowing you’re still able to profit during these events. There will always be trading opportunities, so be patient and strike.The key is to keep making them. 
The stock market just like everything else, runs on cycles. What goes up comes down and what goes down comes up. What goes up the most can come down the most and vice versa. After every bear comes a bull. After every bull comes a bear. After every correction comes a recovery.Be ready to adapt when circumstances demand it. Remember that the goal is to reach the destination you’ve chosen.
Good luck and safe trading!
Asoka Samarakone 
Mr. Asoka ,I really respect your advises .
SEC heads may be political appointments so they are not qualified for the JOB. if so we can understand this drama situation and their intention only earn money from somewhere and somehow.so we can imagine the disaster they create.
Be cautious I never trust SEC and CSE. we can't predict this Sri Lankan market,I think the charts and analysis failed to guess this manipulation with a strong help by SEC and CSE. Do not trust these people, everybody can see the damage they did to this market now.I hope if we have a good leader ship to investigate there businesses and deals ???? Question Question Question

Bakkabwoi likes this post

Jayashantha

Jayashantha
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

As I see it, we can't predict the market. But the market is always going where the traders are going. For decades, those at the top of the game like Warren Buffett and former Fidelity Magellan Fund Manager Peter Lynch have been advising people to buy low and sell high and analyse the fundamentals of a share before buying, but common sense is not so common. And the other thing is that the higher the price of a stock, the riskier it's for the buyer; but when the price comes down, it's less and less risky. If you get the fundamentals right, the only risk you face is not knowing where it bottoms out, which, like many things in life becomes clear only when it's too late to be of any use. Nor can you ever sell a share at its highest just before it starts the descent. Because both phenomena are a function of traders' irrational behaviour. I think more than CSE, SEC or the manipulators, the problem is with the traders themselves who believe the value of share can climb sky high without being backed by earnings. A relatively stable stock market is good for investing. But in a volatile market there are ample trading opportunities. But if you are looking to make quick money without knowing the fundamentals, you may ride on the beginner's luck for a while but it won't be long before you blow all your gains and the principals if you keep buying at higher and higher prices.

learningthemarket


Equity Analytic
Equity Analytic

Dear jayashantha,

Thank you so much for this advice. Could you please advice me on the following

1) what are the fundamentals we must look at ?

2) How do we get the value of these?

Jayashantha

Jayashantha
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Google Common Stock Fundamental Analysis and you'll find plenty of metrics to determine the fundamental strength of a given common stock. Some of the commonest techniques I use are as follows. (To be honest, I did make some dumb speculations during this market run without making a sound fundamental analysis, I mean I bought some good stock at an overpriced level.)
Net Asset Value per Share (NAVPS)
Earnings per share (EPS)
Cash and cash equivalents on hand
Short term borrowings
Long term borrowings
Undervalued assets
Earnings over the past four or five years
Dividend yield
Nature of the industry - cyclical performance or steady performance all around the year
Media reports on the company
Reputation of the management
Whether the stock is undervalued - trading at a deep discount to the Net Asset Value without any reason (this takes some digging)
and what not


Now these are all points of comparison. Stock x is good or bad compared to stock y. You master these skills by practicising.

But, above all, you need to cultivate the emotional competencies it takes to be a good investor - patience, conviction and discipline. If you don't do your homework or if you aren't disciplined, you're blindly following the herd which means you're at the mercy of the market's vagaries. If all people chase the same few stocks, you drive its price to the inflated levels where it makes little sense buy it, but far too many traders here do just that. Remember you're buying a piece of business not renting some blips on a computer screen.

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