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Investment Philosophy

investment philosophy
  • We never advise to buy or sell stocks on tips or rumors, no exceptions.
  • We identify an uptrend or downtrend by using a complex proprietary method.
  • Only buy when the market is in an uptrend. 3 out of every 4 stocks follow the market either up or down.
  • Buy leading stocks in the leading industry groups. Half of any stock’s move, either up or down is due to the strength or weakness of its industry group and its overall sector.
  • Buy stocks with the best EPS growth in the past 3 years giving added weight-age to the most recent quarter results.
  • Identify chart patterns: cup with a handle, flat base.
  • Buy leading stocks at proper buy points in a market rally.
  • Buy stocks as they break out into new highs on high volumes, at least 50% higher than the 50 day average volume.
  • Sell stocks as they break down into new lows on high volumes, at least 50% higher than the 50 day average volume.
  • Stocks tend to make their biggest gains within the first 8 years after an IPO.
  • In US about 80% of leading stocks went public within the past 8 years.
  • Cut losses at 8%, no exceptions.
  • Remember it takes 100% gain to recover a 50% loss.
  • The 8% rule only applies to your entry price.
  • Cutting your losses is like paying insurance premium.
  • In a bear market, average decline of a leading stock is 72%.
  • Only 1 out of 8 will come back to lead the next bull market.
  • Look for price and volume actions.
  • Don’t let emotions take over; we believe that’s one of the biggest dangers in investing.
  • Never average down, instead averaging up is a better strategy.
  • Use 50 & 200 day moving averages as vital points.
  • Buy & hold investing can be very dangerous.
  • Look for distribution days (high volume down days) on major indices of the country and also other emerging countries like Hong Kong, Brazil, Korea, Taiwan, most importantly USA.
  • 4-5 distribution days in the past 4 weeks, indicates that market is in down trend and its time to be in cash.
  • On an average bull markets last for 3 to 4 years and bear markets for 6 months to 18 months although longer bull & bear markets have been witnessed in the past.
  • Growing institutional holding is a positive sign for a stock whereas declining institutional ownership is negative.
  • History definitely repeats itself in the stock market.
  • Don’t back your judgment until the action of the market itself confirms your opinion. “Markets are never wrong – opinions often are.”
 
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