There's lot of discussion around how one can't use technicals/ charts for long term investing.
Biggest challenge I have faced in my short investing journey is finding the fair price for a company. DCF, PE, DDM get thrown at you. DCF has lot of assumptions, PE too keeps fluctuating, and different sites have different PEs assigned for past data.
Another thing that works against relying on quarterly numbers is they are quite old. These days insiders know of the results and start dumping stock if numbers are going to be bad.
Charts do help visually to find value. All stocks have patterns i.e take support at some moving average, or move in a particular range over long term.
Page Industries
Storied stock which has made tons of money. Always been a high PE stock & always expensive. Used to own this and chickened out at 9,000.
Recently got back at 22,000 odd levels. Charts clearly shows Page has a habit of great returns & then a sharp correction taking it below its 50Week DMA. From there on, it again has a big run up. Happened in Feb 2016, Nov 2016 to May 2017 Page took support at 50DMA. Then it had a big run till 2018. It would be safe to assume 50WDMA is where value is seen.
Feb 2019 Page has gone way below 50WDMA, and one could safely assume there's lot of value in the stock. Lets see how this goes in 1 year.
MRF
An expensive stock that always looks way over valued. Again a look at the weekly charts will show area of value. Generally takes support a 50WDMA and bounces back after consolidation. This time in Feb 2019, it went way below 50WDMA and took support at 200WDMA. Looks like highly undervalued. Started buying around 58,000 levels.
Biggest challenge I have faced in my short investing journey is finding the fair price for a company. DCF, PE, DDM get thrown at you. DCF has lot of assumptions, PE too keeps fluctuating, and different sites have different PEs assigned for past data.
Another thing that works against relying on quarterly numbers is they are quite old. These days insiders know of the results and start dumping stock if numbers are going to be bad.
Charts do help visually to find value. All stocks have patterns i.e take support at some moving average, or move in a particular range over long term.
Page Industries
Storied stock which has made tons of money. Always been a high PE stock & always expensive. Used to own this and chickened out at 9,000.
Recently got back at 22,000 odd levels. Charts clearly shows Page has a habit of great returns & then a sharp correction taking it below its 50Week DMA. From there on, it again has a big run up. Happened in Feb 2016, Nov 2016 to May 2017 Page took support at 50DMA. Then it had a big run till 2018. It would be safe to assume 50WDMA is where value is seen.
Feb 2019 Page has gone way below 50WDMA, and one could safely assume there's lot of value in the stock. Lets see how this goes in 1 year.
MRF
An expensive stock that always looks way over valued. Again a look at the weekly charts will show area of value. Generally takes support a 50WDMA and bounces back after consolidation. This time in Feb 2019, it went way below 50WDMA and took support at 200WDMA. Looks like highly undervalued. Started buying around 58,000 levels.
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