I wish to take this opportunity to wish you a more profitable new year. I strongly believe this investment lesson will help you make more money.
As I said before no share can go up or come down indefinitely for whatever reason. If you look at the chart of any good growth stock, you will notice that it will go up for a few months and it will trade within a narrow price range for a short period which is called the consolation period. As soon as the company announces an increased profit for the next quarter, its share price will continue to climb.
The price movement is like any house stairs. It rises half way, it has a level landing for you to rest before you proceed to climb again.
Most chartists and ordinary investors would sell during the consolation period. Most chartists will only buy back when the price goes higher to pass its 200 day moving average. They will not buy at the pivoting or turning point of its trend because they consider it is not so safe. Supper investors will take the risk to buy at the turning point of trend reversal.
Most ordinary investors will not buy it back at a price higher than their selling price and miss the chance of making more profit.
Someone told me that he sold all his CSC Steel shares at Rm 2.14 on the last trading day of the year, 27th Dec. 2016. Basing on fundamental analysis its price should go higher when it announces its increased profit. If he is like any ordinary investor, he will not buy back when its price goes higher than his selling price.
This reminds me of VS Industry when its price was consolidating, a Canadian Chartist advised me to sell because he sold. When VS reported increased profit, its price continued to climb again, the chartist and a few ordinary investors I know did not buy back at a higher price than their selling price because they did not want to admit their mistake.
But I continue to buy until I became the 2nd largest shareholder, owning 102 million shares as shown in its 2015 annual report. I sold all my VS shares and I do not have any more VS shares.
A professional chartist told me that he cannot recommend buy on Lii Hen and CSC Steel because they are in the consolidating period. My advice is that all chartists and investors must check their track record to examine their performance. If they have not been performing as well as they like people to think, they must change their method of buying and selling.
Please note that the performances of all professional fund managers in town are not doing well in 2016. Please read the below link :-