All of us who are investing into stock market are looking for strategies for investing into stocks at correct price and getting out at top. Generally it is said that buy low and sell at high price easy said done. Difficult to identify the low and also high price. Generally people perceive that buy low means that it should be bought at low price compared to its all time high price, the lower the better and wish to sell at the high price probably at 52 week high all time high. So generally to identify the low price novice investors look into 52 week low stocks and try to buy at 52 week lows planning to sell when it moves up. But the market is market, generally 52 week low stocks further go down denting the confidence of the investors and they finally blame the market or the so called analysts. They dont have strategy to buy and also no strategy to sell so they suffer.But they generally do not make an slight effort to understand the market, i generally donot call understand the market but i call it as following the market.
To day i wish to bring into one strategy which has all possible chances of giving good returns over period of time.
The strategy name is
All time high:
Generally people are reluctant, to buy at all time high, as they thing that if the stock is at all time high then it should be sold and not bought so they refuse to look at the stock which is at all time high. But actually its the point to buy. Here the all time high is made after some consolidation the longer the period the better.You should buy at all time high made after consolidation, with stop loss at the nearest pivot low or the 200 day EMA or 100 Day EMA. Stop loss is a must for either trading or investments.
Now comes the question why any body should be encouraged to buy at all time high. Technically all time high signifies that the buyers have out done all the sellers till that point of the time. Meaning that buyers are more that sellers and this becomes the case for buy. And also the investors might be betting on the improved financials in the stocks which they intend to buy.
Now the question comes whether one should look to buy stocks which make all time high, it cam be done, but to protect our selves one should stick to stocks which are fundamentally good. The fundamentals should be improving over last three years at-least last two years. Higher the growth year on year the better. Look in the recent quaters if the quarterly results are also improving QOQ then its also is a good news. Higher the growth rate the better, all these point out that the company is fundamentally good and is fundamenatals are improving justifying the price( all time high). Usually i look into % increase in EPS YOY and QOQ to decide on buy decision. The higher the % increase the better.
I always try to buy the price at all time high and the fundamentals are improving. i have seen so many stocks which have made all time high and after that they have risen substantially from those levels.
I would give one or two examples today and would give those stocks which have give spectacular returns to the investors who have bought at all time high.
The above chart is of Aarti Drugs, it made an all time high in october 2012 and it corrected to the neck line and then from there it reversed and went on to make all time high again in february 2014 after nearly 1 and half year consolidation. if you see the fundamentals at that point of time its have it has CAGR increase in EPS for last three year at 39% and latest quarters also the increase in EPS was around 40% QOQ for last three to four quarters which clearly point towards the improving fundamentals and investors are prepared to pay high price for the stock and look what happened the stock has been nearly 4 timer in short period of time. the two red arrows are the probable points of buy.
Another stock:
The above chart is of Granules india it made an all time high in 2012 came down and took the support of the trend line, moved below it and made a spring line reversal and made again all time high at around 200 in January 2014. If you see the fundamental at that point of time the EPS has increased at a CAGR of 52% for last three quarters and the latest 3 quartes the % increase in EPS was more than 100% all these were pointing towards improved fundamentals and justifying the price at all time high and it has turned 4 timer from those levels in very short period of time.
Fundamentally strong stocks when they make all time high after long time they become a screaming buy with high margin of safety. but in any case we should have stop loss to the extent of which you are prepared to take.
I would give other examples which have been 20 to 30 timers in last five years when the market was not so good.
Any clarifications are welcome and glad to confirm the same
M.Mahiidar
Enjoying Life
Trend is Friend.
Now comes the question why any body should be encouraged to buy at all time high. Technically all time high signifies that the buyers have out done all the sellers till that point of the time. Meaning that buyers are more that sellers and this becomes the case for buy. And also the investors might be betting on the improved financials in the stocks which they intend to buy.
Now the question comes whether one should look to buy stocks which make all time high, it cam be done, but to protect our selves one should stick to stocks which are fundamentally good. The fundamentals should be improving over last three years at-least last two years. Higher the growth year on year the better. Look in the recent quaters if the quarterly results are also improving QOQ then its also is a good news. Higher the growth rate the better, all these point out that the company is fundamentally good and is fundamenatals are improving justifying the price( all time high). Usually i look into % increase in EPS YOY and QOQ to decide on buy decision. The higher the % increase the better.
I always try to buy the price at all time high and the fundamentals are improving. i have seen so many stocks which have made all time high and after that they have risen substantially from those levels.
I would give one or two examples today and would give those stocks which have give spectacular returns to the investors who have bought at all time high.
The above chart is of Aarti Drugs, it made an all time high in october 2012 and it corrected to the neck line and then from there it reversed and went on to make all time high again in february 2014 after nearly 1 and half year consolidation. if you see the fundamentals at that point of time its have it has CAGR increase in EPS for last three year at 39% and latest quarters also the increase in EPS was around 40% QOQ for last three to four quarters which clearly point towards the improving fundamentals and investors are prepared to pay high price for the stock and look what happened the stock has been nearly 4 timer in short period of time. the two red arrows are the probable points of buy.
Another stock:
Fundamentally strong stocks when they make all time high after long time they become a screaming buy with high margin of safety. but in any case we should have stop loss to the extent of which you are prepared to take.
I would give other examples which have been 20 to 30 timers in last five years when the market was not so good.
Any clarifications are welcome and glad to confirm the same
M.Mahiidar
Enjoying Life
Trend is Friend.
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