I am no Technical chartist. My key is FA and valuation, and very much Buffett style.
After researching into a stock, I will be happy to start buying when the price offers me a big enough margin of safety.
But it has happened many times before that the price falls after I have started buying, and my normal reaction is to buy more shares to bring down my cost further to achieve the lowest average cost if possible for my desired holdings.
As I buy to hold for a reasonable period, short term price volatility after I have bought into a stock does not affect me psychologically too much. I think if you choose a stock well and buy into it at a low enough price, the price risk naturally should be lower.
In addition to dydx's comment about insider buying.
I think insider buying is a good indicator, but only if the insider is savvy enough or truly aware of how the financial market works.
I believe that the top mgmt of Enron were still buying up their own shares even when they were pulling those tricks. There would also be some founders or inventor who are enamoured of the business they have built up and are therefore not reliable indicators.
What I found interesting about this particular insider (Lim Yong Wah) is that he has sold shares close to the peak around $1.20 (12th July 07) and is now buying back at what arguably could be the bottom.
I would therefore put much greater weight on his "trading" patterns because he seems to be expressing a nuanced view of the company's value.
No comments:
Post a Comment