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Avoid Overpriced Stock
A key to successful long term stock investing is to avoid overpriced stock. In long term investing the point is to find stocks with a margin of safety and genuine intrinsic stock value. The value of these stocks is based upon their security as investments, their future promise, and their current prices. When there is a market rally the rising tide raises all ships, so to speak. To avoid overpriced stock the investor needs to compare stocks within market sectors and use fundamental analysis tools such as the price to earnings ratio to make sure that market enthusiasm has not driven a stock price to unsustainable levels. In addition a wise investor will also use technical analysis to avoid overpriced stock. Using time honored technical analysis tools such as Candlestick pattern formations investors as well as traders can reliably predict future movement of stock prices. By the use of Candlestick analysis it is possible to anticipate a profitable market reversal as well as a continuation of a price trend. By using both analysis of fundamentals and technical analysis of stock the buy and hold investor can successfully avoid overpriced stock purchases.
It is part of the psychology of investing that investors are tempted to buy a “hot” stock. The stock is in the news and its price is going up. There is the sense that the stock will just keep going up so it will virtually always be a good investment to buy it. That, unfortunately, is not true. Stocks level off in price and stocks go down in price. There are well run companies that always seem to make a profit and whose stock price has steadily risen over the years. However, buying these stocks when the market is hot virtually guarantees “flat” performance for a number of years. A way to avoid overpriced stock is to use an investment strategy that requires an anticipated forward looking income stream based upon the company’s fundamentals. This is the stock’s intrinsic value. To avoid overpriced stock the investor, or especially the day trader, will use market and stock price evaluation tools. Because stock prices fall into patterns and these patterns repeat themselves it is possible to predict the outcome of an emerging pattern. Thus the investor can search out a stock with strong fundamentals and a stock price that has not yet risen to the overpriced range. By applying Candlestick charting techniques to stock prices it is possible to anticipate a price rise instead of reading about it in the news. It is possible with the skilled reading of Candlestick patterns to avoid overpriced stock and build a stock portfolio based upon stocks that are due to rise in price.
2. A key to successful
long term stock
investing is to avoid
overpriced stock.
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3. In long term investing the
point is to find stocks with
a margin of safety and
genuine intrinsic stock
value.
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4. The value of these stocks is
based upon their security as
investments, their future
promise, and their current
prices.
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5. When there is
a market rally the
rising tide raises all
ships, so to speak.
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6. To avoid overpriced stock the
investor needs to compare stocks
within market sectors and
use fundamental analysis tools
such as the price to earnings
ratio to make sure that market
enthusiasm has not driven a stock
price to unsustainable levels.
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7. In addition a wise
investor will also
use technical
analysis to avoid
overpriced stock.
www.candlestickforums.com
8. Using time honored technical
analysis tools such
as Candlestick pattern
formationsinvestors as well
as traders can reliably predict
future movement of stock
prices.
www.candlestickforums.com
9. By the use of Candlestick
analysis it is possible to
anticipate a profitable market
reversal as well as a
continuation of a price trend.
www.candlestickforums.com
10. By using both analysis of
fundamentals and technical
analysis of stock the buy and
hold investor can
successfully avoid overpriced
stock purchases.
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11. It is part of the psychology of
investing that investors are
tempted to buy a “hot” stock.
The stock is in the news and
its price is going up.
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12. There is the sense that
the stock will just keep
going up so it will
virtually always be a
good investment to buy
it.
www.candlestickforums.com
13. That, unfortunately,
is not true. Stocks
level off in price and
stocks go down in
price.
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14. There are well run companies
that always seem to make a
profit and whose stock price
has steadily risen over the
years.
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15. However, buying these
stocks when the market is
hot virtually guarantees
“flat” performance for a
number of years.
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16. A way to avoid overpriced
stock is to use an investment
strategy that requires an
anticipated forward looking
income stream based upon
the company’s fundamentals.
www.candlestickforums.com
17. This is the stock’s intrinsic
value. To avoid overpriced
stock the investor, or
especially the day trader, will
use market and stock price
evaluation tools.
www.candlestickforums.com
18. Because stock prices fall
into patterns and these
patterns repeat
themselves it is possible
to predict the outcome of
an emerging pattern.
www.candlestickforums.com
19. Thus the investor can search
out a stock with strong
fundamentals and a stock
price that has not yet risen to
the overpriced range.
www.candlestickforums.com
20. By applying Candlestick
charting techniques to
stock prices it is possible
to anticipate a price rise
instead of reading about it
in the news.
www.candlestickforums.com
21. It is possible with the skilled
reading ofCandlestick
patterns to avoid overpriced
stock and build a stock
portfolio based upon stocks
that are due to rise in price.
www.candlestickforums.com
22. Proponents of buy and hold
investing typically point out
that over a long period of
time stocks such as those in
the Dow Jones Industrials
rise in value over the years.
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23. They often point out that
even when buying stocks
at the most inopportune
times the investor will
make money over the
years.
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24. However, who wants to
make the least amount
of money possible
when investing in
the stock market?
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25. By applying tools
of fundamental and technical
analysis a stock
investor can buy stocks and
sell stocks at the most
opportune times and multiply
his investment profits.
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26. The trick in
successful long term
investing is to avoid
overpriced stock.
results.
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