Continuation of Part I
Through using trading and position rules described earlier we progress even further in our risk management by minimizing mistakes in our overall investment approach. For example, if all previous approaches agree and we decide to establish an investment position in any given stock or the overall stock market, we would still have to look for the market to confirm our research. If the market moves against our very well researched position, we have to follow our strict trading rules and liquidate our position as fast as possible. While such actions will lead to short-term losses, over the long-term such actions will minimize losses while greatly increasing your return opportunities in more profitable positions.
Once again, by combining all of the factors above into what I call a “Timed Value” style of investing, one gains the ability to compound oversized gains over an extended period of time. All while minimizing risk. An allocation that should ensure in market beating performance if timing techniques used in this book are used in their proper format. It is also important to understand that properly exercised timing techniques can lead not only towards market beating performance, but to capital gains that are typically not available to traditional market participants. If fact, when the market structure is understood in full from the 3-Dimensional perspective, it can be timed with great precision, leading to astronomical returns and very little (if any) risk.
To summarize the Timed Value approach discussed in this book...
- Identify “Rocket Ships” value stocks through the use of fundamental analysis
- Confirm your investment thesis through proper understanding of the Macro Economic environment.
- Use 3-Dimensional analysis to time the stock market or the individual stocks with great precision.
- Use Cycle Analysis to confirm your timing work.
- Follow strict trading rules to properly enter and exit financial instruments in question to minimize risk.
In conclusion, I have developed this unique investment approach after more than a decade long participation in financial markets and tens of thousands of hours studying various timing techniques. While the above might not work for everyone, it is the most powerful and the most risk averse approach to the investing that I know of. While “Value” portion can be replaced with many other investment styles (growth, technical, etc..), the timing principles discussed in this book are indeed timeless and cutting edge. An analyst who dedicates his time to studying the market in 3-Dimensional environment should walk away with a much better understanding of how the markets truly work. An understanding that will eventually morph into an exact science allowing the said analyst to time the stock market with the precision most other market participants can only dream about.
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Putting It All Together (Part 2)