As with any view/ opinion, what I share is open for debate. I'm just sharing my personal views derived from my journey in investing so far. Looking back, had I followed the advice I shared so far, I would not have made many money losing decisions that I've made. So here goes......
There are pretty much 2 main ways of deciding whether to invest into something, fundamental analysis and technical analysis. Of course, there are other less popular methods like rolling dice, listening to hearsay, etc..... I think I heard somewhere even Monkeys have a higher chance of hitting it right compared to humans when it comes to stock selection. Kind of funny if you ask me.
I think I started off being more of a fundamental guy. I mean that's common sense right? Who would want to invest in a company which is not making money or has no competitive edge or no strong cash flow to finance it's ventures right? So sticking to my principles, I signed up with well-known pure fundamental analysts in the mining sector and had my hands on a number of publications from them. Paid a hefty price to have access to those materials. I started pouring time and effort into reading the reports and making decisions from those reports. I also signed up for publications who's authors combined both fundamental as well as technical analysis. My investments started fine since I was in the midst of an intermediate bull run of the mining stocks. Made a fair bit in terms of percentage. Then I got smart and decided to put more money into it. Sounds familiar? Biggest mistake I made then was I liquidated most of my bitcoins (I paid an average of USD500 for each) I had to pump more money into it. Might as well have shot myself in the head! Would have been less painful.
Shortly after, we started heading into the bear market for precious metals. That was when I started bleeding bad. The person I paid most attention to doesn't believe in shorting the market. So shorting ETFs were out for him. He was still bullish and recommended accumulating on weakness (which can be controversial when it comes to technical analysis). It wasn't very long when one of my other suscriptions started recommending shorting ETFs in order to hedge against the falling prices of precious metals and mining stocks. But no, fundamentally there's no reason for everything PM related to go down and the general economy to continue straight up. So I held on and continued to buy more recommended shares on weakness. From time to time, I did learn to cut my losses when the shares fell below 20 percent from the price I bought them. Other times, I just held on, hoping to prove the market wrong. You know you can never prove the market wrong right? The market is always right. You'll be smart if you follow the market and ride along with it.
To cut the long story short, I have only recently decided to cut my losses and to re-evaluate my positions and find the proper entry point to get back in. Hopefully I am wise enough by now not to try catching falling knives anymore. I have come to the decision to only get back in when I can clearly see we are back in a bull trend for the sector.
Another recent event that strengthened my convictions towards technical analysis was with the cryptocurrency PIVX. I started hearing about it since early March if my memory serves me right. I decided to find out more about it and I was convinced it was fundamentally a good coin. Of course, this is open to debate as well. But at that point of time I decided to go into PIVX and quite significantly. It was trading at around a dollar plus minus then. I happily accumulated till the price started moving up. It hit the two dollars mark and started going down till recently when it hit a low of about eighty cents. It was only when it fell back to about a dollar or slightly more I decided to let go of my holdings and put them to something else. Had I followed my usual principles I would have let them go when they fell to a dollar and sixty. But lack of discipline had the upper hand and I held on. Only a couple of days ago, I decided to go back in again when it broke it's downtrend. Fortunately now, it is in the green. But I could have saved myself a lot of heartache had I adhered to my technical analysis principles all along, not to mention the money I could have saved as well.
Basically, I've gathered some lessons from the recent events in my journey:
1) The market may or may not care about the fundamentals for the investment I believe in. They are not obligated to.
2) Wherever the market goes or believes in (as indicated by technical analysis), I jolly well follow if my primary interest is to make money.
3) Take profits! Take profits! Take profits!
4) If the fundamentals match the technicals, great! If not, I'll probably have a better chance with technicals.
Granted, there are some situations which technical analysis will not apply to efficiently. I guess that's the same for anything for that matter. But when we are talking about probabilities, I am convinced technical analysis will give me a better chance at making money than fundamental analysis.
Bottom line: get fluent with your technical analysis. It'll definitely pay off!
