How to identify a stock market bottom

Backstage wrote:Say 18 month band. 40% up down.

Now that sounds a good enough target to start working at.

++++++

How about your tolerance to losses?

By seeking 'undervalued' counters, it looks, you're very reluctant to exit with losses; is it so?

I am not averse to selling at a loss provided that the reallocation is convincing. Sometimes it has worked and sometimes not. 2016 was not so good and I am more wary as a result. Reading the trend on individual shares has been my weakness this year and I hope to brush up on that. Hopefully with some help from you, in a language I understand. You know, OL math and all....

|||provided that the reallocation is convincing|||

Does it mean, you never want to stay in cash ?

Cash management is one of crucial aspects of investing.
But for the time being; we are talking on catching bottoms and jumping off tops.

|||| in a language I understand.++|||

Maths is one of the efficient languages. Anyways, there are other simple and effective ways to do the same.

It can be important to know what are your convenient way of grasping historical price movements.

How do you keep track of historical price movements of shares?

Use any charts?
Keep manual records?
Have any photographic memory yourself?
+?
+?

Very sorry for the delay in response. Twas' the season to be jolly, so....

"Does it mean, you never want to stay in cash ?

Cash management is one of crucial aspects of investing."

Learned that lesson the hard way in 2015. Know the importance of being in cash, but haven't yet been able to put it into practice. I intend to be in such a position towards the middle of this year. I have a very basic idea of cash/risk management.

"How do you keep track of historical price movements of shares? "

I go to CSE site and check 10yr,5yr 6mnt ect,


"Use any charts?"

Not really, I look at charts other people have done. I piggy back on my buddies who are tech proficient and have avoided having to get to know the likes of Bollinger and Fibonachchi. I also piggyback on the fundamental front, but have resolved to learn how to read a cashflow statement this year.



"Keep manual records? "

Only my month end PF.

"Have any photographic memory yourself? "

Alas no . The one thing I didn't inherit from my dearly departed father, may Allah bless his sole.

OK.

Here we have a fun loving, dumb headed, profligate, mal-bred, licentious idiot who wants to make profits by catching bottoms and tops in the market.

Do you think I believe it is possible?

+
+
+

Oh Yes, so let's start.


Let's clarify some basics first.

In its most basic and most 'direct' aspect; what do you think will make a share go up, and what will make it come down ?

"Here we have a fun loving, dumb headed, profligate, mal-bred, licentious idiot who wants to make profits by catching bottoms and tops in the market.

Do you think I believe it is possible? "

Yes to all the above. Not necessary for top of top or bottom of bottom, but close to the apex. You indicating the possibility and my curiosity to know ,was how this conversation began.
(btw a young med student was produced in the Badulla court yesterday for catching a married bottom)

"In its most basic and most 'direct' aspect; what do you think will make a share go up, and what will make it come down ? "

Supply and demand.

|||Supply and demand.||||

Supply of what from outside makes the market go up?

Pulling out of what makes the market go down?

Money.

Backstage wrote:Money.

Brilliant!

That's very intelligent answering.


Now, let's try to clarify few more basics in a little deeper;

Who do you think supply this money,
and who do you think accept this money ??

Yin-Yang wrote:

Backstage wrote:Money.

B
Who do you think supply this money,
and who do you think accept this money ??

Investors supply/ Company owners accept.

So far so good!

Let's backtrack where we are now;

+ We are to find some way to catch tops and bottom of the market.
+ Tops and bottoms are caused by market movements, so we need to find about market movements.
+ Market movements are caused by money supply, so we need to find about money supply.
+Money supply is caused by investors and shareholders, so we need to find about investors and shareholders.


Now, what is common about investors and shareholders [Company owners]; what species do they belong to ?

Yin-Yang wrote:So far so good!



Now, what is common about investors and shareholders [Company owners]; what species do they belong to ?

The desire to make profit ? Homosapiengreatgreedyguttis ?

Great!!

Since we look to have some good level of general knowledge here, should be able to do this fast.

Now, let's look a little closer in to this species.
What are the two main parts, said to, constitute a human; One physical and the other non-physical ?

Yin-Yang wrote:Great!!

Since we look to have some good level of general knowledge here, should be able to do this fast.

Now, let's look a little closer in to this species.
What are the two main parts, said to,  constitute a human; One physical and the other non-physical ?

Oh ! now that's a bit tricky, on what level are we examining ? (you see, one day while sipping a mushroom tea, the idea of a non-dualistic universe made its case)

Is emotional the word ?

Nope, we are still talking of basics.

What is common to other species and Homo-sapien?

What makes Homo-sapien different from other species?

Mind.

Backstage wrote:Mind.

So what is the other part of a human?

Body.

Correct!

Now we know the two parts making up a human.

Anyway, just let's get the correct pairs of words to make things more relevant.

Can you fill in the following two blanks with the correct rhyming words ?

1. Mind and M.......
2. Body and S....

1. Mind and Matter

2. Body and Soul

Excellente!!

Now we have clarified, Human are made up of two things.

1. Body
2. Soul

And we also have an idea that

1. Body is associated with Matter
2. Soul is associated with Mind


Do you agree?
Is there any other view so far?

Err... the mind is also viewed by some as another faculty or sense. The sixth sense.

Backstage wrote:Err... the mind is also viewed by some as another faculty or sense. The sixth sense.

That's fine, if you wish so; then, human has a body where mind is another faculty.

Do you believe there is a soul [or self] existing in human ?

Interesting !
(But, by the time when we really get to Nuts & Bolts of this methodology, I am sure one market cycle will be over).

කිත්සිරි ද සිල්වා wrote:Interesting !
(But, by the time when we really get to Nuts & Bolts of this methodology, I am sure one market cycle will be over).

We should be able to do it within 50 posts.