The Covered Calls for Dummies Thread Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Covered Calls for Dummies Thread

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Judith Williams who wrote (798)	5/29/2001 6:26:40 AM
From: the dodger	Read Replies (2) of 5205

"...but not because we are heading for a correction. I've now given up predicting where the market is going and just focus on a couple of stocks." I'm reminded of a quote... "There are two types of investors -- those that can't time the market - and those that don't know they can't time the market." There's a bit of witty cynacism there -- but that quote has much deeper meaning to me. Embedded in that thought is the core -- the foundation -- to wise investing, and it's the "first hurdle" that most investors NEVER manage to clear. They spend - i.e.waste - their entire investment lives searching, hoping, believing that market-timing is possible. Entertain this thought. What happens when a person FINALLY ADMITS to themselves that they can't time the market? First, they find they have more "free time" on their hands - time that can be used for constructive investment purposes. Time that can be spent finding and researching quality "one decision" stocks. Secondly, when that market-timing "hope" finally dies -- they find that they are no longer being crucified between those two eternal persistent thieves -- "fear" and "greed". Their investments are finally driven by something else -- faith. Because they find themselves placing their money in high-quality no-nonsense equities. Companies THEY KNOW have good fundamentals. Companies THEY KNOW have good track records. Companies THEY KNOW have sound proven management teams. Companies THEY KNOW will be here tomorrow. The day-to-day movements of the market are then seen for what they truly are -- meaningless. If the price of their stock does happen to turn down -- "fear" doesn't compel them to sell -- it is seen only as a buying opportunity. I really think that when a person buys a stock, they should do it with the idea of holding it FOREVER. They should buy a stock as if the portion of the earnings represented by the stock were being directly deposited into their bank account. An investor should be completely oblivious to illusions of the stock-market. "What's the NASDAQ doin today?" should not be a pertinent question. An investor should be ENTIRELY focused one thing -- the fundamentals of the company. Is it financially healthy? Does their product/service fill a long-term niche in the economy? Can they sustain their revenue and profit growth? Is the price I'm being asked to pay in line with their expected performance? If the company performs as I expect -- will I meet my investment goal? And there's another sticky-wicket -- investment goals. An investor should NOT be saying..."I will pay X dollars per share -- and plan to sell it for Y dollars per share in Z number of years." That's just a hybrid form of market-timing -- playing the market. Investment goals should be centered around a company's future EARNINGS per share. "I will give 'X' dollars per share -- and I expect them to generate 'Y' dollars in earnings in 'Z' number of years. Then you have a yardstick that makes sense. If the company performs as the investor originally expects and stays on track profit-wise -- then they are accomplishing their investment goal -- and the future price of the stock is not relevant. Because if you set your investment goals in terms of the future price of the stock -- instead of it's earnings -- you have subjected yourself once again to the whims of the market -- i.e market-timing. td

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next