Dating & Trading #3- Good Fundamentals

Dating & Trading – Good Fundamentals

Look for good fundamentals

What happens when you only judge a relationship based on your emotional excitement rather than your discernment of the other person’s character?

Trouble in knowing what to expect with one hand on the ejection handle.

Every stock and every person has some level of volatility. Whether you set a tight stop, loose stop, or no stop could very well depend on the quality of the stock, meaning, does the investment have a real chance of not recovering from a fall or not?

While there are no bombproof assurances, the fundamentals of the stock is like the character and integrity of a person.
If a person who have proven themselves to be trustworthy decides they need to stay home and study, you can be pretty sure that they are not actually going out pub crawling with their new friends they just met.

When a stock that has good fundamentals (and catalysts) to keep it moving higher, you can have greater trust that a sharp drop will ultimately recover. The sharp drops are not the result of company news, but as a result of general market insecurity, you don’t have to worry as much that you will lose your pants on the investment.

With all investments and circumstances, how much risk tolerance you can handle and if you are a long term trader or a short term swing trader play major roles. I find this strongly depends on how much time you can afford to watch your investments or trades.

What are some examples of fundamentals of companies:
1) Product or service with strong long term growth
2) Company lacks strong competition
3) Strong management team
4) Good debt to cash ratios
5) Generally impervious to the current global or regional problems.
6) Exhibits “good” price action.

What are some examples of personal character?
1) Supportive
2) Kind
3) Affectionate
4) Loyal
5) Problem solving
6) Exhibits “good” habits

You should have time to do your investigating, but one thing about stocks is that they have a history of price action. Nested into the price action are actions of hundreds of institutions with their research. So the price action is like the final arbiter of if a stock is fundamentally sound (also keep in mind that stocks under 5 dollars are generally not half by institutions, which can mean they can be more volatile also stocks with volume under a 500K to million shares per day tend to be more volatile).

Conversely, if you have not had the opportunity to do any investigating of your prospective mate, you can begin by assessing their actions. Are his or her actions consistent with someone of this or that character quality.
Also consider that in the first part of a relationship, the best manners are often peaked as each person would want to put their best foot forward (without falling into chase or target mode).

Challen Yee

Challen Yee

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