To The Moon

Hi Tigers,

Welcome to read the interview with @Lionel8383 for the “What’s the most successful trade“ topic.

Today we are glad to have the insightful sharing from our active user @Lionel8383 who made 81% return of profit from $Meta Platforms, Inc.(META)$ , he doesn’t have much background in finance, but he did have his own strategies to trade undervalued stocks.

Below are 6 questions about his most profitable or successful trade, and his sharing on increase the trades’ winning rate.

Welcome to read @Lionel8383 2023 Mid Year Recap & My approach to H2 2023

Q1 : What's your most profitable or successful trade?

My most profitable trade in terms of unrealised gains would be $Meta Platforms, Inc.(META)$ , it is currently 81% up from my average cost, holding for 324 days. As for short term trade, it would be $Tesla Motors(TSLA)$ , because it was a stock that I bought first without considering fundamentals back in May 2022. When it rallied in August last year, I sold most of the stock, and following that when the stock price dipped again in November and December, I bought it back but it was not close to the bottom. And when it rallied close to $205 in early February, I sold all my positions in $Tesla Motors(TSLA)$ , largely because my believes are that $Tesla Motors(TSLA)$ will see it’s margins decrease as it tried to win market share in a very competitive automotive industry.

Q2 : Do you remember how you made the decision on the trade? Any reasons?

Lionel8383: The strategy is to look for business with wide economic moats, and to find under valued stocks.

Back in 2022, when the market was selling away technology and consumer discretionary stocks because the interest rates was rising, and it affected earnings of a lot of these companies. $Meta Platforms, Inc.(META)$ was hit hard because of reduced advertising revenue, partly due to Apple’s iOS privacy features and there was pressure from TikTok eating into Meta’s market share.

But one thing to note is people still use products like Facebook, Instagram, WhatsApp, and their network effect will keep people in it. I did not expect Meta to turn out so good either.

Q3: How do you plan your trades to increase the trades winning rate？

Lionel8383: For short term trades, I look for setups, like bounce from support or divergences.

Moving average

Traders often use these same supports, for example 50 daily moving average or 200 daily moving average. Depending on the price action in the past, and looking for clues from daily then to weekly then to monthly charts. Other things to look for are previous swing highs (or resistance) that can become next level of support.

Q4: What's your expected investment targets in 2023?

Lionel8383: For 2023, I am expecting that technology, communication services and consumer discretionary sectors to continue to outperform. The 7 magnificent stocks of $Apple(AAPL)$ , $Microsoft(MSFT)$ , $Alphabet(GOOG)$ , $Amazon.com(AMZN)$ , $NVIDIA Corp(NVDA)$ , $Meta Platforms, Inc.(META)$ and $Tesla Motors(TSLA)$ should continue to do well.

However, it is good to note that $Apple(AAPL)$ is more on the mature cycle, so its growth rates are around 5%, as such I don’t expect $Apple(AAPL)$ to have more upside. As for $Tesla Motors(TSLA)$ , investors should watch their margins, as $Tesla Motors(TSLA)$ is likely to reduce prices in order to win market share. Also, if recessionary pressures might lead to people being less likely to buy a new car.

Q5: What's your most bullish or favorite industrial or sector？Do you have any special investing notes or sharing to the other Tigers？

Lionel8383: For long term investing, you need for have a thesis as to why you invest the stock. For example, the company has a great product that you think everyone will use. Have you looked at the income statements and checked its cash flow from operations? Their revenues should have a good five year uptrend. Is there one odd year which revenue was down and do you think they can recover from this setback? What is the amount of cash in their balance and their debt? Have you checked what is the intrinsic value of the stock? And also to have conviction and not to sell too early. In the short term, the market is influence by the market makers, so do not panic if your stocks are under water.

Q6. What is your investing background?

The closest thing I had was a module called “Introduction to financial accounting” back in university. Otherwise I would say I have no background in investing, instead by learning from the internet gurus. I had also taken a subscription in Morningstar and Seeking Alpha, as they have valuable resources. The idea was eventually you will make back more than your subscription fee.

Welcome to read @Lionel8383 2023 Mid Year Recap & My approach to H2 2023