Hot trend followers or principle investing?
Before continuing, just a word of caution. This post contains a couple of π― community posts and / or remarks. I can assure you that this piece is original with no attempt for plagiarism. It is a pure discussion piece and not meant to advertise or criticise any contributions from anyone from the π― community.
The motivation kicks start from a comment from a valuable fellow π― community contributor.
I must say that my fellow contributor, @LMSunshine is just being kind and just. She is definitely not wrong. Sometimes, it is just about efficiency and effectiveness [Happy] But I just happen to want more than sharing my remark, rather trigger a conversation.
Other contributors of similar topics have triggered my thinking of what kind of investor / market player / speculator I really am. I do have the same question for any interested readers of this post, thus the sharing of my thoughts.
Not sure about your investment journey, some could profess to be a value investor, some growth investors. Along the way, as we learn from fellow investors, we might change our investment philosophy or attitude. A lot also depends on the time frame that we have and current market outlook. I find that age is a very important aspect of decision making. When we are younger, when time looks forever aplenty, risk taking and compound growth looks no wrong. As we are in the market longer, we experienced more market ups and downs (think Asian financial crisis, Great recession, etc). How many of the younger or new investors have actually seen established companies like DBS, UOB from Singapore, BHP, Rio Tinto from Australia as a risky and unwanted stocks, knowing that shares prices tomorrow is likely to be cheaper than today? We are not even talking about Amazon when it was at its infancy stage here.
I might have been irrelevant. The point I want to make here is that perspective changes with experience and age. Risk tolerance has everything to do with it, and market experience has played an important part to building or destroying that.
I will now share some posts / comments from fellow wonderful contributors for my next part of my discussion.
From above, you might notice some mix from value and trends chasing market participants. If you think back, many ideas encouraged by π― app come from certain hot topic events or triggers. See an example along with my contribution.
Is this itself not trend chasing π€? Actually, there is nothing wrong about trend chasing. It is always the shining things or latest trends that attract the most eyeballs π and I am sure we are in agreement here. Market trend chasing is always exciting while principled, in the background prowling is probably plain boring and not inviting for many.
Even for those disciples of value investment, even those of the likes of Warren Buffett, who is to say that trend following has no effect on them. Think of π, TSMC, or even Snowflakes. Warren Buffett is either ahead of the trend or following slowly behind it. If Warren Buffett has not come around to π, Berkshire Hathaway's investment returns won't be what it is today! Trend is a moving train. Some are bullet trains, others might be slow prowling but ever-moving locomotives. They affect everyone, whether we like it or not.
Final word, I follow the market passively. I read the news, study the market, read some π― postings, identify the companies of interest, follow their results, read their charts to identify entry opportunity. So, does this make me a principled market participant since I do things my way, at my timing? Or does this make me a trend follower, since my market idea / research is probably triggered by an interesting article I read in a π― post or something I read in the news? Or perhaps both?
Big trading houses have been using mathematical algorithms and big data to capture trading patterns and directions in their bids for market advantage. With the emergence of AI, perhaps not long into the future, retail investors could convert trending news flow into hyper-quick fundamental research analysis results! So who can be sure that fundamental research based value investing is also not trend chasing in the future? Market needs a spark or trigger to move. Value investing is for the long haul, but it doesn't mean that it can't work well with a bullet train pushing behind...
What do you say to my question? What investors are you, really, my dear readers and fellow valued contributors?
I hereby acknowledge my fellow contributors,@LMSunshine @koolgal @Elliottwave_Forecast @Kaixiang @intheloop @nerdbull1669
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Hehe very interesting opinionsβ¦. just learn different ideas from people here.