Throughout this book we have talked about a number of important investment concepts. We started out by looking at the traditional value investment approach and how to use it in order to minimize risk while maximizing returns. We followed on by looking at things like margin of safety, how to determine the intrinsic value of any stock like a pro, the different types of stocks out there and how to apply macroeconomic analysis in order to supplement fundamental analysis. Basically, this section of the book allowed us to concentrate on the fundamental approach to investing and the best practices associated with it. At the same time, we were able to identify a number of significant problems associated with value investing.
The most significant of them was the fact that value investing doesn’t give us the ability to properly time entry and exit points into the financial instruments we are investing in. Even if our fundamental research is proven to be correct, we might be months or even years away from a properly timed entry point. Yet, timing is the most important element. Properly timed investments allow us to further reduce risk while maximizing our returns. Not only that, but properly timed investments can either confirm or challenge the validity of our fundamental analysis.
This understanding forced us to look at the various timing techniques and their associations with the stock market. Primarily, by introducing a completely new way to look at the stock market we were able to concentrate on the 3-Dimensional analysis as our primary tool to time the markets. As this book clearly illustrates, the stock market is not random, but is, indeed, highly structured. Once the structure is understood through the use of 3-Dimensional analysis, one can time the market with great precision.
Further, an analyst working with the timing techniques described in this book should be able to identify with great accuracy not only what any given stock or the overall market will do, but exactly when it is going to happen. This was followed by the cycle analysis and an explanation of how cycle analysis truly works. Most analyst have had issues with using cycle analysis in the past because cycles tend to work over a certain period of time, only to break down and to never work again. This conundrum was clearly explained and it was shown how the cycle analysis can be used to mimic the stock market with great precision. Once the cycles are arranged in proper configuration an analyst can determine with great precision not only the price and time, but the velocity of the upcoming move as well. Once again, confirming price/time and minimizing risk in the process.
So, what is Timed Value?
It is exactly what it sounds like. Three powerful investment strategies, all wrapped into one. Fundamental analysis, 3-dimensional analysis and the cycle analysis. Combining all three into one allows us to predict the stock market (or individual stocks) with great precision in both price and time. This further reduces risk while maximizing the returns. For instance, working with fundamental analysis and macroeconomic understanding we would be able to identify “Rocket Ships” stocks that are set for rapid and significant advance. We would then use 3-Dimensional analysis and cycle work in order to confirm our fundamental analysis and timing. If everything aligns and the price movement confirms, it is ideal to start building a trading or an investment position.
To be continued….
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Putting It All Together