In stock market, investors ride on waves.
Sixteen century’s sailors sailed on trade winds and currents. When the monsoon left, the sailors would stop at the harbour waiting for the trade wind of next season to travel. They did not fight inch by inch forward for it would be a futile effort. In quiet time, the sailors set their sails ready. When the next trade wind came, it brought them to where gold and spices were rich.
The paradigm is applicable in stock market. Stock market moves in waves form. When the market is down and sentiment is weak, we set our sails ready. Finding the right stock at a good price, we wait leisurely for the next wave. We don't fight cent by cent for trading "profit" that would probably lead to losses.
Stock picking and staying power are still two of the keys…
Prices of most good stocks take tides to move up. However, their prices will stay at the new higher ranges when the tides reverse. So, even if trade wind is fickle, good stocks will find harbour to stay when the wind reverse its direction. Off course, there are always exceptions in every general rule. Selecting the right stock with a good business can be like riding on a speed boat against trade wind toward your destination. Even when the general stock market waves move against you, you ride to fortune.
In the experience of Peter Lynch or Warren Buffett, it seems good stocks in US can flow against general market movement. But in Malaysia, good stocks move with the improvement of market sentiment. Such stocks would usually remain at the new higher price range even when the market reversed.
Therefore, Philip A. Fisher was right, it is about finding a fundamental strong stock with good business. Though, be patient, reward will only come when the market sentiment improved. His quote on Shakespeare is simply contagious, "There is a tide in the affairs of men which, taken at the flood, leads on to fortune."
