- Projected earnings growth rate should ideally be at twice the trailing P/E.
- To get the potential price increase, assume the P/E remains the same over the next year and multiply that with next year’s expected earnings to get the potential price one year later.
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rssFundamental Analysis: P/E ratio to Growth Rate Comparison
An economist’s XMAS
If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three.’ As Winston Churchill noted, economists rarely agree on anything. And the topic of Christmas should be no different. Here is our guide to the macroeconomics of Christmas:
Keynesians – place a lot of emphasis on the ‘macro stabilization’ properties of Christmas. Ideally, they would vary the number of Christmases each year according to the state of the economy. This is best summarized by Paul Krugman’s depression paper ‘Wish it could be Christmas every day’, in which he also acknowledges his love of British glam rock. The Keynesians would like to see a larger role for the state, including publically-funded Santas.
Austrians – Believe Christmas is dangerous because it inevitably ends with a nasty January hangover. Also worry about the moral hazard implications of gift-giving and the propensity for overinvestment in Christmas decorations. Reject the idea of ‘public’ holidays, arguing the free market would lead to a better outcome.
Monetarists – Convinced they are the only ones who know how Christmas ‘really works’ and quickly become frustrated with other economists’ lack of understanding. Their thinking can be reduced to a simple identity, though this is vulnerable to shifts in the velocity of Santa’s circulation. Hardcore monetarists believe in the tight control of chocolate coins to prevent the hyper-inflation of waist lines and the hyper-activity of small children. (more…)
THE GUESSING OF TRADING
Trading is based on our hypothesis. In other words trading amounts to our educated guesses, which means the more you invest in your education, the more likely you are to find yourself on the right side of the trade. One of the most widely overlooked parts of trading education by traders is the study of past charts. I make personal videos, so that like a football team I can review my plays and create better strategies.
Your chart will tell you almost every thing you need to know to get on the right side of the trade. The one thing it doesn’t tell you is what is going on behind the scenes and it will even give you a hint to that most of the time. Your bullish/bearish ENGULFING patterns are evidence that there are some secrets that the market keeps to itself.
Mastering your candlestick psychology, your support/resistance, and your trendlines are things that you want to major on and learn well. You may not win every trade, but having a firm foundation on these simple techniques can greatly increase your odds of a successful trade. I think the more simple your charts, the better and easier it is for you to enter a good trade.
Sometimes you will have the perfect trade set up and all of your analysis will be right and you will find yourself on the wrong side of the trade. No big deal, it happens to all of us, review that trade and see if you can identify the error. When you have reviewed it, look for the next trading opportunity. There is NO PERFECT TRADING STRATEGY!!!!!!! This is only a guessing game for those of us who like to play the odds. The better your education, the better your odds will be against the house.
Overcrowded financial markets are nothing new: the Amsterdam bourse, ca. 1633
Education Is NOT The Same As Schooling-VIDEO
Traders motto, at least it should be.
Reason For Trading Failure
The quote above is from Mike Bellafiore’s The Playbook: An Inside Look at How to Think Like a Professional Trader.
Unfortunately, too few make it in the trading business, not for lack of desire or want for success, but for ignorance of what is necessary for success. Successful trading is not about predicting the future but about managing it.
If you find that each day your time is consumed with searching for the next great indicator or a combination thereof or with the endless search for the best time frame to use, then you are trying to predict. If, on the other hand, you focus on a specific, well-defined price pattern for entry and exit on a specific time frame, allowing the price to dictate your future action (win, lose, or draw) then you are managing the future.
The former is a “path to trading failure”; the latter the road to success.
When there's nothing to do, do nothing
Just Try This….
