| Here is a mindset that you can cultivate as a stock | | | | which you will sell once prices return to something like |
| market investor or trader that will give you the | | | | a normal level. |
| appropriate perspective towards making a profit in | | | | It's always a trick to determine what the new level |
| the market. To the extent that you can govern your | | | | is, but if you look at the 50 day and 200 day moving |
| actions by this principle, you have a fighting chance | | | | averages you'll get some kind of sense of fair value |
| of making a profit in the market. | | | | as voted on by the market over long periods of |
| Consider trading in the stock market the same way | | | | time. To trade in this manner you must have low |
| that Wal-Mart conducts its business. Wal-Mart makes | | | | cost in your trading transactions and so you need to |
| its money by finding those things that most people | | | | have your account at a deep discount brokerage |
| want and need in finding the lowest cost way of | | | | houses. |
| acquiring the inventory and selling at a reasonable | | | | If you have skill in finding values like these, you might |
| profit and turning their inventory as many times as | | | | extend your analysis to find stocks that are trading |
| possible. | | | | at a discount to their book value. This is the way |
| The strategy suggest that you should be a short | | | | that Warren Buffett and other all-time great value |
| term trader who's always looking to buy things on | | | | investors like Benjamin Graham buy their stocks. This |
| sale that people are going to need and then selling it | | | | strategy has you buying below real market value and |
| to them once prices return to responsible in normal | | | | simply waiting for the market to discover the bargain |
| levels. The strategy will have you looking for | | | | that you already own. This is slightly different than |
| unusually sharp selloffs in quality companies which | | | | the Wal-Mart strategy but it is along the same lines |
| allows you to buy inventory at relatively low cost. | | | | of sound business principles. |
| It's often possible to do this afternoon's events have | | | | It's not always necessary to buy low and sell high; |
| caused an exaggerated selloff in the stock. You want | | | | you may find yourself buying high and selling higher. |
| to look for those periods of maximum pain and wait | | | | In either case you have to learn to sharpen your |
| for evidence of price stability to return in the form of | | | | judgment of value and find ways to offload your |
| support levels are at once that happens you can | | | | inventory with advantage. |
| begin a strategy of buying to accumulate inventory | | | | Good trading! |