Chapter 02 - The characters and their roles

We know the characters, but what role do they take part? And how they create waves and storms? Lets focus each of them and find out how they play in this rich and tempting sea of greed.

SEASON the time factor
Season is referring to right timing. It is part of the nature in every living organism of this planet, and in this case it is the market, which is build up by all the active traders.

Understanding the timing is a very important issue in investment, one only act (Sell or Buy) according to the period of time the market is in. (Bull or Bear)

2008 was a year of bear market, a year to sell instead of buying. Bear market usually last about 1 to 3 years and Bull market last around 3 to 5 years. (The previous Bull Market was from April 2003 to Oct. 2007) The phases “Buy when the price is low” or “Buy when the public are panic to sell” is refer to a time to invest. But that is easy say then done. How does one know when is the right time to enter to buy or to sell? One must know the season of time the market is in (trend), don’t act the opposite way, you can’t fight the direction of the waves, go along with it, be with the trend once the trend is confirm.

There are three phase in BEAR and in BULL, as we all know, there is no true indication to know the end or the beginning of a Bull cycle or the Bear cycle, but it is very obvious when it is in their second phase of the cycle, and that is already very profitable. Once the cycle come to an end, one must have great patient to wait for the turning point, again act only when it is confirm.

As to understand the timing of season, we have many instruments to monitor the nature, and so we also have a lot of instruments to check and confirm the trend of the waves.
We will explore these indications in later chapters.

Chapter 01 - The Market is an Ocean of Emotion

The stock market around the world is a trading Ocean with many kind of people, many type of personalities, it is an enormous sea that control and moves with emotions by all the fishes in it. The direction it takes, and the high or low of the waves are the results of the winds, the seasons and the emotions from everyone that take parts in this feeding ground. These powers can turn a calm sea into stormy water with gigantic waves that kill innocent lives.

Here is the full picture of the Trading Market:

The Seasons –
There is a time to invest, a time to ripe, a time to wait and a time to hide from storms.

The Winds –
US Market, European market, Eastern Europe market and Asia market.

The Baits – All news great and small, in newspapers, reports, TV, radio and Internets.

And finally we are all the fishes in the sea looking for food.
The Blue Whales - The long-term investment funds
The Killer Whales – The Hedge Funds
The Shark – Supper rich people and investment bankers
The Sea Turtles – Long-term Private Investors
The Salmon – Private Investors
Small Fishes – Everyone else that trades now and again.

Now we know all the characters, the next chapter we will find out the role they play, how they move in the water and set up traps to capture their preys.

Introduction

For the last 6 months I have been forecasting the movement of the Hong Kong Index in my personal investment blog called “CHOICE INVESTMENTS” http://hk.myblog.yahoo.com/choice-investments, during this period of time, my weekly forecasting has been over 70% accurate.

The financial market has been going through a stormiest year ever, never in my lifetime had seen such crisis as bad as this year, no one expected a giant investment bank as big as Lehman Brothers could go bankruptcy over night. I am sure no one actively investing in the market ever going to forget this past year of 2008.

Even in such a stormy market, I am surprised by the accuracy of my forecast every week. Reading the index charts, and closely monitoring the movements of the MACD, and the PUT and CALL option index positions, I can narrow the movement of the index to capture the high and the lows in a month. Understanding the weekly rhythm of the investment banker’s strategies, these are some of the key factors to my forecasting success.

I will try and use this blog to capture the way of my interpretation in the stock market around the world, so that complete records can be kept for future guideline to know when to invest.

Within the following pages of this Blog, I will captures articles from around the world of well known investors I admired, their words of wisdom and experiences will also bring great insights into our readings and learning.

A positive mind is the power to overcome all impossible, it is a new chapter in my life to be bold enough to write this blog, putting myself on the front line for viewers to judge. From today onwards the strategies of investing show here will only help me and whoever read this blog regularly (and I don’t really care if anybody read it or not) can improve their financial status.

2009 onwards will be a great year! All will be achieved either great or small. Focus and reach the goal with joy, learn and re-learn to mould into perfection of a true Market Investor!