Requirements of "Investment Methods"
Once again, what are the requirements for an investment method?
It is about the three elements—“forecast method,” “positioning method,” and “capital management method”—working in balance and being systematically organized.
From a long-term perspective, it is necessary that the action guidelines are clear.
However, it is natural to also focus on short-term movements.
For example, in today’s market, a trader’s job is to fine-tune the “positioning method” based on short-term price tendencies, such as “stocks that have broken out won’t yield profits in the current market.”
Nevertheless, focusing only on short-term moves can lead to traders taking the easy route and chasing trends instead of making proper adjustments.
It is natural to think that a method becomes viable when it has a foundation of a method that can be continued for a long time and a universal approach, with fine-tuning built upon it.
When thinking about the approach, first decide how to interpret price movements.
A universal, i.e., always applicable, interpretation might be as simple as “stock prices go up and down,” an explanation that is blunt but solid.
That alone is not a complete “method.”
However, since the problem is easily swayed by short-term tendencies, there is meaning in deliberately forming a rough, broad image in your mind.
The Midline rule is simple and the human, intuitive understanding is attainable because it stays away from impossible efforts, sticking to a maximally common-logical approach (math).
When building your own method or adapting an existing one (the same applies when analyzing existing methods), you should purposefully value a rough image and emphasize a perspective that the method can be continued for a long time.
That is why it becomes an unwavering foundation.
At Lin Investment Institute, while proposing a trend-following method, we recommend the “Midline Positioning Method” as one approach to carry out the trend-following, because it has universality.
Separately, selecting and investing in low-priced stocks“FAI (FAI) Investment Method”is also positioned as one of the major pillars of the Lin Investment Institute’s approaches.
It answers the general investor’s question of “which stocks are worth buying,” but it is a concrete methodology that can be explained with a consistent theory rather than a cheap stock-picking method.
Of course, it is universal, and since 1984, when the“FAI Club”was established, information has continued to be disseminated and many practitioners have continued over the long term.
The importance of “technique” in trading is the same, but unlike methods that rely heavily on stock selection such as Warren Buffett’s approach, which emphasize business model and fundamentals for 10 or 20 years, the FAI Investment Method is a low-priced stock investing method that can be executed without special knowledge.
Like a professional in Midline, one option is to use a method with a professional sensibility to firmly shape yourself, and another is to gradually develop a trading philosophy using an easy-to-implement method like the FAI Investment Method that allows you to progress smoothly.
Once again, please take time to think carefully about the perspective of “methods.”
To make your past experiences more effectively usable!
■ Stock Investment [Tiger’s Den] (Lin Investment Institute Channel)
On Friday, January 21, we uploaded the latest video.
Stock Investment [Tiger’s Den]
Stock Investment [Tiger’s Den] Important! The Three Principles of Technical Analysis
There are three essential principles in technical analysis (chart analysis) that must not be forgotten. If you don’t know them, you’ll have a distorted view and incorrect analysis. What are the three principles that professionals value? I will explain them concisely and practically.
■ YouTube Channel Market Scramble
Tonight, the latest video from Market Scramble will also be released.
Please view it at the following URL. Enjoy!
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