Hughesair (Inflection Point)

Retired physician and air taxi operator, science writer and part time assistant professor, these editorials cover a wide range of topics. Mostly non political, mostly true, I write more from experience than from research and more from science than convention. Subjects cover medicine, Alaska aviation, economics, technology and an occasional book review. The Floatplane book is out there. I am currently working on Hippocrates a History of Medicine and Globalism. Enjoy!

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Saturday, May 15, 2021

Equities

 The best I can say, I’ve never gone broke, at least not yet, and I’ve been in the market since 1954. Light weight, I’ve never had a great amount to invest, but managed to live modestly on my returns. Over the years, a few guidelines have proved helpful. It’s a cold foggy and snowing Saturday after a week in which the market is changing with maybe the beginning of rising intersex rates. I’m inclined to share some of what I’ve learned. 
First, I think that most of the investment gurus who force you to listen to an hour of their BS before offering a single stock tip and a promise of many more for only some thousands of dollars a year, but with this onetime only offer of  $49.99 — amount to investors who failed at some point along the way and turn to the internet want-to-be for a recovery.
My father did well with IBM and Anheuser-Bush; he was shroud, I was not. My first stock was General Dynamics. I held it far a long time and nothing much changed.  Then I read The Battle for Investment Survival, Gerald M. Loeb 1935 with some 13 reprints and counting. — basically stay in cash until you spot a high probability of 100% growth, stop your losses and don’t bet the farm.
Doctors are inclined to brag about their losses in the surgeon’s lounge, and then one day a radiologist who was inclined to remain silent, shared his stock market graphs. He was the only one not suffering loses. From then on, I became a chartist.  I followed every pattern I could find. Equities are not a zero net gain gabble. Options are. Equities tend to grow over time despite their ups and downs and occasional company failure. None the less, I believe that one must be in the market on a daily basis and monitor your companies as your own. I’ll list a few things I look for. Obviously I’m thinking about it.
  1. Is it a strong company favored currently by institutional investors, a leading market segment.
  2. Accelerated earnings, good chart pattern
  3. I do technology almost exclusively because I tend to understand the science.
  4. With rising interest rates, companies with little or no debt
  5. The PEG, the ratio of %growth to the Price earnings ratio, (1) or less is good, include R&D 
  6. A chart that shows a promising pattern. Otherwise you tend to buy high 
  7. Look for the inflection point on a cup and handle pattern or a W shaped pattern — 
  8. Having said that, buy low and sell high!
  9. Check over sold / under sold, various chart indicators like Bollinger Bands or MACD.
  10. Draw a linear regression line to see a clear statistical line of progress. 
  11. Buy below the line and sell above the line.
  12. Look for operating margins 20% or more. Same for return on equity
  13. Look for a company, you know something about that the market undervalues.
  14. Look for 100% Groth probability and buy early.
  15. Selling high or long term hold is my hardest decision
  16. Look for owner participation and insider trading
  17. Look for increasing institutional buying 
  18. The average daily volume, times 20, divided by the float, shows relative current activity and interest
  19. Market liquidity can be seen as a proxy in the Daily Treasury revenue compared year over.
  20. Interest rates inhibit, inflation drives higher
  21. Of these, read the charts, all of them, every day, 3 day, 3mo, 1 year.
  22. Study A/D accumulation distribution which you can see on the candle graph.
  23. Don’t talk about it. Don’t listen to others. Don’t follow stock tips - queers the deal.
  24. Discipline yourself to distinguish gambling from investing.
  25. Keep it simple within your own capacity. 
  26. Preserve capital above all

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