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| Hard
and Easy
I recently read the article “Right and Wrong – Good and Bad” written by Bac Han, a Khai Minh alumni of 1969/1972 class and I totally agree with him. It is not an absolute, but rather a relative, concept and it is up to us how to interpret it. In addition to Right and Wrong, Good and Bad, I like to add Hard and Easy. I remember when I graduated from the 8th grade; we passed around the souvenir book for our classmates to write something. One of the comments stood out and I still remember it now: “Do we really have hard or easy task? If we do it, hard task will be easy; if we don’t do it, easy task will be hard.” That happened in 1974 and it is proven to be a good advice to me whenever I struggle in life. I always ask myself that question and I find a way to make a hard task to become easy task for me. When I first came here, I thought I could never drive a car in this country. There are too many cars on the street and the freeways look scary. Not surprisingly, I was a loyal bus rider for 6 full years until I got behind the wheel for the first time in 1986. Driving was a hard task for me from 1980 to 1986 because I didn’t do it. When I actually do it, driving is suddenly not hard any more. When I first attended UCLA in 1982, I literally got lost in a huge campus. I relied on the campus map to move around during my first week of attending UCLA. Every thing was so hard for me. The school work, the system, the courses were huge obstacles for me to overcome. Again, I asked myself that question and I determined to make a hard task to be easy. I was one of the first in my group to graduate in exactly 4 years. I graduated in the summer of 1986 when some of my friends still had one or two quarters to go. I believe most of us have our goal when we come to this country. We all took the biggest risk of risking our own life to come here, so it is logical to set a goal to make our journey worth. My goal is to be free physically and financially. I got my physical freedom when my boat arrived at Hong Kong in May of 1979. I knew it was just a matter of time before I could get to my final destination: The USA. To achieve my goal of financial freedom, I actively pursued a college degree. I believe a college degree will eventually set the base for my financial freedom. My first job was an in-house appraiser at a bank. The job gave me a comfortable life but I did not believe it will give me the financial freedom that I sought. I tried the stock market in mid 90’s. It is easy to make money but it is also easy to lose money in the stock market. The hard task is to make AND keep money trading the market. To accomplish that hard task, I need to educate myself and develop an effective trading strategy. It was undoubtedly a hard task for me. Again, I asked myself the question and I determine to make it an easy task. Do we really have hard or easy task? If we do it, hard task will be easy; if we don’t do it, easy task will be hard. Written by Dennis Phan |
出人頭地要靠自己
如想成功，必須從本身做起。以下幾點是值得留意的： (一)無比勇氣：應付大小事情，一於無所畏縮，如果處處表現怕事，還會有人幫你，跟隨你嗎那？么又如何做大事呢？ (二)自我壓抑：這比不怕死更重要，大人物是不輕易發脾氣的，這只能誤事，無論是什么風浪，讓它在肚子裡翻騰可也。 (三)尖銳的判斷力：這樣才有公正的觀點，也是這樣才能服眾。 (四)不可猶疑不決：而要當機立斷。 (五)有計劃的頭腦。 (六)別斤斤計較吃虧與否：大家不願做，你肯插手，又何妨呢？ (七)建立人緣：態度必須平易近人。 (八)富有同情心。 (九)觀察入微。 (十)樂意承擔一切的責任。 (十一)與別人合作：不能任意獨斷獨行。 一個人可以出人頭地，與一個人藉藉無名，式甚至徒勞無功，絕不是偶然的。以下是十個原因，分折出為什么一些人屢次失敗。 (一)缺乏做事魄力，經常用「太忙」藉口來堆搪工作。 (二)自視過高，低賤工作不屑為。 (三)少做，多說話。 (四)恐懼與別人競爭。 (五)缺乏想像力。 (六)自私。 (七)性急。 (八)不誠實。 (九)強調威權，強迫別人尊重他。 (十)愛慕虛銜。 凡此種種，只能導致失敗的途徑。
啟明中學1971/1974年 團結班校友潘家墉搜集 美國加州羅省 二零零八年八月廾八日 |
Fundamental and Technical Analysis I hope I had cleared out some of the concepts in option trading from my previous articles. However, without fundamental and technical analysis, trading stock or option profitably is almost an impossible task. Fundamental analysis tells us what to invest whereas technical analysis tells us when to do it. I will try to cover those two concepts in this article. When we look for a stock to invest, we should look for a stock with strong fundamentals. The followings are included, but not limited, in the search for a fundamentally strong stock. P/E Ratio: This is the ratio of stock’s price to its earnings per share. The lower the ratio, the cheaper the stock. A $20 stock with a P/E of 20 is actually more expensive than a $40 stock with a P/E of 10. Debt/Equity Ratio: Measures how much debt the company has compared to equity in the company. Microsoft is a company with a lot of cash reserve, so it should not be a surprise to see a low debt/equity ratio for Microsoft Corporation. Accumulation/Distribution: Tells us if the institution money, also known as “big money”, is accumulating (buying) the stock or distributing (selling) it. EPS Rank: Measures how well the stock is performing versus all other stocks when looking at earning per share growth. Price Rank: Measures how well the stock is performing versus all other stocks when looking at price growth. Group Rank: Measures how well the stock is performing versus all other stocks when looking at group strength. Price Pattern: Determines whether the stock is moving up, down, or sideway. Volatility: How fast the stock moves up and down on a daily, weekly and monthly basis. It is up to the trader’s investment style to determine which of the above is the most important. For instance, conservative stock trader generally looks for low volatility stock whereas aggressive option trader looks for high volatility stock because option trade needs movement to be profitable. EPS, price and group rank are important to some traders because those factors determine how strong the stock is compared to its peers and within its industry. When investing, it is usually wise to go with the “big money”; therefore, Acc/Dist. Factor is also important to look at. After we make up our mind what stock to invest, we should look at technical analysis to time our entry and exit. There are numerous ways to do it. As beginner, we should pay more attention to 30-day moving average, MACD (Moving Average Convergence Divergence) and Stochastic. As the name implied, 30-day MA averaging the stock price in the last 30 trading days. MACD measures the market momentum. Stochastic measures the market sentiment which tells us if the stock is either over bought or over sold. If the stock is trading above its 30-day moving average, MACD indicates an up momentum and stochastic shows the stock is in the over sold area, we consider it as a buy signal. The reverse is true for sell signal. After we master our trading skill relying on the mentioned signals, we should go deeper to price analysis using candlestick chart to get ahead of the signals. If we analyze it correctly, we should be able to guess the direction of price movement more than half of the time. A candlestick chart is another version of the bar chart which includes open, close, low and high of the day. The range for the period is shown with a vertical line. The opening and closing prices are shown by horizontal lines crossing the vertical line. The distance between the opening and closing prices forms a box called the body of the candlestick. The range of prices above or below the body of the candlestick, represented by the vertical line, is called the shadow. An up day has a white candle and a down day has a black candle. There are many ways to read a candlestick chart. The followings are some of the most common candlestick patterns:
There are many forms of candlestick formations. For simplicity purpose, only the simple and popular ones are mentioned in this article. Candlestick chart measures the price fluctuation and also reflects the psychology of the crowd. Reading it is an art, not a science. There is no absolute right or wrong way to interpret the candlestick chart reading. To seek better understanding, reading more about the subject is strongly recommended. Analyzing support and resistance level plays an important part in technical analysis, in my opinion. If the stock hits its resistance level and we also see a hanging man candlestick with confirmation the following day, it is a good signal for bearish play. Conversely, if the stock hits its support level and we also see a hammer candlestick with confirmation the following day, it is a good signal for bullish play. Usually, the candlestick gives us the signals one to three days prior to the signals given by the combination of 30-day moving average, MACD and Stochastic indicators. The candlestick indicator is used for short term trade, usually 3 to 7 trading days. The candlestick indicator is not obvious to beginners. It takes time and practice to read the chart. Always remember we cannot rush perfection. To add a finishing touch to the analysis, we should also consider the volume. If the stock moves down from resistance or moves up from support with strong volume, it should give us an even more powerful signal because it shows us the “big money” is either moving out or in of the stock. The points I mentioned in this article are very basic points of fundamental and technical analysis. However, it should give us a pretty good idea of what to look for when trading stock or option. Written by Dennis Phan, KM, UCLA & Investools Alumni Book Cited Investools Inc. The 5 Step Online
Investing Formula 2004 Edition Investools Inc. Advanced Technical
Analysis Course Manual 2006 Edition |