Why have I been staying full cash since the last rally in 2007? Simply to maximise my profits when I decide to use my cash. This is what I learnt after going through more than 20 years in the market. Yes, you need to know the fundamentals. You need to know the technicals. But just the bare minimum will do. Fundamentals because you need to know what is happening around you so you know when the turning point is round the corner. Technicals because you need to know you are not buying at the high, not buying while it is going down. You need to identify the trough. You need to identify the drying up of volume. Look out for the sign of total despair. Look around you. Have most of the people gave up on the market? Are they still buying? Make sure most have no more money to buy. Make sure they gave up on their stocks. You should start hearing things like "This stock I take it as throw away already." It means that even when there is a rebound, they can't even bother to throw, because they are already stuck too deep to care. Also look at the trough. Not false one. Does the period of trough correspond with dried-up volume? These are signs of total despair. I look for total despair. Only when there is total despair Only then can the stockmarket have a chance to recover. And this is the time when people with money who will come in and mope up the dirt cheap stocks - and good quality dirt cheap stocks I mean.
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