Last night was boring. It's US holiday so the markets are closed. My friends asked me last night why am I not trading the Singapore market instead. The reason is simple. I don't trade because I do not have the tools to filter through the companies to select the best companies to buy. I like large capitalized markets for KUTE to work, and the more efficient the market is the better is the selection of the stocks to trade.
It seems odd that I mention forecasting to generate alpha and market efficiency together in the same breath. Well, I do believe that US market is more efficient than my local stock exchange, and companies KUTE recommends are not against the efficiency theories. KUTE is not a system for selecting mis-priced shares. It is not easy since I am not an artist in applying the complicating formula to determine if the share is mis-priced. The permutation and methods for determining discount rates are many. No one can be more correct than the other for the discount rate to be used to calculate the share present value. Future projections of revenues, income statements, balance sheets and cashflows are subjective. An over-valued stock can be an under-valued to another believer.
KUTE only searches for companies with good business growth potential, stable and financial ly strong. If companies qualify under its stringent conditions, the companies' stock prices should appreciate over time, given the right macro environment. The system takes into consideration the reality of the price volatility along its growth path and current market particpants' behavior, and uses candlestick formations to understand the current strength of the bulls and bears to determine how they will affect the demand and supply of the shares. It uses cycle trend to understand the cycle of the share price since it is a well known fact that economies and markets have cycle and since companies' revenues do correlate with the economies.
The belief is that even if the technical are wrong, the companies are still good companies and with the correct money management rules, we can wait and allow for these companies share prices to achieve the targeted returns over time. Records so far shown they are less than a month to achieve the returns when the technical are wrong.
Have a great day!
Francies Cheng
BBus MAppliedFinance
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