Sean Hyman, Editor of The Ultimate Wealth Report, urges investor to look well into the matter of investment by examining companies on three dimensions:
1. Fundamental analysis -- look at how strong the company is financially;
2. Technical analysis -- look at the current pricing of the share; is it under-valued, fairly-valued or over-valued? For example, RSI < 30 = cheap; RSI > 80 = pricey; P/E <8 = under-priced; P/E>24 =over-priced; P/E=16 = fairly-priced.
3. Sentiment analysis -- be greedy when others are fearful, and fearful when others are greedy. Avoid the love money. Move in and out of stocks at the right timing according to rational thinking rather than greed.
Be greedy only when the time is right. Indeed it takes great discipline to resist following the crowd and act rationally. According to Sir John Templeton, "To buy when others are despondently selling and to sell them when others are avidly buying requires the greatest fortitude but pays the greatest rewards."
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