I used to work with a bright middle age man where he already now a VP of foreign bank based locally. The first advice he provided when knowing we're interested in stock market are "Quantify you Holding Power" and "Understand your Business".
The maelstrom of conflicting interests in the world of politics and economies is not something we want to get involved in and even relate to it. The reason is simple; we don't have the divine veto power to make a call on our choice.
Just like in the field of statistical analysis, the usage of point estimate to make estimation is meaningless because the area under the particular curve function and selection interval is zero. To use point estimates to make prediction on anything is like try to hit a hidden bull eye with a small tipped dart. Application of confidence interval estimation is more appropriate. We definitely would like to increase our chance of hitting our target (Unless your goal is to NOT hitting the target), we must increase our probability of success and this would require a range of any kind.
The question now is which dimensions of stock market investment intelligence we are able to leverage? The discussion here will not be quantitatively conducted because a comprehensive analysis of dimension interactions and significance would require tremendous amount of data and sophisticated data mining methodologies. Crudely outlined, we know that Time, Money, Business, External Factors, Risk Appetite and Expectations dimension constitutes a simple framework that governs your unique investment style. By adjusting the relevancy (weightage) of each of these dimensions, you shall obtain a vector to be input into your investment portfolio.
Money is a constraint in our analysis and Time is strongly correlated with our risk appetite and expectations. Optimally, we always want to earn the most money within the shortest time frame assuming no risks, but this wouldn't be practical in reality.
Holding power signifies our ability to withhold certain amount of investment money for a period of time, which is usually unknown. This stretching of time dimension magnifies our success probability in making profits out from this volatile market.
Shortsighted investors (Investors? Punters?) often irrationally misaligned their investment parameters. High Risk but Low Return, multiple folds profits in ridiculous time frame and etc, countless number of impulsive decision making examples happened all around us.
Global equity markets recently are like riding a breathtaking roller coaster where the end point still undetermined. Many people already jumped out from the car and got injured. Their ending is conclusive for now. They lose money and might not dare to get another ride. Not everyone enjoys the thrilling experience of a roller coaster ride :p. For us who are still rolling upside down, stay calm, open your eye to enjoy the scenery because we know that our holding power will capitalize time to ensure our final moment of success.
