Should you buy when a stock makes a new lifetime high 🤔

How stupid it sounds...so unintelligent so downmarket so unvalue like...plus you will be mocked by followers of Warren Buffet.

Let us break this myth with one example
FirstSource is now up 100% in six months I recommended First Source when it made a new lifetime high around the end Dec near the price of 93
smarketpremium.com/2020/12/25/a-l…

Yes, I recommended even after the stock had made a 3x move from the lows in just 9 months

Let's teach some basic economics to educated idiots:

How fuel price @100 today is different and better than fuel price @100 back in 2013:

It was a hyperinflationary period in India and higher fuel prices were adding more fuel to inflationary expectations killing economic growth Fuel price @100 today is adding more taxes to Govt kitty. It's easy to collect and helping Govt to plug in some deficits. The inflationary environment is benign. The value of Rs. 100 today is a lot less than Rs. 100 nine years back. It's not apple to apple comparison

Lots of people do not understand dividend growth investing. It does not mean investing in a stock that gives you a high dividend yield. Actually, doing that leads to more destruction of wealth. Dividend Growth investing is positioning for high yield income in the future. Example:

You buy a strong company that's available at a 3% dividend yield right now. But has a track record of increasing dividends and is a growth story, not a dead business

Bullish theme:

Digitization - Data and Digital properties

Distributed Supply Chain means more market share for Indian Pharma Supply Chain and Chemical companies faciliatetd by
Anti China sentiment and Atmanirbhar Policy (domestic manufacturing for domestic consumption) Accelerated Digitization of Global companies to drive big deals for Indian Tech companies and Remote working to drive high margin offshoring which can be done in Tier 2 Tier 3 town. It means low-cost scaling. It's a structural reset for Indian IT companies

Reading Price Action is all about reading price moves and then investigating fundamental reasons to find out if this is for real...

The real issue...have an open mind of why something is happening

It helps you discover great ideas very early Let me share some examples:
During last week of March, US Secretary of State Pompeo tweeted about his phone conversation with Indian Foreign Minister and reconfig of Pharma Supply Chain

It started the bull market in Pharma. I covered it as a Buy
smarketpremium.com

My view on Tesla:

1. Tesla made a big bull run precovid when it rallied to 190
2. Covid crash pulled the stock down, no fault of Tesla and the stock pulled back to 50-week ma of 80
3. Covid recovery happened and this stock rallied early and broke out above > 190 Tesla stock took a leadership position and rallied from 200 to 340. It was an insane rally.
The stock then went quiet and the board announced a stock split on August 11 and the stock made another insane move from 275 to 500
Now there is nothing left to price in

The market always makes sense in hindsight. Let me share why the market has been crazy about Tesla since Nov 2019.

Once upon a time i.e. before Oct 2019: Tesla was known for missing delivery targets, production milestones. Musk was never considered good at managing expectations Tesla's factory in Shanghai changed that perception for good. That was the biggest shock element for the market which was extremely bearish on Tesla. There were people who had bet everything that Tesla would go down to zero.

The world turned upside down

The stock market is not a mirror image of the economy. So, please do not flash your low intellect by making statements like the stock market is disconnected from reality.

You have no idea then what the stock market does. The stock market is a discounting engine. It looks at the current economic situation and then visualizes a new economic landscape and picks winners and losers. At this point in time, the only thing that matters - What the market believes the future will be. It's only belief

Laws of the market:

1. Every year the market falls in love with one particular stock and then it just takes it to the moon. Such stocks before making the move offer multiple opportunities.

2. You cannot stop an idea whose time has come.

Case Study: IOL Chemicals and Products IOL Chemicals and Products

Breakout in Feb but covid happened and the stock made a quick 50% move before collapsing

smarketpremium.com/2020/02/24/why…

Indian Govt today announced the CHARITY package. This Govt's obsession with EAT and SHIT economic model is the real reason behind the current economic mess The problem with Eat and Shit economic model - It depletes your resources with no real progress. It's an endless vicious cycle and is done in the garb of morality. After all who can argue against helping the poor without realizing that you are not helping the poor. [Classic Left]

X Bizmen launched a Real estate project...sold 100 apartments for 1 crore and collected 100 crores from customers. Then he used 100 crores to buy land at some faraway place at obscene prices. Then borrowed 60 crores from PSU Bank through Phone a friend. 1/n What happened?
1. Bizmen gave lots of ad dollars to sickular channels and got good publicity
2. Channels also helped him create a more high flying profile
3. Customers got Ghanta...no apartment
4. Banks got Ghanta...no loan recovery...no buyer for that land 2/n

Two things happened in 1991:

1. Liberalization [Foundation for competent private sector]
2. Mandal Implementation [Loss of state competence]

Before 1991: Govt run state and colleges were damn good...but then the Social Justice movement killed the competence for good. 2008-2013: Second big moment in recent history

Shameless crony capitalism
PSU Banks financed corruption
Massive Social Sector spending with incompetent state - Runaway inflation
Things became unaffordable for everyone

I don't have a PhD like Arvind Subramanian. I cannot talk about Intellectual trash like him. I am not a professional pessimist like him. I don't watch the rearview mirror to tell the obvious. But I can tell you why the market is moving up. Please read this thread completely. A financial market is a discounting engine. It does not look backward. It looks ahead. There is only question it debates all the time: What will be the impact of steps Govt is taking today six months, nine months, twelve months from now

I am not an economist by training. I understand human behavior, and what drives economic activity. The slowdown in GDP in India has been caused by a multitude of factors:

Complete disruption of old economic architecture [Demonetization, Formalization, GST, Bankruptcy Law]... Result: Dramatic Negative Wealth Effect. This has caused massive erosion in the Value of stocks, and Real Estate. Also, Govt drive to keep inflation under check has dried up credit

How Sonia Gandhi and Manmohan Singh destroyed Indian economy that even after 4 years - India is still paying a huge price for their misrule Sonia Gandhi NGO Lobby first threw fiscal discipline out of the window and she went berserk on entitlement programs [MNREGA, Right to Food, Relentless increase in MSP, Oil Subsidy] but there was no money to pay for it...so what Govt did - it borrowed like crazy

US Social Security Program:
Working population with a job pays payroll tax [6.2% employee, 6.2% employer] - the money goes into Social security pool and then US Govt pays its retirees - monthly pension from that pool. It's incredibly simple and powerful program Till date - The Program has worked because it always gets in more money than it has to pay out. As a result - the Program has a $2 trillion reserves. The excess money is parked in Treasuries...so no risk. This is set to change by 2020 when money in will not be sufficient to pay

Ok Coming to @India_Progress rant against Technical Analysis - well to begin with there is nothing Technical about Technical Analysis. There are two aspects of trading/investing:
1. The underlying Business
2. Buying and Selling of Business that happens in market It is the job of investing community to determine the price of Business based on hazaar things from cost of money to the cash flow business generates to how much potential business has. It's a guess work all the time when people decide what price to pay for the business

What's Governance? What's 56-inch chest - to take on the lethargic Govt machinery head on and deliver services to people.
Just watch this 2 min video - Lee Kuan Yew response to Singapore Airlines strike. Unfortunately Modi has refused to take them on and that's disappointing Democracy is all about creating a compassionate system that cares for its citizens. It's not perpetuating the old feudal system of Governance where everybody wants Govt jobs and nobody cares for citizens. Yes, Modi has been a complete disappointment. This is not a political tweet