Markets are not only for the elite
Science has proved that markets are effective by their nature. On practice, this means that any information which affects the company’s prospects is already reflected in the prices. To make a lot of money from the market, one need to be either an insider and know more than others, or be a very fortunate person – many people think exactly this way.
We believe that it is not necessary to become a friend of Bill Gates or hit the jackpot to make money. Markets will never change their nature. They will always be in trend. The primary goal for those who come to the market is to to identify the trend, to understand how steady it will be, and settle into the part of the market in time (be one of the leader in the market industry).
Trend is the key to success
A trend arises when trigger events occur which acutely improve or aggravate asset perspectives, the so-called game changer or “alpha.” The one who could anticipate this occasion, or earlier than others, guide an analysis and estimate the potential of the news, can eventually receive considerable rewards.
To detect the unique news, experts follow the flux of news, shoveling tons of “ore.” They try to understand the fair value of the company and how it will change after the occasion. They assess whether this will be a reduction in the perception by the market’s risks (reducing the rate of cashflow) or improving outlooks (aspects) (the growth of the cashflows).
The art of assessing (evaluating) fair value
To use “alpha”, it is not necessary to anticipate events. We can do it in another way. Namely we may see the fair value of all assets. We are engaged in screening, selecting best of the best and then either we start from the market situation (what happens on the price chart) or analyze the news flow. When a catalyst is detected, we decide to form portfolios. To estimate fair value, we apply:
This is an analysis of discounted cashflows or dividends, added value, depreciable value, economic profit. It is important to feel and to understand the market, because the discount rate directly depends on market conditions, the demand-supply situation, so people’s emotions involved in it.
Comparison with analogues
We use multiples: P / E, PEG, EV / EBITDA, EV / Sales for comparison with competitors, it is important to take into account the difference of business models, operational and financial risk. We compare it with the same multiplier in the previous years or with average risk values. The main word here is relativity and it is necessary to understand what is the exact difference in each individual case. If there are no reasons, but there is a difference, it means that is an opportunity to withdrawal the “alpha”.
Experience and personal “recipes”
This is an art that every specialist might learn for years. There are no precise and inviolable rules, but there are checked “recipes” and years of painstaking work. It is important to rely on the statement and to understand what the work with risks is and then – to trust.
·Technical analysis is the last stage of the market assessment
This stage begins with a divergence between the fair and market price and there is a possibility to get “alpha”. There is already a “realm of robots” (robots wo that use market inefficiencies to optimize access point. Either this is done by hand on the analysis of tens thousands patterns that have passed before specialist’s eyes for years of work.
Standard resistance line tools and support line are transformed into a whole complex of actions which includes assessment not within one timeframe, the use of volumes, glasses price. Some people like indicators, adding computer power to see the best prices first.
This is an important stage! This is because only central banks can play against the market which have an inexhaustible resource in the form of a printing press. Our customers do not have it, so with the help of “technology” we discern the turn maneuver to be at the very beginning of the trend path.
Invest and trust!
Trust is the most important component in the financial sphere. We invite you to share the results of our experience, to repose trust to our art to distinguish the trend and identify “alpha.” Specialists of Imperial GM have passed a long-term school of ups and downs and now they use their skills to earn money for their clients and themselves. If you do not have the time, passion and zeal to go through the same way, join us.