Opportunity Knocks

Wednesday, 12th May 2021 12:31 - by Moosh

There is a saying for long term trends that goes something like this:

“90% of the final price move within a trend happens in the last 10% of the trending period”

As a long-term investor I like this idea as it fits with my general investment strategy such that if I commit to buying a company over 36 months, then my expectation will be that I will be buying for the first 33 months of the period at least, in order to acquire the assumed financial benefits from the final 3 months of the 36 month period.

In reality there is clearly the fundamental story which needs to be somewhat aligned over the timeframe but that is why we research companies to see which ones have the best chance of opening up a long-term trend which satisfies the quote above.

While placings and funding are often part of the story, I see them as positive as they maintain financial viability in order to develop projects to create shareholder value. As a cost averaging buyer, it makes no difference to my long term strategy and price usually returns to the pre-placing trajectory when the impact of regular buyers occurs. It is worth considering a long-term regular buying strategy if a company has a 2-3 year plan in place, especially if a company is suitably organised with respect to market communication.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.