Thanks for raising a very good point, and something I also have pondered for a long time.
First of all, I have highlighted at the top of my report that this report is for trading purposes with a short-term outlook. So I had to think what can change in 1 week. This is as I also ( and few others may also) trade a portion of their holding.
But lets keep that short-term view away, and lets look from a longer term view, which I believe most of us over here are for.
One thing that is new for me and may be for many others here, is that first time we may be seeing a phenomena in our trading life. I was not trading in 2008 recession or earlier ones. So everything looks new to me, these wild fluctuations, drops, etc. Every 2 in 3 reports/analysis is now being done with previous recession periods/bear markets which had a big effect on many in a negative way. So its there knocking at our door, even if we don't want to talk about it or feel it may not affect us.
This downtrend started in May for most Li stocks I follow, though for ASX and US stocks the real downtrend had already started in Dec/Jan.
Before this June bottom hit us, to be very frank, I used to follow US indices but only cursorily. I had not realised how much influence that has on the global markets. But after the May downtrend and June bottom, I started noticing and studying it. Before that my report was more sector and stock specific, but the way stocks have behaved in last 4 to 5 months, I feel there is an elephant sitting in the room which we cannot ignore - and also that has the greatest influence in short term.
For any stock, we can look at 3 levels how the specific stock move:
- Specific stock itself, eg in this case SYA - announcements, progress, off takes, production start etc
- The Li sector itself - The Li price, demand, how other Li stocks are behaving etc
- General market itself - The Market Indices, Economic conditions like Inflation, Recession, Interest Rate etc
The stock price of any stocks will be guided by all the above 3 factors. It is possible though that in certain stages of its journey, one or other becomes more prominent and influential for the share price. I feel in last few months the general market has overpowered the other 2 levels, hence my writing on recent times has focussed on that.
There is a chance with decent probability (no guarantee though) that indices may drop another 10 and 20%. There are many analysts now talking about recession, including long periods of it. I know individual stocks including us could be strong and possibly think we are recession proof, but there is a good chance that if that happens, most stocks would have a fall. Fear sometimes creates a frenzy, we had 1 in June, our price touched 11.2c a drop from 39c. So we want the general markets to be at neutral if not good, to make decent gains in stock prices.
The above point is for why in recent times I am concentrating on general market.
Next point you have raised is around timing the entry/exit and comparing with roulette - very valid point as getting the timing right is not easy, some get it, most don't. And even those who get, they might get some of it, nor all. So in long term it may not have that big a influence, especially those who want to hold for 3 to 5 years.
But in short periods, it does have a large impact. One of the reasons is that it is very difficult to quantify the true value of a stock. Lot of things are based on future events, probabilities, hopes etc - not everything quantifiable - so SP may run havoc up and down.
Lets see the price since the beginning of the year:
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.The above figures speaks for itself how difficult it is to quantify the value of even billion dollar stocks (small caps can be played around by few traders). Also, another thing which becomes obvious is - the entry and exit do matter, may be not for very very long, but for others.
Theoretically I have put some points, (fully knowing its only theoretical and practically impossible to time the top and bottom). But lets assume some one times it and then we can calibrate up and down:
- Just this year, if someone bought on 1st jan and sold at highs, bought back at lows, they would have 500% gain at current sp
- Someone who bought at 1st Jan and held till now, has not even done 100%
- Someone who bought at high 30s is down 40% from their buy price - its not been a good time for them, for now
- Someone who bought at 1st Jan or June bottom, they are close to 100% gain - even in this volatility
So the above shows that entry/exit may matter in short to medium term. Even if one doesn't get complete top/bottom, but somewhere around it, it can help.
So hopefully I have answered some of the good points you raise. Being long term has one benefit - one can shield themselves from the volatility. All the best.
(20min delay)