Chart Patterns  |  JUN 2007

Bonanza Bottoms by Scott Brown Ph.D.

Stocks & Commodities V. 25:6 (46-48): Bonanza Bottoms by Scott Brown Ph.D. Powerful reversal patterns are synonymous with good buying opportunities. Here’s how to identify them. To succeed in the stock market you must buy low and sell high. Why is this so hard to implement for most investors? In this article, we’ll find out by examining the forces driving stock prices and how to identify the real deals in the stock market, all through bonanza bottoms. WHY BUY LOW AND SELL HIGH? The only way you can get rich is to buy low and sell high or sell high and buy it back low. You will be pitched many different strategies as an investor, but wealth-building ones, as opposed to income-producing ones, simply amount to acquiring an asset at a lower price than you sell it. It’s mainly due to your social wiring that buying low and selling high is so difficult to implement. You have learned that when something you buy is a real bargain it is most likely of inferior quality — defective or spoiled or out of date. This helps you as a shopper but hurts you as an investor. But if something is priced high, we normally assume it is of higher quality. FINANCIALLY HARMFUL SOCIAL WIRING Experienced investors buy stocks when the outlook for those stocks looks bleak. In fact, when the stock market really stinks, like after a severe bear market, successful investors go on a buying spree while the uninformed public shy away from stocks.

by Scott Brown, Ph.D.