Value Investing Strategy Based On Trend

Value investing strategy basically means you invest in stock based on valuation whether a stock is overvalued or undervalued. However, purely based on valuation is not enough. You also need to look at the market trend. The trend can tell you what actions to take.

Valuation	Trend	Actions
Undervalued	Uptrend	Buy
Undervalued	Downtrend	Wait/buy
Overvalued	Uptrend	Wait/Sell
Overvalued	Downtrend	Sell

When a stock is undervalued and downtrend, you can either wait or buy. If you're good in technical analysis, you probably want to wait for the trend reversal signal. However based on my experience, it is really super hard to tell when the trend reversal is. If you're wrong, you could have bought in the higher price. Instead of waiting for trend reversal signal, I usually break my total investment amount to few parcels so I can average down if the price moves down.

Similarly when a stock is overvalued and uptrend, you don't sell immediately but wait for the trend reversal signal to sell. The reason is very simple because I have seen many overvalued stocks keep going higher and higher! Even if it goes down and if company fundamental, is solid I will take partial profits instead. This is to reduce the risk of predicting the trend reversal wrongly.

This is my investment strategy. Technically it is not pure value investing. I don't know whether it will work but I will be keep experimenting.