We’re not trend traders. We’re value capturers. Two different schools of thought. Trend trading is buying higher in hopes of selling to someone else even at higher valuations.
Value investing is all about buying low (and for us, averaging down even lower) and capturing outsized gains, many times, even before it starts to trend higher.
Value investing is about getting great gains with lower risks. Momentum trading/trend trading by default has to take upon higher risks because they don’t start buying until trends are confirmed, which are at much higher fundamental valuations.
Additionally, the lower you buy, the higher your dividend yield. The higher price you buy, the lower your dividend yield. So, even on the same stocks, we get a much higher dividend income stream becaause of our value-based approach.
The problem with a trend trader is that they don’t know soon enough when a trend ends. Why? Because a trend reversal just looks like a sizable dip within the uptrend. So, by the time they realize the trend has reversed, they’ve lost a ton of value. It’s why we go off of solid, measurable metrics. And we make our money by superior entries (buying at value levels and averaging down) vs trying to make it on the exit, by trying to squeeze every drop out of it.