Market Trends: Ride Them
As a result of our knowledge and experience we are now able to recognize certain behavioral characteristics markets exhibit before they begin to trend. The primary thesis which drives our decisions is that liquid macro markets and stocks trend. Armed with this knowledge, Sarhan Capital is designed to identify these trends and capitalize on them as they mature and not fight them.
Trade In The Now:
Since we are inherently “one” with our own psychology it is extremely important for investors to know their psychological strengths and weaknesses and what pscyhological forces are driving the market at any given time. Therefore, once established, it is very important for investors to remain present and “see” what psychological factors are in control at any given moment and adjust their strategy accordingly. I.e. are you operating out of a position of fear or greed? What emotion is dominating the markets (fear, greed, hope, etc.)? and how are you adapting to it? For example: If you buy a stock and are stopped out for a loss, do not be “fearful” that it will stop you out again. If the facts change, and the stock is now “actionable” again, overcome your fear, trade in the now, and change with them.
Market States Change: Know Them & Trade Accordingly
There are three possible states markets can be in: Bull, Bear, or Sideways. That’s it. Therefore, it is imperative to know what “state” the market you are trading is “in” and trade in the same direction (i.e: be bullish in a bull market and bearish and bear market).
We do not limit our thinking in terms of space, time, or labels. We believe that capital does not know any borders, which makes it truly fluid; hence, capital will always flow toward the path of least resistance. As this capital flow exhausts itself, we will continue to profit as the risk/reward ratio decays until we eventually exit at what should be a handsome profit. This migration of capital creates the trends that we capture.
We Capture The “Bulk” Of A Move, Not Pick The Top or Bottom:
Sarhan Capital looks to identify, as early as possible, where capital will flow at any given moment and capture intermediate term trends as they develop in real time. It then seeks to exit the trade when the flows slow, stop or reverse. One of our trading goals is to capture the bulk of a move without picking the exact top or bottom.
Always Seek Good & Truth- Fear & Love Dominate Market “Thinking”:
Markets and, by extension, their participants operate either out of a position of fear or love. The underlying upward sloping bias which has dominated for centuries is based on universal love for our societies and mankind. Meanwhile, the short term fluctuations tend to revolve around short-term human-born fear. It is important to know what state the market is in and adjust your strategy accordingly.