The 3 Yeses Formula: How to Know When to Invest Confidently guides investors to say no unless the economy, market, and company all say yes. Waiting for three yeses aligns the odds in their favor by avoiding the mistakes of missing market or economic signals. Investors give themselves a massive advantage by knowing the importance of the economic, market, and company facts. And they play that advantage by waiting for the three yeses before investing.
What You Learn From The 3 Yeses Formula: How to Know When to Invest Confidently
This lesson answers the question, how do superior investors know when to buy? Knowing and using the 3 key investing indicators helps you to buy in favorable conditions. Doing that puts more money into your pockets. More importantly, it keeps you from buying when you should wait for better conditions. That keeps money in your pockets until favorable buying puts it to work earning you more! teaches 3 key indicators superior investors use before investing. The lesson reinforces the importance of research and knowledge for investment success. Links at the end of the lesson help you learn more.
FAQ Investors Ask About The 3 Yeses Formula: How to Know When to Invest Confidently
How do investors know when to buy stocks?
Investors must hear three yeses, or no investment gets made!
Informed investors need a yes from the economy, market, and company, or they do not invest their money! When conditions are unfavorable, they patiently continue to save and collect money while waiting for more favorable investment conditions.
The Three Times, yes or investors say no, is an easy way to pick only winners in winning markets! Start by learning how to ask and research the right questions.
What are the three investment yeses?
Before investing, there must be a yes from the economy, the market, and the company. Without these three yeses, the money stays in our pockets!
The first yes from the economy happens when the economic signs are positive, with people feeling optimistic and doing well. The second yes is when the markets are trending up with a positive outlook.
That means to find the third yes, look for a growing, profitable company that we confidently invest in with the expectation we have a winner!
The combination of 3 yeses is a quality check that helps No-Worry Investors buy more winners and avoid losers.
What questions should I ask before buying a stock?
No-Worry Investors read the financial statements and research these 12 questions before investing:
1. What business is the company in?
2. How does the company make money?
3. Where is the market, and what is the market size?
4. Where does the company operate?
5. What are the track records of management and the company?
6. How does the company compare to competitors?
7. Are there many satisfied loyal customers?
8. What are trends for earnings, revenue, and stock price?
9. Does the company pay dividends?
10. What is the market capitalization?
11. What are the revenues, earnings, and price-to-earnings ratios?
12. Does this stock fit my Smart Diversification plan?
Be aware that this research may find a competitor or other sector that offers better investment opportunities.
What numbers should stock buyers check?
Wise investors research the company's operations and revenue streams before buying and consider the following.
The ten essential stock and market metrics
Price,
Dividend,
Book value,
Return on equity,
Debt-equity ratio,
Price-earnings ratio,
Trading volume,
Chart trends,
Total return,
Volatility.
They also compare the company to its competitors to determine its relative performance and identify the best performer in that market segment.
Research informs investors about the best performers and lets them make informed stock purchase decisions. In addition to identifying investment opportunities, research also uncovers companies or sectors to avoid.
Is it better to buy a stock when the price is low?
Informed investors must answer yes to three questions before investing in any stock, regardless of its price.
Savvy investors need a yes from the economy, the market, and the company, or keep the money in their pocket.
The "three times yes rule" is an easy way for investors to feel confident in their stock picks. Asking the right questions and seeking answers from reliable sources helps judge the potential of a stock and increases the chances of success.
When should I buy a stock and when should I sell?
Investors buy when they hear three yeses from the economy, the market, and the company or say no. As for selling, investors hold income producers as long as they are secure and growing.
No-Worry Investors schedule six-month performance reviews for their portfolios and sell non-productive investments with no returns or any they have lost confidence in.
For traders to profit, they buy stocks rising in price or expected to increase in value, selling any that decline in value. The best traders research, set, and follow trading rules.
A popular trading rule is to sell as soon as a loss hits 7% or more with no hesitation and, most importantly, no exception. Serious, effective money-making and profitable investing start with an investment in knowledge.
The economy, market, and company must all say yes or we answer no!
Before investing we research the facts on the economy as well as the market and company. That gives us three layers of useful information.
Three layers of investing information to tip the odds in your favor
1. Look at the economy
2. Look at the market
3. Look at the company
The economy continues to get better so the odds favor investors.
We begin by looking at the economy. The keys to the big economic picture are trends. 3 leading trends matter the most, jobs, autos or vehicle production, and housing. When checking these trends, look at the 3 and 6-month trends.
Media reports always focus on the newest economic figures because they are the news. Traders instantly react to such news and stock market pundits spill many words sharing their wisdom and insight. However, we can ignore most of the excitement and racket. For investing decisions we can pay little or limited attention to those numbers.
Instead, look at longer trends. Short-term the numbers go up and down but the trends are clear. The trend is up, down, or sideways. Most times it is up and as long as that remains the case we take these indicators as giving us a buy signal.
All the trends are readily available by using Google. In minutes we can gather this key information. Up is good, down is bad. When all three trends, jobs, auto, and housing are positive, the economy is giving us our first definite yes! It is a favorable time to buy!
1. Look at the economy to get the 1st of the 3 yeses or no investment
We begin by looking at the economy. The keys to the big economic picture are trends in jobs, cars, and housing. We check the 3 and 6-month trends.
All are readily available by using Google. In minutes we can gather this key information. Up is good, down is bad. When all three trends are positive, the economy is giving us our first yes!
It could be a good time to buy. Check off one yes!
Up is not forever
When economic facts, not just rumors, go negative, things can change. To check, we follow the trends. Should a trend falter, we can hold off on buying. If all three key economic indicators, jobs, cars, and housing turn, we may have good reason to wait or exit the market.
Bad economic events do happen. Declining economic results profoundly affect stock markets. So when we see convincing and negative economic facts, the economy could be saying, it is time to wait or perhaps selling time has come!
Never buy in a panic or sell in a panic
Investors are prudent and deal with facts. Being prudent, wait for a trend to turn negative before selling. Rumors and any pundit or media hand wringing are not facts. Wait until the actual numbers show that we must deal with negative economic news. Most often a bad or poor economic report is an outlier. One or a small number of months do not make a trend. Stay the course until we have facts to deal with. Not always but most times the next report will be positive, and so the positive trend will continue.
However, not always, it could be the start of a downtrend. If so, we look further, but when we have the facts we definitely wait and do not buy more. We do have selling in mind. But investors wait and do not sell.
Good and bad stock market noise needs filters
The economic news is never all good or all bad. Generally, the economic balance has a favorable tilt but never gets 100% positive. We can continually consider and judge an unending parade of economic factors and data. When the balance tips to a negative trend, we can hold or sell. When trends stay positive, stay in the market or buy.
Although it is never all positive, generally speaking, stock market trends move up. When they do, the market and economy are in a generally positive outlook. When that is the case, the first layer of our decision matrix gives a positive signal. Think of it as being in a period of economic growth. That puts the odds in our favor and gives us a reason to buy.
Consider the upside of down trends
Investors riding quality dividend-paying stocks don’t sell in downtrends. Rather, as quality companies continue paying during such times, they see stock prices going on sale! They wait to buy more at the most favorable prices to increase their income returns. Other lessons will more fully explain how superior investors manage to do this well.
2. Look at the market to get the 2nd of 3 yeses or no investment
Secondly, with the economic trend information in hand, we look at the stock market where we are considering making our investment. Stock markets in one region can be good while another area may show less favorable results.
North America, Europe, and Asia are all distinct and within each region are more local markets. They differ in offerings, character, issues, and circumstances. Every stock market has a global view and reacts to important world events. That makes our task fairly simple.
To use the market as a buying indicator, we just look at the market that interests us. Turmoil, upsets or bad news elsewhere could indicate trouble is on the way but most likely reflects their local or regional issues. Looking at market indicators soon tells if markets are rising, falling, or going sideways.
An O.K. or rising market is normal and a positive sign. This happens during periods of economic growth that get reflected in the market. We can be confident that the trend will continue. That is, the market, like the economy will continue rising until the expansion stops!
As a rule, when trends in the economy have told us yes, we can expect the stock market to also give us a yes! But not always, and not necessarily when we want to buy.
Even during positive stock market trends, price dips and corrections are normal and regular occurrences. Those are opportunities!
Markets dip, correct, and fall seeking 3 yeses or no investment
Markets only fall by significant amounts and stay down, for good economic reasons. Daily, weekly and monthly gyrations, turbulence, dips, and even corrections are normal. When dips and corrections happen, favorable conditions and trends soon return, when the economy continues to expand. During such times, dip and correction recoveries can be brisk.
When the economy is not expanding or when it contracts we want to be more cautious. Continue making contributions to your account but let the cash and any dividends received sit. Superior investors are patient. Wait for the market to settle down.
Like riding favorable waves while surfing or sailing, we benefit and enjoy our ride on market waves. And just as we sail through the dips and troughs at sea, riding through market dips and corrections are opportunities. Think of them as opportunities to buy stocks on sale!
This lets us think of stock market price dips as buying opportunities that lower our costs boosting our total returns!
A positive economy means positive stock markets
There are many economic issues and troubles worldwide but for the time being, on balance, international economic influences on North American markets remain positive.
There are many economic issues and troubles worldwide but, on balance, most places, most times are economically improving. Most markets, most times show positive uptrends. Virtually everywhere, all the time, market noise remains at full volume.
Superior investors learn how to cut through the market noise to hear the key information they seek and use. With positive economic trends we expect but look to confirm, if the market is going up, we have the second indicator telling us yes, it is a time to take a bite, buy and stay in!
Our second layer or look has been positive which confirms that dips and corrections are buying opportunities. We can use them as open doors to larger gains. When positive, this second layer or look tells us that definitely the odds favor us!
Before passing on all other markets keeping a general awareness of them gives us useful information. The international markets provide valuable indicators of economic progress. Or at times, when progress falters. That knowledge raises our awareness of both good and bad factors that could be coming to our economic future.
Ask why to learn more and meet new ideas
As part of your research on the economy or market, asking why can produce some interesting answers and ideas. Asking Google why a market or economy is rising or falling can expose you to a world of information. Do remember there are many opinions and much misinformation in the world of markets and investing. Sorting through answers can produce useful and even valuable information sources.
Taking a bite of those companies looks like a good place for some money.
3. Look at the company to get the 3rd of the 3 yeses or no investment
- The economy says yes, while never perfect is favorable and,
- The markets say yes with positive movements,
- The company interesting us makes money grows and pays dividends.
When in a positive investing environment we can confidently look at specific companies as we seek more money-making winners to ride. Superior investors want established, well-managed, growing, money-making companies that they can understand. And we only buy when we get paid to ride so the company must pay us dividends. When we get a yes on all counts, we are ready to buy!
That third step remains as important as the others. Investing means economy, market and company all say yes, by making sure all give positive signs we control risk and keeps the odds in our favor. All say yes, or we say no!
That positive environment puts us in the mood to take a bite and munch on some shares of good companies that will make our money earn more money! That investing decision comes after completing this important third step process before we buy. We do this every time we consider investing in a specific company or when we want to buy more.
Dips and corrections – the profitable exception!
The 3 yeses rule helps us buy in favorable conditions. But when markets dip or correct with falling prices, the market does not indicate buy now! Still, when the economy and company continue with yes indications, dips and corrections can be excellent buying opportunities.
The White Top Investor lesson on buying dips fully explains how superior investors profit from buying during dips and corrections. Next time you see media reports of market turmoil think of investors listening to opportunity knocking!
Investors wrap their decision in facts
Making ourselves aware of the big economic picture, the stock market picture, and of our individual holdings lets us make good investing choices. Doing our research homework makes us ready for any contingency.
Then when facts change and some panic, we are able to make good decisions. We can consider buying after others panic! Most importantly, being prepared by doing that homework positions us well to make timely decisions and seize the day when opportunity knocks.
To invest well, we must become and remain aware of the economy, market, and individual company. We must both watch and learn. Finally, we must have ourselves psychologically ready and able to take any needed action.
Why The Lesson, The 3 Yeses Formula: How to Know When to Invest Confidently Matters
Knowing how superior investors use 3 key buying indicators helps new investors protect and grow their capital. The 3 basic checks on the economy, markets, and prospective investment allow investors to buy in the most favorable circumstances. It teaches a simple way to keep your money safe and available for buying in favorable conditions.
Takeaways From The Lesson, The 3 Yeses Formula: How to Know When to Invest Confidently
3 Yeses or no investment gets made keeps money in your pocket until you can buy under favorable circumstances. Superior investors need yeses from the economy, stock market, and company you are considering investing in.
- Look at the economy – trends for jobs, cars, and housing must be positive. Up is good, down is bad. We need up!
- Look at the market – in the short term stock markets can have volatile but superior investors look longer term. Are markets working their way higher, lower, or going sideways? Up or sideways works for us. Hold off buying when trends are down.
- Look at the company – the company must be growing, making money, and paying affordable dividends. If yes, buy, if no, pass and look elsewhere.
Other Lessons Related To: The 3 Yeses Formula: How to Know When to Invest Confidently
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lesson links:
Key investing success choices Lesson 290.01
Join exceptional wealth builders Lesson 290.02
Investing time or adviser time? Lesson 290.03
Small investors have advantages Lesson 290.04
5 Secrets of superior investors Lesson 290.05
Avoid 6 investing sins Lesson 290.06
Investment impatience destroys wealth Lesson 290.07
3 Yeses or no investment Lesson 290.08
Investing can be fun, interesting and slow Lesson 290.09
Warren Buffett explains gold Lesson 290.10
Stock trading halts explained Lesson 290.13
FAQ about money making investment choices Lesson 290.14
FAQ about financial and investment advisors Lesson 290.15
Next lesson 10: Investing can be fun, interesting and slow
Have a prosperous investor day!
Bryan
White Top Investor
[email protected] WhiteTopInvestor.com
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