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  5. LSPD: What do you think about using the 20 DMA to determine a bid to start a new position? [Lightspeed Commerce Inc. Subordinate Voting Shares]
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Q: What do you think about using the 20 DMA to determine a bid to start a new position? I don't have the time nor access to the data required to do a thorough analysis. Any other suggestions?

Thank you
Asked by Richard on January 18, 2024
5i Research Answer:

Using moving averages can be useful in looking for stock entries or exits, however, with such a short timeframe, it may not provide as much signal for a long-term position. For example, buying CSU when it drops below its 20-day moving average may have provided an investor with good entry points over the years (particularly as CSU has historically gone up and to the right), however, this same practice on a name like LSPD would have provided entry points that preceded the stock falling significantly. 

We prefer to use fundamental metrics and market dynamics/psychology to assess entry points. For example, if LSPD reaches a low point in valuation and also if the market is beginning to reward fintech names, then these factors combined might provide a favourable setup and entry point. As in all things investing-related, there is no single answer or solution, but using a combination of factors, logic and reason, we can assess the probability of good entry or exit points.