<?xml version="1.0" encoding="UTF-8"?><rss xmlns:dc="http://purl.org/dc/elements/1.1/" xmlns:content="http://purl.org/rss/1.0/modules/content/" xmlns:atom="http://www.w3.org/2005/Atom" version="2.0" xmlns:itunes="http://www.itunes.com/dtds/podcast-1.0.dtd" xmlns:googleplay="http://www.google.com/schemas/play-podcasts/1.0"><channel><title><![CDATA[Investing With Purpose: Resources & Tools]]></title><description><![CDATA[Access our curated library of practical calculators, spreadsheet templates, and how-to guides—everything you need to streamline research and supercharge your decision-making.]]></description><link>https://www.investingwpurpose.com/s/resources-and-tools</link><image><url>https://substackcdn.com/image/fetch/$s_!CNyU!,w_256,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F4f84101b-e56a-422f-be4b-f1e48179d50b_1024x1024.png</url><title>Investing With Purpose: Resources &amp; Tools</title><link>https://www.investingwpurpose.com/s/resources-and-tools</link></image><generator>Substack</generator><lastBuildDate>Fri, 17 Apr 2026 16:31:45 GMT</lastBuildDate><atom:link href="https://www.investingwpurpose.com/feed" rel="self" type="application/rss+xml"/><copyright><![CDATA[Investing With Purpose]]></copyright><language><![CDATA[en]]></language><webMaster><![CDATA[investingwpurpose@substack.com]]></webMaster><itunes:owner><itunes:email><![CDATA[investingwpurpose@substack.com]]></itunes:email><itunes:name><![CDATA[Investing With Purpose | IWP]]></itunes:name></itunes:owner><itunes:author><![CDATA[Investing With Purpose | IWP]]></itunes:author><googleplay:owner><![CDATA[investingwpurpose@substack.com]]></googleplay:owner><googleplay:email><![CDATA[investingwpurpose@substack.com]]></googleplay:email><googleplay:author><![CDATA[Investing With Purpose | IWP]]></googleplay:author><itunes:block><![CDATA[Yes]]></itunes:block><item><title><![CDATA[Mastering P/E, PEG, and Price-to-Sales: Valuation Ratios Made Simple]]></title><description><![CDATA[A clear, practical guide to three of the most important valuation ratios, their history, how to interpret them, and how to integrate them into a full investment process.]]></description><link>https://www.investingwpurpose.com/p/mastering-pe-peg-and-price-to-sales</link><guid isPermaLink="false">https://www.investingwpurpose.com/p/mastering-pe-peg-and-price-to-sales</guid><dc:creator><![CDATA[Investing With Purpose | IWP]]></dc:creator><pubDate>Fri, 15 Aug 2025 14:31:17 GMT</pubDate><enclosure url="https://substackcdn.com/image/fetch/$s_!fo3Y!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png" length="0" type="image/jpeg"/><content:encoded><![CDATA[<div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!fo3Y!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!fo3Y!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png 424w, https://substackcdn.com/image/fetch/$s_!fo3Y!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png 848w, https://substackcdn.com/image/fetch/$s_!fo3Y!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png 1272w, https://substackcdn.com/image/fetch/$s_!fo3Y!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!fo3Y!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png" width="1024" height="1024" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:1024,&quot;width&quot;:1024,&quot;resizeWidth&quot;:null,&quot;bytes&quot;:null,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:null,&quot;href&quot;:null,&quot;belowTheFold&quot;:false,&quot;topImage&quot;:true,&quot;internalRedirect&quot;:null,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!fo3Y!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png 424w, https://substackcdn.com/image/fetch/$s_!fo3Y!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png 848w, https://substackcdn.com/image/fetch/$s_!fo3Y!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png 1272w, https://substackcdn.com/image/fetch/$s_!fo3Y!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F99132b7d-3f25-425b-9cb1-631aedddf7b5_1024x1024.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><h3><strong>TL;DR</strong></h3><p><br><strong>P/E, PEG, and Price-to-Sales are three of the most common valuation ratios, each showing how the market is pricing a company relative to its earnings, growth, or sales.</strong> Their meaning has evolved over decades: P/E dominated early industrial investing, PEG rose with growth stock booms, and P/S became popular with high-revenue but unprofitable tech firms.</p><p><strong>These ratios measure market value against certain fundamentals, not intrinsic value.</strong> Intrinsic value is what a business is truly worth based on its future cash flows, assets, and competitive position, while market value is what investors are currently willing to pay. The two often diverge due to sentiment, economic cycles, and investor psychology.</p><p>In bullish markets, high ratios may feel normal; in bearish periods, even fair valuations can look expensive. <strong>Sector norms also matter.</strong> What&#8217;s high in one industry may be low in another. The most effective use of these ratios is as a starting point: compare within sectors, check against history, and integrate with deeper analysis of growth, profitability, and risk.</p><p class="button-wrapper" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/p/mastering-pe-peg-and-price-to-sales?utm_source=substack&utm_medium=email&utm_content=share&action=share&quot;,&quot;text&quot;:&quot;Share&quot;,&quot;action&quot;:null,&quot;class&quot;:null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://www.investingwpurpose.com/p/mastering-pe-peg-and-price-to-sales?utm_source=substack&utm_medium=email&utm_content=share&action=share"><span>Share</span></a></p><div><hr></div><p><strong>Valuation ratios are the quick language of the stock market. You see them in earnings headlines, analyst notes, and investor presentations. For many, they&#8217;re the first step in deciding whether a stock is &#8220;cheap&#8221; or &#8220;expensive.&#8221;</strong></p><p><strong>But there&#8217;s a problem: these numbers are often taken at face value, stripped of the history, context, and psychology that give them meaning.</strong></p><p>Used correctly, valuation ratios are a filter, or a way to narrow down opportunities and spot potential risks. Used poorly, they can lead to costly mistakes.</p><p>This guide will cover three of the most widely used ratios: <strong>Price-to-Earnings (P/E)</strong>, <strong>Price/Earnings-to-Growth (PEG)</strong>, and <strong>Price-to-Sales (P/S)</strong>. It will also go deeper into their history, their interpretation, and how investor psychology changes what those numbers mean.</p><div><hr></div><h3><strong>The Evolution of Valuation Ratios</strong></h3><p>Valuation ratios have been around for more than a century, but their meaning has evolved.</p><ul><li><p><strong>Early 1900s:</strong> P/E was a banker&#8217;s shorthand. Companies with P/E ratios above 15 were often considered &#8220;speculative.&#8221;</p></li><li><p><strong>1930s&#8211;1950s:</strong> Benjamin Graham and David Dodd formalized P/E and book value multiples, tying them to intrinsic value estimates.</p></li><li><p><strong>1980s&#8211;1990s:</strong> The growth stock boom saw PEG ratios gain traction, popularized by Peter Lynch as a way to spot growth at a reasonable price.</p></li><li><p><strong>2000s&#8211;Today:</strong> P/S ratios became mainstream, especially during periods when tech companies operated with high growth but no profits.</p></li></ul><p>Each ratio rose in prominence during periods when it best fit the market narrative: low P/E in post-war industrials, PEG in tech growth waves, P/S in startup-heavy eras.</p><div><hr></div><h3><strong>Intrinsic Value vs. Market Value</strong></h3><p>Understanding valuation ratios requires knowing what they measure and what they do not.</p><ul><li><p><strong>Intrinsic Value:</strong> An estimate of a company&#8217;s true worth based on fundamentals, like discounted cash flows (DCF), asset value, and competitive position. This is a model-driven, forward-looking assessment.</p></li><li><p><strong>Market Value:</strong> The current price investors are willing to pay, as set by supply and demand in the market. This is influenced by fundamentals but also by sentiment, liquidity, and macro conditions.</p></li></ul><p>Valuation ratios tell you about <em>market value relative to certain fundamentals</em>, not the intrinsic value itself. </p><p>A stock can have a low P/E and still be overvalued if its intrinsic value is lower than what the market is pricing in.</p><p><strong>Fair Value is</strong> <strong>where intrinsic and market value are in balance.</strong></p><p>Ratios help identify possible over- or undervaluation, but they are not substitutes for full valuation models.</p><div><hr></div><h3><strong>1. Price-to-Earnings (P/E) Ratio</strong></h3><p><strong>Formula:</strong><br>P/E = Current Share Price &#247; Earnings Per Share (EPS)</p><p>The P/E ratio tells you how much investors are paying for each dollar of current earnings. It&#8217;s simple, intuitive, and widely available, which is why it&#8217;s often the first number people quote when talking about a stock&#8217;s valuation.</p><h4><strong>Interpreting the P/E Ratio</strong></h4><ul><li><p><strong>High P/E:</strong> Often signals high growth expectations. This can be good if the growth materializes, dangerous if it doesn&#8217;t.</p></li><li><p><strong>Low P/E:</strong> May indicate undervaluation or that the market expects weak growth or significant risks.</p></li></ul><h4><strong>Example:</strong></h4><p>Company A is trading at $100 per share with $5 in EPS. Its P/E is 20.<br>Company B trades at $50 per share with $5 in EPS. Its P/E is 10.<br>Without more context, B appears cheaper. But if A is growing earnings at 30% annually while B&#8217;s earnings are flat, the picture changes.</p><h4><strong>Pitfalls:</strong></h4><ul><li><p>Comparing across sectors: A 20 P/E might be cheap for software but expensive for utilities.</p></li><li><p>Ignoring one-time earnings impacts: A large gain or loss from an asset sale can distort EPS.</p></li><li><p>Not adjusting for the cycle: P/E ratios can look artificially low during earnings booms and artificially high during recessions.</p></li></ul><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!9TCY!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!9TCY!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png 424w, https://substackcdn.com/image/fetch/$s_!9TCY!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png 848w, https://substackcdn.com/image/fetch/$s_!9TCY!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png 1272w, https://substackcdn.com/image/fetch/$s_!9TCY!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!9TCY!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png" width="1456" height="926" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/ffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:926,&quot;width&quot;:1456,&quot;resizeWidth&quot;:null,&quot;bytes&quot;:50517,&quot;alt&quot;:&quot;&quot;,&quot;title&quot;:null,&quot;type&quot;:&quot;image/png&quot;,&quot;href&quot;:null,&quot;belowTheFold&quot;:true,&quot;topImage&quot;:false,&quot;internalRedirect&quot;:&quot;https://investingwpurpose.substack.com/i/171046661?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png&quot;,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" title="" srcset="https://substackcdn.com/image/fetch/$s_!9TCY!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png 424w, https://substackcdn.com/image/fetch/$s_!9TCY!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png 848w, https://substackcdn.com/image/fetch/$s_!9TCY!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png 1272w, https://substackcdn.com/image/fetch/$s_!9TCY!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fffe7264a-3d67-4c68-a1bc-7d7e91cf74f5_1614x1026.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a><figcaption class="image-caption">S&amp;P 500 P/E Ratio Evolution since 1995. Source: Macro Trends</figcaption></figure></div><div><hr></div><h3><strong>2. Price/Earnings-to-Growth (PEG) Ratio</strong></h3><p><strong>Formula:</strong><br>PEG = P/E &#247; Expected Annual EPS Growth Rate</p><p>The PEG ratio refines the P/E by adding a crucial dimension: growth. By dividing the P/E by the company&#8217;s expected growth rate, you get a measure of how expensive the stock is relative to its growth prospects.</p><h4><strong>Interpreting the PEG Ratio</strong></h4><ul><li><p><strong>PEG &lt; 1:</strong> Often considered undervalued relative to growth.</p></li><li><p><strong>PEG &#8776; 1:</strong> Fairly valued.</p></li><li><p><strong>PEG &gt; 1:</strong> Possibly overvalued for its growth rate.</p></li></ul><h4><strong>Example:</strong></h4><p>Company C has a P/E of 25 and an expected EPS growth rate of 30%. PEG = 0.83. This could indicate a reasonable valuation for a high-growth business.<br>Company D has a P/E of 25 but a growth rate of just 10%. PEG = 2.5, which may be expensive unless there are other strategic advantages.</p><h4><strong>Pitfalls:</strong></h4><ul><li><p>Reliance on analyst estimates: Growth forecasts can be overly optimistic.</p></li><li><p>Useless for negative growth: A shrinking company will have a negative PEG, which tells you little.</p></li><li><p>Short forecast horizons: PEG usually uses a 1- to 5-year growth estimate, which may not capture the full business cycle.</p></li></ul><div><hr></div><h3><strong>3. Price-to-Sales (P/S) Ratio</strong></h3><p><strong>Formula:</strong><br>P/S = Market Capitalization &#247; Total Revenue<br>(or Share Price &#247; Sales Per Share)</p><p>The P/S ratio tells you how much investors are paying for each dollar of revenue. It&#8217;s especially useful for companies that are not yet profitable, such as early-stage tech firms.</p><h4><strong>Interpreting the P/S Ratio</strong></h4><ul><li><p><strong>Low P/S:</strong> Could mean undervaluation, particularly if margins are improving.</p></li><li><p><strong>High P/S:</strong> Could mean overvaluation unless revenue growth is strong and sustainable.</p></li></ul><h4><strong>Example:</strong></h4><p>A cloud software startup with $200 million in revenue and a $1 billion market cap has a P/S of 5. This might be reasonable if it&#8217;s growing revenue at 50% a year with strong gross margins, but expensive if growth is slowing.</p><h4><strong>Pitfalls:</strong></h4><ul><li><p>Different industries have different average margins: A grocery store chain and a software company can have similar P/S ratios but vastly different profit potential.</p></li><li><p>A low P/S can still be a value trap if sales are declining or margins are thin.</p></li></ul><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!YWVa!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!YWVa!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png 424w, https://substackcdn.com/image/fetch/$s_!YWVa!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png 848w, https://substackcdn.com/image/fetch/$s_!YWVa!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png 1272w, https://substackcdn.com/image/fetch/$s_!YWVa!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!YWVa!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png" width="1456" height="1109" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/a712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:1109,&quot;width&quot;:1456,&quot;resizeWidth&quot;:null,&quot;bytes&quot;:101021,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:&quot;image/png&quot;,&quot;href&quot;:null,&quot;belowTheFold&quot;:true,&quot;topImage&quot;:false,&quot;internalRedirect&quot;:&quot;https://investingwpurpose.substack.com/i/171046661?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png&quot;,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!YWVa!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png 424w, https://substackcdn.com/image/fetch/$s_!YWVa!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png 848w, https://substackcdn.com/image/fetch/$s_!YWVa!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png 1272w, https://substackcdn.com/image/fetch/$s_!YWVa!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa712e00e-f3fb-4ab8-830f-b8622fba1dbd_1506x1147.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a><figcaption class="image-caption">S&amp;P 500 P/S Ratio Evolution since 2010. Source: Macro Trends</figcaption></figure></div><div><hr></div><h3><strong>Sector Benchmarks</strong></h3><p>P/E, PEG, and P/S mean different things depending on the industry. Here are a few sample sector benchmarks for valuation ratios.</p><ul><li><p><strong>Utilities:</strong><br>Typical P/E: 10&#8211;20<br>Typical P/S: 1&#8211;2<br>Growth: Low and stable</p></li><li><p><strong>Technology:</strong><br>Typical P/E: 20&#8211;40+<br>Typical P/S: 5&#8211;15+<br>Growth: High</p></li><li><p><strong>Consumer Goods:</strong><br>Typical P/E: 15&#8211;25<br>Typical P/S: 1&#8211;4<br>Growth: Moderate</p></li><li><p><strong>Energy:</strong><br>Typical P/E: 8&#8211;18<br>Typical P/S: 0.5&#8211;2<br>Growth: Cyclical</p></li></ul><p>These are rough ranges, and market cycles can push them higher or lower.</p><p>For investors looking for credible, up-to-date data on valuation multiples, few resources match the quality and breadth of Aswath Damodaran&#8217;s NYU Stern website. Damodaran, often called the &#8220;Dean of Valuation,&#8221; publishes annual datasets that cover market-wide valuation multiples across sectors and geographies.</p><p>His data includes:</p><ul><li><p>Average and median P/E, P/S, EV/EBITDA, and other key ratios</p></li><li><p>Breakdowns by industry group</p></li><li><p>Comparisons across global markets</p></li><li><p>Historical trends to put current valuations in perspective</p></li></ul><p>This information is invaluable for benchmarking individual companies against their peers and understanding how sector norms shift over time. Because it is updated annually and covers both U.S. and international markets, it is a dependable reference point for both professional and retail investors.</p><p>You can explore the datasets here: <a href="https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datacurrent.html#multiples">Damodaran&#8217;s Current Data Page</a></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!TKKI!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!TKKI!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png 424w, https://substackcdn.com/image/fetch/$s_!TKKI!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png 848w, https://substackcdn.com/image/fetch/$s_!TKKI!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png 1272w, https://substackcdn.com/image/fetch/$s_!TKKI!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!TKKI!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png" width="1456" height="1102" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:1102,&quot;width&quot;:1456,&quot;resizeWidth&quot;:null,&quot;bytes&quot;:277557,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:&quot;image/png&quot;,&quot;href&quot;:null,&quot;belowTheFold&quot;:true,&quot;topImage&quot;:false,&quot;internalRedirect&quot;:&quot;https://investingwpurpose.substack.com/i/171046661?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png&quot;,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!TKKI!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png 424w, https://substackcdn.com/image/fetch/$s_!TKKI!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png 848w, https://substackcdn.com/image/fetch/$s_!TKKI!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png 1272w, https://substackcdn.com/image/fetch/$s_!TKKI!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7997e352-4418-4f37-b983-68c1321b0fd6_1771x1340.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a><figcaption class="image-caption">Source: pages.stern.nyu.edu/~adamodar</figcaption></figure></div><div><hr></div><h3><strong>Investor Psychology and &#8220;What Feels Expensive&#8221;</strong></h3><p>Investor sentiment shifts the boundaries of what&#8217;s considered &#8220;cheap&#8221; or &#8220;expensive.&#8221;</p><ul><li><p><strong>Late Bull Markets:</strong> High ratios feel &#8220;normal&#8221; because everyone expects growth to continue. Tech companies in 1999 traded at P/S ratios above 20 without raising eyebrows.</p></li><li><p><strong>Bear Markets:</strong> Even fair valuations feel expensive because investors are fearful. In 2009, quality companies traded at single-digit P/E ratios and still struggled to attract buyers.</p></li></ul><p>Behavioral finance tells us that <strong>anchoring</strong> plays a big role. If a stock has historically traded at a P/E of 30, investors may see 20 as &#8220;cheap&#8221; - even if fundamentals suggest it&#8217;s overvalued. Similarly, <strong>recency bias</strong> leads investors to overemphasize recent performance when judging value.</p><p>Behavioral finance is a crucial tool when analyzing market trends and momentum. </p><blockquote><p><em><strong>Valuation is not purely mathematical, it&#8217;s also emotional.</strong></em></p></blockquote><div><hr></div><h3><strong>Using Ratios </strong></h3><p>Ratios are most powerful when used together. For example:</p><ul><li><p>A high P/E with a low PEG can signal growth at a reasonable price.</p></li><li><p>A low P/S with improving margins can suggest an undervalued turnaround.</p></li><li><p>A company with a P/E below sector average, a PEG under 1, and stable or rising sales may be a strong candidate for deeper research.</p></li></ul><p>Also, using multiples as part of a process will always increase the probability of a successful conclusion. The best investors use ratios as an entry point. Here&#8217;s an example process:</p><ol><li><p>Screen for companies with P/E, PEG, or P/S suggesting possible mispricing.</p></li><li><p>Check sector norms and adjust expectations.</p></li><li><p>Evaluate growth drivers, profitability, and competitive position.</p></li><li><p>Compare market value to intrinsic value estimates.</p></li><li><p>Factor in sentiment and behavioral context.</p></li></ol><div><hr></div><h3><strong>Common Misuses of Valuation Ratios</strong></h3><ol><li><p><strong>Taking them at face value:</strong> Always investigate the underlying earnings or sales quality.</p></li><li><p><strong>Not adjusting for debt:</strong> Two companies with the same P/E can have very different risk profiles if one carries high leverage.</p></li><li><p><strong>Forgetting macro context:</strong> Interest rates, inflation, and economic cycles can all affect what is considered &#8220;cheap&#8221; or &#8220;expensive.&#8221;</p></li></ol><div><hr></div><h3><strong>Final Thoughts</strong></h3><p>Valuation ratios are essential, but they are only part of the puzzle. They tell you how the market is pricing a company today relative to certain metrics, not what it&#8217;s truly worth.</p><p>To use them well, you need historical context, an understanding of intrinsic vs. market value, and awareness of how investor psychology can distort what feels &#8220;cheap&#8221; or &#8220;expensive.&#8221;</p><p>The numbers are objective. The interpretation is where investing skill comes in.</p><p></p><p>Thank you for reading!</p><p class="button-wrapper" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/p/mastering-pe-peg-and-price-to-sales?utm_source=substack&utm_medium=email&utm_content=share&action=share&quot;,&quot;text&quot;:&quot;Share&quot;,&quot;action&quot;:null,&quot;class&quot;:null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://www.investingwpurpose.com/p/mastering-pe-peg-and-price-to-sales?utm_source=substack&utm_medium=email&utm_content=share&action=share"><span>Share</span></a></p><div class="subscription-widget-wrap-editor" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/subscribe?&quot;,&quot;text&quot;:&quot;Subscribe&quot;,&quot;language&quot;:&quot;en&quot;}" data-component-name="SubscribeWidgetToDOM"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">For more resources and tools like this, subscribe now!</p></div><form class="subscription-widget-subscribe"><input type="email" class="email-input" name="email" placeholder="Type your email&#8230;" tabindex="-1"><input type="submit" class="button primary" value="Subscribe"><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div><p></p>]]></content:encoded></item><item><title><![CDATA[8 Overlooked Metrics That Smart Investors Use to Spot Winners Before Wall Street Does]]></title><description><![CDATA[EV/FCF, CCC, ROIIC, and others. The hidden numbers that reveal what EBITDA can't.]]></description><link>https://www.investingwpurpose.com/p/8-overlooked-metrics-that-smart-investors</link><guid isPermaLink="false">https://www.investingwpurpose.com/p/8-overlooked-metrics-that-smart-investors</guid><dc:creator><![CDATA[Investing With Purpose | IWP]]></dc:creator><pubDate>Sun, 29 Jun 2025 08:09:50 GMT</pubDate><enclosure url="https://substackcdn.com/image/fetch/$s_!mRX-!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png" length="0" type="image/jpeg"/><content:encoded><![CDATA[<p>Most investors look where the light shines brightest: P/E ratios, revenue/EPS growth, EBITDA, charts. These numbers are easy to track and easy to talk about. But if you want an edge, you need to look where others don&#8217;t.</p><p>Some of the most powerful signals are buried in places few investors bother to check: deep in the cash flow statement, hidden in the footnotes, or tucked away on the balance sheet.</p><p>This post breaks down 8 underused, underappreciated metrics that can expose real risk, reveal undervalued opportunities, and help you spot businesses that compound over time. <strong>Before the consensus catches on</strong>.</p><div class="subscription-widget-wrap-editor" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/subscribe?&quot;,&quot;text&quot;:&quot;Subscribe&quot;,&quot;language&quot;:&quot;en&quot;}" data-component-name="SubscribeWidgetToDOM"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption"></p></div><form class="subscription-widget-subscribe"><input type="email" class="email-input" name="email" placeholder="Type your email&#8230;" tabindex="-1"><input type="submit" class="button primary" value="Subscribe"><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!mRX-!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!mRX-!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png 424w, https://substackcdn.com/image/fetch/$s_!mRX-!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png 848w, https://substackcdn.com/image/fetch/$s_!mRX-!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png 1272w, https://substackcdn.com/image/fetch/$s_!mRX-!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!mRX-!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png" width="1456" height="971" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:971,&quot;width&quot;:1456,&quot;resizeWidth&quot;:null,&quot;bytes&quot;:null,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:null,&quot;href&quot;:null,&quot;belowTheFold&quot;:false,&quot;topImage&quot;:true,&quot;internalRedirect&quot;:null,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!mRX-!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png 424w, https://substackcdn.com/image/fetch/$s_!mRX-!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png 848w, https://substackcdn.com/image/fetch/$s_!mRX-!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png 1272w, https://substackcdn.com/image/fetch/$s_!mRX-!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F19ef8756-861a-45a9-8f26-c8a5b07299ed_1536x1024.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><div><hr></div><h3>1. EV / Free Cash Flow Yield</h3><p><strong>What it is:</strong><br>Measures how much free cash flow a company generates relative to its enterprise value.</p><p><strong>Formula:</strong><br>FCF Yield = Free Cash Flow / Enterprise Value</p><p><strong>Why it&#8217;s overlooked:</strong><br>Investors often default to P/E or P/FCF. EV/FCF is slightly harder to compute, especially with variable debt levels.</p><p><strong>Why it matters:</strong><br>It&#8217;s a capital efficiency check. A high FCF yield can indicate an undervalued, cash-rich business.</p><p><strong>Best for:</strong><br>Mature companies, capital-intensive sectors, or dividend compounders.<br><strong>Examples:</strong> <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$MSFT&quot;}" data-component-name="CashtagToDOM"></span> (Microsoft), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$XOM&quot;}" data-component-name="CashtagToDOM"></span> (Exxon), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$MCD&quot;}" data-component-name="CashtagToDOM"></span> (Mcdonald&#8217;s)   </p><div><hr></div><h3>2. Cash Conversion Cycle (CCC)</h3><p><strong>What it is:</strong><br>Measures how long a company&#8217;s cash is tied up in inventory and receivables before it turns into actual cash.</p><p><strong>Formula:</strong><br>CCC = Days Inventory Outstanding + Days Sales Outstanding &#8722; Days Payables Outstanding</p><p><strong>Why it&#8217;s overlooked:</strong><br>Requires pulling and calculating multiple metrics from the financials. More operational than most investors want to go.</p><p><strong>Why it matters:</strong><br>A shorter CCC means more efficient use of capital. A rising CCC can warn of liquidity issues or poor inventory management.</p><p><strong>Best for:</strong><br>Retail, CPG, and manufacturing companies.<br><strong>Examples:</strong> <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$WMT&quot;}" data-component-name="CashtagToDOM"></span> (Walmart), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$COST&quot;}" data-component-name="CashtagToDOM"></span> (Costco), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$DE&quot;}" data-component-name="CashtagToDOM"></span> (Deere &amp; Co.)</p><div><hr></div><h3>3. Operating Leverage</h3><p><strong>What it is:</strong><br>Shows how much operating income (EBIT) changes in response to changes in revenue.</p><p><strong>Formula:</strong><br>Operating Leverage = % Change in EBIT / % Change in Revenue</p><p><strong>Why it&#8217;s overlooked:</strong><br>You need multi-quarter data and a clear look at EBIT trends. This isn&#8217;t easily charted on a single snapshot.</p><p><strong>Why it matters:</strong><br>Tells you how scalable a business is. In good times, profits grow faster than sales. In bad times, losses pile up.</p><p><strong>Best for:</strong><br>Software, platform businesses, asset-light models, or cyclical plays.<br><strong>Examples:</strong> <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$MSFT&quot;}" data-component-name="CashtagToDOM"></span> (Microsoft), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$NVDA&quot;}" data-component-name="CashtagToDOM"></span> (Nvidia), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$CAT&quot;}" data-component-name="CashtagToDOM"></span>(Caterpillar)</p><div><hr></div><h3>4. Return on Incremental Invested Capital (ROIIC)</h3><p><strong>What it is:</strong><br>Measures the return a company generates on <strong>new capital, </strong>not just historical averages.</p><p><strong>Formula:</strong><br>ROIIC = Change in NOPAT / Change in Invested Capital</p><p><strong>Why it&#8217;s overlooked:</strong><br>Not in earnings reports, and requires pulling two time periods and calculating deltas. Takes time and effort. </p><p><strong>Why it matters:</strong><br>A great test of whether a company is allocating capital wisely as it grows.</p><p><strong>Best for:</strong><br>Compounders, serial acquirers, and capital allocators.<br><strong>Examples:</strong> <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$V&quot;}" data-component-name="CashtagToDOM"></span> (Visa), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$AAPL&quot;}" data-component-name="CashtagToDOM"></span> (Apple), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$NKE&quot;}" data-component-name="CashtagToDOM"></span> (Nike)   </p><div><hr></div><h3>5. Deferred Revenue Trends</h3><p><strong>What it is:</strong><br>Revenue that has been collected but not yet earned, which is often seen in subscriptions or prepaid service models.</p><p><strong>Formula:</strong><br>Look at the YoY or QoQ change in the Deferred Revenue line on the balance sheet.</p><p><strong>Why it&#8217;s overlooked:</strong><br>Sits on the liabilities side and isn&#8217;t part of the income statement, making it easy to ignore if you're only tracking earnings.</p><p><strong>Why it matters:</strong><br>Rising deferred revenue suggests strong bookings and future growth. A quiet but powerful signal.</p><p><strong>Best for:</strong><br>SaaS and subscription-based businesses.<br><strong>Examples:</strong> <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$CRM&quot;}" data-component-name="CashtagToDOM"></span> (Salesforce),  <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$ADBE&quot;}" data-component-name="CashtagToDOM"></span> (Adobe), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$SHOP&quot;}" data-component-name="CashtagToDOM"></span> (Shopify)</p><div><hr></div><h3>6. Revenue Per Employee</h3><p><strong>What it is:</strong><br>A productivity metric showing how much revenue the company generates per worker.</p><p><strong>Formula:</strong><br>Revenue Per Employee = Total Revenue / Number of Employees</p><p><strong>Why it&#8217;s overlooked:</strong><br>Requires external headcount data for accuracy, although reported employees can work. It&#8217;s not always easy to normalize across companies however.</p><p><strong>Why it matters:</strong><br>Higher productivity often signals intellectual property leverage, not just brute force growth.</p><p><strong>Best for:</strong><br>Tech, fintech, digital services, or consulting.<br><strong>Examples:</strong> <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$BLK&quot;}" data-component-name="CashtagToDOM"></span> (BlackRock), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$GOOGL&quot;}" data-component-name="CashtagToDOM"></span> (Alphabet), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$PLTR&quot;}" data-component-name="CashtagToDOM"></span> </p><div><hr></div><h3>7. Unit Economics (Customer or Product-Level Profitability)</h3><p><strong>What it is:</strong><br>How much profit each product, transaction, or customer generates.</p><p><strong>Formulas:</strong><br>Contribution Margin = (Revenues &#8722; Variable Cost) / Revenues (compare across industry averages)<br>LTV:CAC Ratio = Customer Lifetime Value / Customer Acquisition Cost</p><p><strong>Why it&#8217;s overlooked:</strong><br>Usually internal data only. You&#8217;ll find it in startup decks or investor presentations (not 10-Ks).</p><p><strong>Why it matters:</strong><br>It tells you whether scaling the business actually makes sense&#8212;or just burns more money faster.</p><p><strong>Best for:</strong><br>Startups, DTC brands, fintech, SaaS, and subscription models.<br><strong>Examples:</strong> <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$HIMS&quot;}" data-component-name="CashtagToDOM"></span> (Hims &amp; Hers), <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$DUOL&quot;}" data-component-name="CashtagToDOM"></span> (Duolingo)</p><div><hr></div><h3>8. Altman Z-Score</h3><p><strong>What it is:</strong><br>A formula that predicts the likelihood a company could go bankrupt, based on financial health and leverage.</p><p><strong>Formula:</strong><br>Z =     1.2 &#215; (Working Capital / Total Assets)<br>&#8195;&#8195;+ 1.4 &#215; (Retained Earnings / Total Assets)<br>&#8195;&#8195;+ 3.3 &#215; (EBIT / Total Assets)<br>&#8195;&#8195;+ 0.6 &#215; (Market Value of Equity / Total Liabilities)<br>&#8195;&#8195;+ 1.0 &#215; (Sales / Total Assets)</p><p><strong>Why it&#8217;s overlooked:</strong><br>It feels like an academic tool. Most analysts skip it unless they&#8217;re explicitly doing credit or distressed work.</p><p><strong>Why it matters:</strong><br>If you're looking at a turnaround play or high-debt company, this can be a leading indicator of danger&#8212;or resilience.</p><p><strong>Best for:</strong><br>Distressed or highly leveraged businesses.</p><div><hr></div><h2>Why These Metrics Matter</h2><p>Most investors stick to what's easy.<br>But the edge comes from going one layer deeper.</p><p>These metrics aren't about being fancy, they're about seeing what others miss. Whether you're in public markets, early-stage investing, or private equity, mastering these tools will separate you from the crowd.</p><p></p><div class="subscription-widget-wrap-editor" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/subscribe?&quot;,&quot;text&quot;:&quot;Subscribe&quot;,&quot;language&quot;:&quot;en&quot;}" data-component-name="SubscribeWidgetToDOM"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">Thanks for reading! To get more resources like this straight in your inbox, subscribe now:</p></div><form class="subscription-widget-subscribe"><input type="email" class="email-input" name="email" placeholder="Type your email&#8230;" tabindex="-1"><input type="submit" class="button primary" value="Subscribe"><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div><p></p><p><em>The information in this post is for educational and informational purposes only. It reflects the author&#8217;s personal research and analysis, which may be subject to error or omission. This is not financial, investment, or trading advice. Always conduct your own due diligence and consult with a qualified financial advisor before making any investment or trading decisions.</em></p>]]></content:encoded></item><item><title><![CDATA[ Elliott Wave Crash Course]]></title><description><![CDATA[Read the Waves. Surf the Trend.]]></description><link>https://www.investingwpurpose.com/p/elliott-wave-crash-course</link><guid isPermaLink="false">https://www.investingwpurpose.com/p/elliott-wave-crash-course</guid><dc:creator><![CDATA[Investing With Purpose | IWP]]></dc:creator><pubDate>Fri, 27 Jun 2025 10:21:51 GMT</pubDate><enclosure url="https://substack-post-media.s3.amazonaws.com/public/images/45d2788b-0a2d-4332-8e6d-299b732c9584_1024x1024.png" length="0" type="image/jpeg"/><content:encoded><![CDATA[<h3><strong>CHAPTER 1: The Ocean Beneath the Charts</strong></h3><p>Imagine the market is an ocean.</p><p>Every price move is a wave. Traders get swept up, dragged under, or - if they know what to look for - ride it like a pro.</p><div class="subscription-widget-wrap-editor" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/subscribe?&quot;,&quot;text&quot;:&quot;Subscribe&quot;,&quot;language&quot;:&quot;en&quot;}" data-component-name="SubscribeWidgetToDOM"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">This Substack is reader-supported. To receive new posts and support my work, consider becoming a free or paid subscriber.</p></div><form class="subscription-widget-subscribe"><input type="email" class="email-input" name="email" placeholder="Type your email&#8230;" tabindex="-1"><input type="submit" class="button primary" value="Subscribe"><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div><p>That&#8217;s the promise of Elliott Wave Theory.</p><p>It&#8217;s not about guessing every tick. It&#8217;s about spotting the structure beneath the chaos.<br>Impulse. Correction. Emotion. Psychology.</p><p>These waves repeat - over and over - because human behavior repeats.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!FE3b!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!FE3b!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png 424w, https://substackcdn.com/image/fetch/$s_!FE3b!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png 848w, https://substackcdn.com/image/fetch/$s_!FE3b!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png 1272w, https://substackcdn.com/image/fetch/$s_!FE3b!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!FE3b!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png" width="698" height="465.3333333333333" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/abfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:400,&quot;width&quot;:600,&quot;resizeWidth&quot;:698,&quot;bytes&quot;:12200,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:&quot;image/png&quot;,&quot;href&quot;:null,&quot;belowTheFold&quot;:false,&quot;topImage&quot;:true,&quot;internalRedirect&quot;:&quot;https://investingwpurpose.substack.com/i/166962161?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png&quot;,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!FE3b!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png 424w, https://substackcdn.com/image/fetch/$s_!FE3b!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png 848w, https://substackcdn.com/image/fetch/$s_!FE3b!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png 1272w, https://substackcdn.com/image/fetch/$s_!FE3b!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fabfc354a-e4f6-45d3-9f33-6f33cabc3520_600x400.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><p></p><div><hr></div><p><strong>NOTE ON DIRECTION: Bull or Bear?</strong></p><p>Before we dive into wave types, here&#8217;s something most beginners miss:</p><p>Waves don&#8217;t always move up.<br>Elliott Wave describes trend structure- regardless of direction.</p><ul><li><p>In a <strong>bull market</strong>, the 5-wave impulse is up, and the 3-wave correction is down.</p></li><li><p>In a <strong>bear market</strong>, the 5-wave impulse is down, and the 3-wave correction is up.</p></li></ul><p>Same structure. Flipped psychology.</p><p>We&#8217;ll walk through both.</p><div><hr></div><h3>CHAPTER 2: The Impulse &#8211; 5 Waves of Emotion</h3><p>The impulse is the core move&#8212;5 waves with the dominant trend.</p><p>In a <strong>Bull Market</strong>, it looks like this:</p><ol><li><p><strong>Wave 1 &#8211; The Spark</strong><br>Smart money moves in. The market rises, quietly. Most traders ignore it.</p></li><li><p><strong>Wave 2 &#8211; The Doubt</strong><br>Pullback. &#8220;Another fakeout,&#8221; they say. But price doesn&#8217;t break down.</p></li><li><p><strong>Wave 3 &#8211; The Explosion</strong><br>Momentum surges. Fundamentals &#8220;improve.&#8221; Everyone jumps in.</p></li><li><p><strong>Wave 4 &#8211; The Pause</strong><br>Choppy. Sideways. Traders get nervous. Weak hands exit.</p></li><li><p><strong>Wave 5 &#8211; The Euphoria</strong><br>&#8220;This will never stop.&#8221; Volume fades. RSI diverges. But price pushes one last time.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!Y5JR!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!Y5JR!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png 424w, https://substackcdn.com/image/fetch/$s_!Y5JR!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png 848w, https://substackcdn.com/image/fetch/$s_!Y5JR!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png 1272w, https://substackcdn.com/image/fetch/$s_!Y5JR!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!Y5JR!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png" width="600" height="400" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:400,&quot;width&quot;:600,&quot;resizeWidth&quot;:null,&quot;bytes&quot;:63341,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:&quot;image/png&quot;,&quot;href&quot;:null,&quot;belowTheFold&quot;:true,&quot;topImage&quot;:false,&quot;internalRedirect&quot;:&quot;https://investingwpurpose.substack.com/i/166962161?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png&quot;,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!Y5JR!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png 424w, https://substackcdn.com/image/fetch/$s_!Y5JR!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png 848w, https://substackcdn.com/image/fetch/$s_!Y5JR!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png 1272w, https://substackcdn.com/image/fetch/$s_!Y5JR!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F503f4cd0-3dfd-44f1-a48b-ddd886e402d8_600x400.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div></li></ol><div><hr></div><p>In a <strong>Bear Market</strong>, it&#8217;s the same emotions&#8212;in reverse:</p><ol><li><p><strong>Wave 1</strong> <strong>&#8211; The Crack</strong><br>Selling begins. Smart money exits. Few notice.</p></li><li><p><strong>Wave 2 &#8211; The Bounce</strong><br>Hope returns. &#8220;That was the bottom.&#8221; It&#8217;s not.</p></li><li><p><strong>Wave 3</strong> <strong>&#8211; The Panic</strong><br>Broad selling. Bad news hits. Fundamentals now match price.</p></li><li><p><strong>Wave 4 &#8211; The Sucker's Rally</strong><br>A sharp bounce. People want to believe. They get trapped again.</p></li><li><p><strong>Wave 5 &#8211; The Washout</strong><br>Capitulation. Despair. No buyers left. Oversold&#8230; but no one cares.</p></li></ol><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!p9bS!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!p9bS!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png 424w, https://substackcdn.com/image/fetch/$s_!p9bS!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png 848w, https://substackcdn.com/image/fetch/$s_!p9bS!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png 1272w, https://substackcdn.com/image/fetch/$s_!p9bS!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!p9bS!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png" width="600" height="400" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:400,&quot;width&quot;:600,&quot;resizeWidth&quot;:null,&quot;bytes&quot;:62813,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:&quot;image/png&quot;,&quot;href&quot;:null,&quot;belowTheFold&quot;:true,&quot;topImage&quot;:false,&quot;internalRedirect&quot;:&quot;https://investingwpurpose.substack.com/i/166962161?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png&quot;,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!p9bS!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png 424w, https://substackcdn.com/image/fetch/$s_!p9bS!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png 848w, https://substackcdn.com/image/fetch/$s_!p9bS!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png 1272w, https://substackcdn.com/image/fetch/$s_!p9bS!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc4e2d5-2c92-4abe-aa30-6489ea749144_600x400.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><p></p><div><hr></div><h3>CHAPTER 3: The Correction &#8211; 3 Waves of Psychology</h3><p>After every 5-wave impulse, the market needs to breathe out. This is the A-B-C correction.</p><p>In <strong>Bull Markets</strong> (correction moves down):</p><ul><li><p><strong>Wave A</strong> &#8211; First hit. &#8220;Buy the dip&#8221; works&#8230; but it&#8217;s weaker.</p></li><li><p><strong>Wave B</strong> &#8211; Bounce. &#8220;New highs coming!&#8221; But internals are weak.</p></li><li><p><strong>Wave C</strong> &#8211; Drop. Pain. Stops hit. Then&#8230; stabilization.</p></li></ul><p>In <strong>Bear Markets</strong> (correction moves up):</p><ul><li><p><strong>Wave A</strong> &#8211; The bounce. &#8220;The worst is over.&#8221;</p></li><li><p><strong>Wave B</strong> &#8211; Pullback. Confusion. Still bearish sentiment.</p></li><li><p><strong>Wave C</strong> &#8211; A sharp rally. Feels like recovery&#8230; but it&#8217;s just a breather.</p></li></ul><div><hr></div><h3>CHAPTER 4: Fractals &#8211; Waves Within Waves</h3><p>Elliott Waves are fractal.</p><p>Every wave you see contains smaller waves inside it. Zoom out, and you&#8217;ll find that same pattern repeating on larger timeframes.</p><ul><li><p>A Wave 3 may contain 5 smaller waves.</p></li><li><p>That Wave 3 might itself be part of a larger Wave 1 on the weekly chart.</p></li></ul><p>This is where Elliott becomes powerful - but also messy.</p><p><em><strong>Example: Bitcoin 5 year chart</strong></em></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!hFVo!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F077077b6-c8d3-4db4-b1c7-e2943df3dba3_2369x1446.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!hFVo!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F077077b6-c8d3-4db4-b1c7-e2943df3dba3_2369x1446.png 424w, https://substackcdn.com/image/fetch/$s_!hFVo!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F077077b6-c8d3-4db4-b1c7-e2943df3dba3_2369x1446.png 848w, https://substackcdn.com/image/fetch/$s_!hFVo!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F077077b6-c8d3-4db4-b1c7-e2943df3dba3_2369x1446.png 1272w, https://substackcdn.com/image/fetch/$s_!hFVo!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F077077b6-c8d3-4db4-b1c7-e2943df3dba3_2369x1446.png 1456w" sizes="100vw"><img 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srcset="https://substackcdn.com/image/fetch/$s_!hFVo!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F077077b6-c8d3-4db4-b1c7-e2943df3dba3_2369x1446.png 424w, https://substackcdn.com/image/fetch/$s_!hFVo!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F077077b6-c8d3-4db4-b1c7-e2943df3dba3_2369x1446.png 848w, https://substackcdn.com/image/fetch/$s_!hFVo!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F077077b6-c8d3-4db4-b1c7-e2943df3dba3_2369x1446.png 1272w, https://substackcdn.com/image/fetch/$s_!hFVo!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F077077b6-c8d3-4db4-b1c7-e2943df3dba3_2369x1446.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><p></p><div><hr></div><h3>CHAPTER 5: Tools of the Wave Rider</h3><p>Waves aren&#8217;t magic - they&#8217;re probabilistic. To trade them effectively, combine them with:</p><ul><li><p><strong>Fibonacci</strong>:<br>Wave 3 often extends 161.8% of Wave 1.<br>Wave 2 often retraces ~61.8%.</p></li><li><p><strong>RSI/MACD</strong>:<br>Use to confirm momentum in Wave 3.<br>Divergence? Could mark Wave 5 or C tops/bottoms.</p></li><li><p><strong>EMAs</strong>:<br>Wave 1 often breaks through the 21/55 EMAs.<br>EMA flips confirm trend transitions.</p></li></ul><p>Use these tools to validate - not force - your wave count.</p><div><hr></div><h3>CHAPTER 6: Why It Works</h3><p>Elliott Wave works not because price moves in waves&#8230;<br>&#8230;but because people move in cycles.</p><p>Fear &#8594; Hope &#8594; Greed &#8594; Complacency &#8594; Fear again.</p><p>The waves are just footprints of mass psychology.</p><p>They aren&#8217;t perfect. But they repeat - because we repeat.</p><div><hr></div><h3>CHAPTER 7: From Theory to Practice</h3><p>Don&#8217;t get lost labeling every subwave.</p><p>Start simple:</p><ul><li><p>Is the trend up or down?</p></li><li><p>Are you in an impulse or a correction?</p></li><li><p>Where&#8217;s the momentum?</p></li></ul><p>Study past charts. Practice counts. Track them forward. Refine.</p><div><hr></div><h3>Takeaway</h3><p>Elliott Wave won&#8217;t turn you into a psychic. But it will give you a map.</p><p>A way to anticipate structure. To spot the traps. To know when to push - and when to stay patient.</p><p><strong>Because when you read the waves,<br>you stop fighting the market - and start riding it.</strong></p><div class="subscription-widget-wrap-editor" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/subscribe?&quot;,&quot;text&quot;:&quot;Subscribe&quot;,&quot;language&quot;:&quot;en&quot;}" data-component-name="SubscribeWidgetToDOM"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">This Substack is reader-supported. To receive new posts and support my work, consider becoming a free or paid subscriber.</p></div><form class="subscription-widget-subscribe"><input type="email" class="email-input" name="email" placeholder="Type your email&#8230;" tabindex="-1"><input type="submit" class="button primary" value="Subscribe"><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div>]]></content:encoded></item><item><title><![CDATA[The MACD Crash Course]]></title><description><![CDATA[A Story of Momentum and Change]]></description><link>https://www.investingwpurpose.com/p/the-macd-crash-course</link><guid isPermaLink="false">https://www.investingwpurpose.com/p/the-macd-crash-course</guid><dc:creator><![CDATA[Investing With Purpose | IWP]]></dc:creator><pubDate>Thu, 26 Jun 2025 14:53:23 GMT</pubDate><enclosure url="https://substack-post-media.s3.amazonaws.com/public/images/4449e7d1-4619-4534-a844-1949aae5157b_1024x1024.png" length="0" type="image/jpeg"/><content:encoded><![CDATA[<p>Imagine you're in a bustling marketplace. The sound of vendors, the hum of the crowd - it&#8217;s chaotic. Amid it all, you're trying to understand which direction the market will move. Enter the MACD, the quiet storyteller of market momentum.</p><p><strong>The Tale of the Two Moving Averages</strong></p><div class="subscription-widget-wrap-editor" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/subscribe?&quot;,&quot;text&quot;:&quot;Subscribe&quot;,&quot;language&quot;:&quot;en&quot;}" data-component-name="SubscribeWidgetToDOM"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">This Substack is reader-supported. To receive new posts and support my work, consider becoming a free or paid subscriber.</p></div><form class="subscription-widget-subscribe"><input type="email" class="email-input" name="email" placeholder="Type your email&#8230;" tabindex="-1"><input type="submit" class="button primary" value="Subscribe"><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div><p>The MACD (Moving Average Convergence Divergence) is like a conversation between two moving averages: one short (12-day) and one long (26-day). The short one reacts quickly, like a sprinter, while the long one is measured, like a long-distance runner. When the sprinter crosses above the long runner, it's saying, "Momentum is shifting." This crossover is your first signal.</p><p><strong>The MACD Line and The Signal Line</strong></p><p>Imagine you're watching a race. The MACD line (difference between the short and long EMAs) is the runner making moves. The signal line (9-day EMA of the MACD) is the coach, advising when it's a good time to act. When the runner crosses above the coach, it's a "buy" signal. When it falls below, it's a "sell" signal.</p><p><strong>The Histogram: The Heartbeat of Momentum</strong></p><p>The histogram is like a heart monitor. When the bars are growing, momentum is rising - the market has a strong pulse. When the bars shrink, it's a sign that the heartbeat is weakening, and a trend change might be near.</p><p><strong>The Story in Action</strong></p><p>Picture this: You're watching a stock trend upwards. Suddenly, the MACD line crosses above the signal line, and the histogram turns green and grows taller. It's telling you, "The bulls are gaining strength." As long as this continues, the trend has legs. When the MACD line falls below the signal line and the histogram shrinks, it's warning you that the rally might be exhausted.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!VKhi!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!VKhi!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg 424w, https://substackcdn.com/image/fetch/$s_!VKhi!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg 848w, https://substackcdn.com/image/fetch/$s_!VKhi!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg 1272w, https://substackcdn.com/image/fetch/$s_!VKhi!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!VKhi!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg" width="1456" height="915" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:915,&quot;width&quot;:1456,&quot;resizeWidth&quot;:null,&quot;bytes&quot;:159498,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:&quot;image/jpeg&quot;,&quot;href&quot;:null,&quot;belowTheFold&quot;:true,&quot;topImage&quot;:false,&quot;internalRedirect&quot;:&quot;https://investingwpurpose.substack.com/i/166899108?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg&quot;,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!VKhi!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg 424w, https://substackcdn.com/image/fetch/$s_!VKhi!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg 848w, https://substackcdn.com/image/fetch/$s_!VKhi!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg 1272w, https://substackcdn.com/image/fetch/$s_!VKhi!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F13592869-2cec-448e-aee8-cb8a77c8d537_1600x1006.jpeg 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><p><strong>The Final Lesson</strong></p><p>The MACD is not a crystal ball, but a translator of the market's momentum. It whispers when to lean in and when to step back. By understanding its language, you can tune out the noise and focus on the story that truly matters: the balance between strength and fatigue, buyers and sellers, momentum and reversal.</p><p><strong>In a world of endless price action, the MACD is your quiet guide. Listen closely, and it'll lead you to smarter decisions - one crossover, one shift in momentum at a time.</strong></p><div class="subscription-widget-wrap-editor" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/subscribe?&quot;,&quot;text&quot;:&quot;Subscribe&quot;,&quot;language&quot;:&quot;en&quot;}" data-component-name="SubscribeWidgetToDOM"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">This Substack is reader-supported. To receive new posts and support my work, consider becoming a free or paid subscriber.</p></div><form class="subscription-widget-subscribe"><input type="email" class="email-input" name="email" placeholder="Type your email&#8230;" tabindex="-1"><input type="submit" class="button primary" value="Subscribe"><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div>]]></content:encoded></item><item><title><![CDATA[Mastering Moving Averages]]></title><description><![CDATA[A crash course in using SMAs and EMAs to filter the noise and find the trend.]]></description><link>https://www.investingwpurpose.com/p/mastering-moving-averages</link><guid isPermaLink="false">https://www.investingwpurpose.com/p/mastering-moving-averages</guid><dc:creator><![CDATA[Investing With Purpose | IWP]]></dc:creator><pubDate>Thu, 26 Jun 2025 14:21:21 GMT</pubDate><enclosure url="https://substack-post-media.s3.amazonaws.com/public/images/2de5e868-4416-44a9-8913-7db3a1d44b6b_1024x1024.png" length="0" type="image/jpeg"/><content:encoded><![CDATA[<p>Imagine you&#8217;re in a bustling harbor. The stock market is like the ocean - tides rising and falling, winds shifting every minute. You, the captain, must chart a safe course. But how can you discern the trend from the noise? Enter the Moving Averages.</p><p><strong>The Ship and the Tide</strong></p><p>Moving averages (MAs) are like the tides of the market. A simple moving average (SMA) captures the average price of a stock over a set number of days. An EMA (Exponential Moving Average) adds weight to recent prices, making it more responsive. Together, they help you understand the underlying trend despite short-term fluctuations.</p><p><strong>The Story of the 50 and 200-Day MAs</strong></p><p>Picture a seasoned sailor teaching a novice about the seas. The 50-day MA is like the surface current, reacting quickly to changes in the wind. The 200-day MA is the deep, slow-moving undercurrent that shows long-term trend. When the 50-day MA crosses above the 200-day MA - a "Golden Cross" - it's like a favorable wind for your journey. Conversely, when it dives below - a "Death Cross" - it's a warning of rough waters ahead.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!jJVt!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!jJVt!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png 424w, https://substackcdn.com/image/fetch/$s_!jJVt!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png 848w, https://substackcdn.com/image/fetch/$s_!jJVt!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png 1272w, https://substackcdn.com/image/fetch/$s_!jJVt!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!jJVt!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png" width="1456" height="609" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:609,&quot;width&quot;:1456,&quot;resizeWidth&quot;:null,&quot;bytes&quot;:298477,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:&quot;image/png&quot;,&quot;href&quot;:null,&quot;belowTheFold&quot;:false,&quot;topImage&quot;:true,&quot;internalRedirect&quot;:&quot;https://investingwpurpose.substack.com/i/166896382?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png&quot;,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!jJVt!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png 424w, https://substackcdn.com/image/fetch/$s_!jJVt!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png 848w, https://substackcdn.com/image/fetch/$s_!jJVt!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png 1272w, https://substackcdn.com/image/fetch/$s_!jJVt!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a3743bb-c246-4ef5-97b5-258ea7a54996_1951x816.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><p><strong>The EMA Advantage</strong></p><p>An EMA is like a scout aboard your ship, alerting you quickly when the wind shifts. Its responsiveness makes it ideal for traders looking to make quick adjustments, especially in volatile markets.</p><p><strong>Making Decisions with MAs</strong></p><p>Moving averages don&#8217;t predict the future, but they give you a roadmap. They help filter out the noise, allowing you to focus on the trend. A quick rule of thumb: when the price is above the moving average, it often signals strength and an uptrend, while price below the moving average can imply weakness or a downtrend. Use them to determine entry and exit points, or to confirm other signals like RSI and Fibonacci retracements.</p><p><strong>The Journey Never Ends</strong></p><p>Mastering moving averages is like mastering navigation. It takes practice, patience, and an understanding of the elements. But with them, you can steer your trading ship towards calmer, more profitable waters.</p><p><strong>Bon voyage, and may the trend be ever in your favor.</strong></p>]]></content:encoded></item><item><title><![CDATA[Fibonacci (Fib)]]></title><description><![CDATA[The Market&#8217;s Ancient Map]]></description><link>https://www.investingwpurpose.com/p/fibonacci-fib</link><guid isPermaLink="false">https://www.investingwpurpose.com/p/fibonacci-fib</guid><dc:creator><![CDATA[Investing With Purpose | IWP]]></dc:creator><pubDate>Thu, 26 Jun 2025 10:26:20 GMT</pubDate><enclosure url="https://substack-post-media.s3.amazonaws.com/public/images/b86e40ce-3a59-433e-a283-2f558a03dcfa_1536x1024.png" length="0" type="image/jpeg"/><content:encoded><![CDATA[<p>It all starts in 1202, when an Italian mathematician named Leonardo Fibonacci introduced Europe to a puzzling sequence of numbers. <strong>You&#8217;ve probably seen it:</strong></p><p>0, 1, 1, 2, 3, 5, 8, 13, 21&#8230;</p><p>Each number is the sum of the two before it. Simple. But the ratio between these numbers - roughly 1.618, the "Golden Ratio" - started appearing everywhere. In seashells, galaxies, human proportions&#8230; and, as traders discovered, in price charts.</p><p><strong>Why Should You Care?</strong></p><p>Markets are made of human behavior, and human behavior tends to move in waves - bursts of greed and fear. Those waves often retrace or extend in Fibonacci ratios:</p><p>A strong rally? Expect it to give some ground - maybe 38.2%, 50%, or 61.8% of the move.</p><p>An extension? Watch for price to target 127.2% or 161.8% of the prior leg.</p><p>It doesn&#8217;t work because it&#8217;s magic. It works because enough people watch and respect these levels, making them self-fulfilling.</p><p><strong>A Story You Can See on a Chart</strong></p><p>Imagine a stock rising sharply from $100 to $150. The rally stalls. Where might the next wave of buyers step in? Traders draw a Fibonacci retracement from the low to the high. Suddenly:</p><ul><li><p>The 38.2% retracement is at $130.</p></li><li><p>The 50% retracement is at $125.</p></li><li><p>The 61.8% retracement is at $119.</p></li></ul><p>The price often finds support right at one of these levels. Not because of some cosmic force, but because traders expect it.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!QJL0!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!QJL0!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg 424w, https://substackcdn.com/image/fetch/$s_!QJL0!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg 848w, https://substackcdn.com/image/fetch/$s_!QJL0!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg 1272w, https://substackcdn.com/image/fetch/$s_!QJL0!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!QJL0!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg" width="728" height="596.232" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:819,&quot;width&quot;:1000,&quot;resizeWidth&quot;:728,&quot;bytes&quot;:82968,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:&quot;image/jpeg&quot;,&quot;href&quot;:null,&quot;belowTheFold&quot;:true,&quot;topImage&quot;:false,&quot;internalRedirect&quot;:&quot;https://investingwpurpose.substack.com/i/166880824?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg&quot;,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!QJL0!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg 424w, https://substackcdn.com/image/fetch/$s_!QJL0!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg 848w, https://substackcdn.com/image/fetch/$s_!QJL0!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg 1272w, https://substackcdn.com/image/fetch/$s_!QJL0!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20a223d2-bebb-4290-910e-b10b7f9d2cc1_1000x819.jpeg 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><p><strong>The Bigger Picture</strong></p><p>These ratios also project forward. If a stock breaks out of its range, Fibonacci extensions point to potential targets. What starts as a line becomes a roadmap.</p><p><strong>The Takeaway:</strong></p><p>Fibonacci isn&#8217;t a crystal ball. It&#8217;s a lens - one that lets you understand how crowds behave and where price might pause, retrace, or extend. It's a tool rooted in math, shaped by nature, and embraced by markets for one reason:</p><p><strong>Humans tend to move in patterns, and Fibonacci gives you a way to spot them before they happen.</strong></p>]]></content:encoded></item><item><title><![CDATA[RSI - Relative Strength Index]]></title><description><![CDATA[Your Market's Mood Ring]]></description><link>https://www.investingwpurpose.com/p/rsi-relative-strength-index</link><guid isPermaLink="false">https://www.investingwpurpose.com/p/rsi-relative-strength-index</guid><dc:creator><![CDATA[Investing With Purpose | IWP]]></dc:creator><pubDate>Wed, 25 Jun 2025 11:42:10 GMT</pubDate><enclosure url="https://substackcdn.com/image/fetch/$s_!jyck!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png" length="0" type="image/jpeg"/><content:encoded><![CDATA[<p>Imagine the stock market has emotions - sometimes it gets overly excited (buying everything), sometimes it gets too depressed (selling everything). The RSI (Relative Strength Index) is like a mood detector that tells you when the market is having an extreme emotional moment.</p><p><strong>The Magic Number:</strong> </p><p>RSI gives every stock a score from 0 to 100:</p><ul><li><p>Above 70 = "I'm too excited, I can't stop buying!" (Usually means prices might drop soon)</p></li><li><p>Below 30 = "Everything is terrible, sell it all!" (Usually means prices might bounce back)</p></li><li><p>50 = Perfectly chill, no drama</p></li></ul><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!jyck!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!jyck!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png 424w, https://substackcdn.com/image/fetch/$s_!jyck!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png 848w, https://substackcdn.com/image/fetch/$s_!jyck!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png 1272w, https://substackcdn.com/image/fetch/$s_!jyck!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png 1456w" sizes="100vw"><img src="https://substackcdn.com/image/fetch/$s_!jyck!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png" width="1292" height="980" data-attrs="{&quot;src&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png&quot;,&quot;srcNoWatermark&quot;:null,&quot;fullscreen&quot;:null,&quot;imageSize&quot;:null,&quot;height&quot;:980,&quot;width&quot;:1292,&quot;resizeWidth&quot;:null,&quot;bytes&quot;:53539,&quot;alt&quot;:null,&quot;title&quot;:null,&quot;type&quot;:&quot;image/png&quot;,&quot;href&quot;:null,&quot;belowTheFold&quot;:false,&quot;topImage&quot;:true,&quot;internalRedirect&quot;:&quot;https://investingwpurpose.substack.com/i/166800942?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png&quot;,&quot;isProcessing&quot;:false,&quot;align&quot;:null,&quot;offset&quot;:false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!jyck!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png 424w, https://substackcdn.com/image/fetch/$s_!jyck!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png 848w, https://substackcdn.com/image/fetch/$s_!jyck!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png 1272w, https://substackcdn.com/image/fetch/$s_!jyck!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F704c7f6e-8ff1-4f05-88a4-c36a4b0a945a_1292x980.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container restack-image"><svg role="img" width="20" height="20" viewBox="0 0 20 20" fill="none" stroke-width="1.5" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button tabindex="0" type="button" class="pencraft pc-reset pencraft icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><p><strong>Why It's Brilliant</strong>?</p><p>Think of it like a rubber band. Stretch it too far in one direction (extreme buying or selling), and it snaps back. RSI spots when that "snap back" moment might be coming.</p><p><strong>The Real-World Implementation?</strong></p><p>When everyone's panicking and RSI hits 25, smart traders think "Hmm, maybe this fear is overdone." When everyone's euphoric and RSI hits 80, they think "Maybe this party's getting a little too wild."</p><p><strong>Pro Secret</strong>: RSI works best when you combine it with the overall trend and other indicators. It's not a crystal ball, but it's like having a really good weather forecast for market emotions.</p><p>The beauty? It turns the chaos of market psychology into a simple number you can actually use.</p><p>Check out how RSI data is used in our latest analysis on Nike <span class="cashtag-wrap" data-attrs="{&quot;symbol&quot;:&quot;$NKE&quot;}" data-component-name="CashtagToDOM"></span>:</p><p></p><div class="digest-post-embed" data-attrs="{&quot;nodeId&quot;:&quot;05a8af38-b966-4e26-9128-4db9d6a67e69&quot;,&quot;caption&quot;:&quot;reports this week. Bounced off 59.19 with a clean MACD cross and rising RSI. But this still looks like a wave (b) relief move inside a larger corrective structure. Big move coming. Earnings will choose the direction.&quot;,&quot;cta&quot;:&quot;Read full story&quot;,&quot;showBylines&quot;:true,&quot;size&quot;:&quot;lg&quot;,&quot;isEditorNode&quot;:true,&quot;title&quot;:&quot;Nike Inc. (NKE)&quot;,&quot;publishedBylines&quot;:[{&quot;id&quot;:355419072,&quot;name&quot;:&quot;Investing With Purpose&quot;,&quot;bio&quot;:&quot;Smart trading &amp; investing signals | Stock, Bonds, ETFs &amp; Crypto | Substance over speculation | Backed by combined 35+ years of Portfolio Management &amp; Advisory | Not Investment Advice | TL;DR? We Got You |&quot;,&quot;photo_url&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/eda84220-4bdf-40a8-b24b-d6a2a7328956_1024x1024.png&quot;,&quot;is_guest&quot;:false,&quot;bestseller_tier&quot;:null}],&quot;post_date&quot;:&quot;2025-06-25T09:09:50.158Z&quot;,&quot;cover_image&quot;:&quot;https://substack-post-media.s3.amazonaws.com/public/images/2ae8dd92-fbff-4677-bff4-b58d4cb6e83f_720x960.jpeg&quot;,&quot;cover_image_alt&quot;:null,&quot;canonical_url&quot;:&quot;https://substack.com/home/post/p-166793521&quot;,&quot;section_name&quot;:&quot;Stock Analysis&quot;,&quot;video_upload_id&quot;:null,&quot;id&quot;:166793521,&quot;type&quot;:&quot;newsletter&quot;,&quot;reaction_count&quot;:0,&quot;comment_count&quot;:0,&quot;publication_id&quot;:null,&quot;publication_name&quot;:&quot;Investing With Purpose&quot;,&quot;publication_logo_url&quot;:&quot;https://substackcdn.com/image/fetch/$s_!eji0!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Feda84220-4bdf-40a8-b24b-d6a2a7328956_1024x1024.png&quot;,&quot;belowTheFold&quot;:true,&quot;youtube_url&quot;:null,&quot;show_links&quot;:null,&quot;feed_url&quot;:null}"></div><div><hr></div><p>Stay tuned as we dive into other powerful indicators that pair perfectly with RSI - from moving averages to MACD and beyond. The real advantage happens when you combine these tools into a complete trading toolkit. Drop a comment below and let us know what technical indicator you'd like us to break down next, or if there's a specific trading concept you want us to deep dive into!</p><p class="button-wrapper" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/p/rsi-relative-strength-index/comments&quot;,&quot;text&quot;:&quot;Leave a comment&quot;,&quot;action&quot;:null,&quot;class&quot;:null}" data-component-name="ButtonCreateButton"><a class="button primary" href="https://www.investingwpurpose.com/p/rsi-relative-strength-index/comments"><span>Leave a comment</span></a></p><p></p><p></p><div class="subscription-widget-wrap-editor" data-attrs="{&quot;url&quot;:&quot;https://www.investingwpurpose.com/subscribe?&quot;,&quot;text&quot;:&quot;Subscribe&quot;,&quot;language&quot;:&quot;en&quot;}" data-component-name="SubscribeWidgetToDOM"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">To stay up to date with our latest analyses, insights, and resources, write your email below to subscribe and we got you!</p></div><form class="subscription-widget-subscribe"><input type="email" class="email-input" name="email" placeholder="Type your email&#8230;" tabindex="-1"><input type="submit" class="button primary" value="Subscribe"><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div><p></p><p></p><p></p>]]></content:encoded></item></channel></rss>