# Which one do you use? Technical or fundamental analysis?



## Mostafa (29 May 2006)

I combine both fundamental and technical analysis, at first I choose some stocks with fundamental analysis then with technical analysis decide when trade them.

How do you trade?


----------



## tech/a (29 May 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Mos.

I do the opposite.
My main investment trading is mechanical systems trading.
A small % of trading is discretionary

By the way in the link at the bottom of your page under Risk Management all that is described is Fixed Fractional Position sizing in itself it is no more than a risk minimisation tool.
Most of the discussion on risk relates to capital exposure.

Risk in my view can only be limited when we have the other half of the picure----performance of your trading methodology.

Had quite a discussion here.https://www.aussiestockforums.com/forums/showthread.php?t=2982


----------



## bullmarket (29 May 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Mostafa

I use fundamental analysis to identify potential investments and then look at the charts for the companies that pass my fundamentals test.

If interested, search my posts for 'NPV' and you should find a description of what I do.

cheers

bullmarket


----------



## happytrader (30 May 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Mostafa

I'm in the 'actions speak louder that words camp' which is technical analysis. I use fundamental analysis for profit announcement and dividend dates.

Cheers
Happytrader


----------



## Mostafa (1 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Tech, Bullmarket and Happytrader,   



			
				tech/a said:
			
		

> Risk in my view can only be limited when we have the other half of the picure----performance of your trading methodology.
> 
> Had quite a discussion here.https://www.aussiestockforums.com/forums/showthread.php?t=2982



Useful thread I’m studying it.



			
				tech/a said:
			
		

> My main investment trading is mechanical systems trading.



You mean you use soft wares?



			
				bullmarket said:
			
		

> If interested, search my posts for 'NPV' and you should find a description of what I do.



I read your post about NPV in ‘Fundamental Analysis Software?’ thread, thanks


----------



## tech/a (1 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> You mean you use soft wares?




Yes Metastock and Tradesim. These are not blackboxes.
Formulas are designed into systems,tested and traded.I use 3.
One is fully disclosed here.There is around a weeks reading to fully understand the methodlogy.Its traded live and has been for nearly 4 yrs,results are posted each week. There is massive amounts of discussion designed to help anyone starting out using this as a basis to learn from and compare.

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=forum;f=74


----------



## Realist (1 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Some people instantly understand charts and trends.

Some people instantly understand valuation.

I think most people never change from this instant understanding.

I worry about brokerage fees and tax more than most here, and I never aim to own any share less than 1 year because of this.

A share that doubles in less than a year and you sell it gives you a 50% return after tax. But because it has doubled so quickly it is IMHO more likely to be overvalued.

I'd rather a share went up 70% after 1 year, than 100% in less than a year. I'd make a tiny bit more from it. And feel more confident it is now not overvalued.


----------



## StockyBailx (1 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

_I say_- there are options here? If you trade soley based on the technical side of things you may well be considered a short term trader, but if you trade soley based on the Fundermendals you may be considered a long term trader. 
Thats why I consider my self to be a medium term trader, I really can't trade on a stock based on only one of those two alone, for me they must be mixed if i was to find any meaningful results. I must admit that I'm more favoured towards Fundermentals, because they can give me a defined opinion on the stock, were most of discussions are made. Although Fundermendals can be undermined by the market conditions and don't always paint a pretty picture. 
And I still have sum homework to do on Technical trading.

All the Best!

Stocky.....

Inporting Valium & Exporting Value.


----------



## Mostafa (10 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Tech,

I registered in Reefcap forum, thanks

A question, how much is your return per month with mechanical system?


----------



## Realist (13 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> I say- there are options here? If you trade soley based on the technical side of things you may well be considered a short term trader, but if you trade soley based on the Fundermendals you may be considered a long term trader.
> Thats why I consider my self to be a medium term trader, I really can't trade on a stock based on only one of those two alone, for me they must be mixed if i was to find any meaningful results.




Any true Fundamental investor can not use Technical analysis...

If someone values a stock at $1. And the current price of the stock is $2 it does not matter to a Fundamental investor if the price has just come up from 10 cents or down from $10 and everyone in the world wants to buy it, the stock is overpriced so they will not buy it.

If the stock is valued at $1 and the price is 60 cents they will buy it, even if the price has plummeted, everyone thinks the company is crap, no one will buy it, and world war 3 is about to break out.

I can not agree that a true fundamental investor would use charts.


----------



## suhm (14 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I think I'd have to disagree with you realist, maybe they wouldn't use it to trade per se but i think it is useful to identify companies that might be undervalued for analysis


----------



## tech/a (14 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Mostafa said:
			
		

> Hi Tech,
> 
> I registered in Reefcap forum, thanks
> 
> A question, how much is your return per month with mechanical system?




 Sorry Mostafa Just saw your post.

Return /mth relative to what? If initial investment some months have been 100% positive and the odd one like now -100%

If purely $$ return then $10K is common and as more leverage and compounding takes effect that will rise as it has over the 3.5 yrs.
Addition of capital,such as in a superfund will also have a positive impact.

Downturns like now have a large impact on return on a trend following method.Trading its equity curve and switching the method off converting all to cash is a very good way to maximise return and minimise risk.

Other *Switches* are being investigated eg--Indexes,Composite portfolio charts and or Universe charts.


----------



## pch (14 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				suhm said:
			
		

> I think I'd have to disagree with you realist, maybe they wouldn't use it to trade per se but i think it is useful to identify companies that might be undervalued for analysis




Well I may as well pipe up and say that I have never used charts but I seem to be in the minority..


----------



## swingstar (14 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I use both, but mostly technical.


----------



## Realist (15 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> i think it is useful to identify companies that might be undervalued for analysis





You can't value a company from a chart, therefore a chart gives no indication if a company is undervalued. So true Fundamentalists can't use charts.


----------



## tech/a (16 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> You can't value a company from a chart, therefore a chart gives no indication if a company is undervalued. So true Fundamentalists can't use charts.




Interesting logic.
A charts price reflects the markets perception of its share price at that point in time.Regardless of wether you or 100 analysts value the share at even remotely the same core valuation.

Its not possible to even get 2 people agreeing on a valuation let alone 10,000 share holders,as can be seen by fluctuations in price.
If it was that easy to value a company then the share price would be stoic.

So here we go again whose perception of valuation is correct the fundamentalist or the technical analysts.

Fact remains that either has to see price rise above their BUY price REGARDLESS of analysis method or method of entry.


----------



## bullmarket (16 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Realist



			
				Realist said:
			
		

> You can't value a company from a chart, therefore a chart gives no indication if a company is undervalued. So true Fundamentalists can't use charts.




I disagree - the way I look at it is that in simplistic terms, you can do your own fundamental analysis to value a company on a per share basis and then look at the price chart to see if the current share price is above your valuation (company is then overvalued on the chart) or below your valuation (company is cheap on the chart)

I use fundamental analysis to identify potential investments and then look at their charts to help time buying points.

cheers

bullmarket


----------



## mit (16 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I use technical trading almost exclusively. After being involved in 3 major company acquisitions and having all of their books open in front of me I can tell you that even the most honest companies can have no idea of their value. In one company we found errors which revalued the company 25% down.

What chance do we have with the limited information we get from companies. I'm certain that if the market goes down a lot, then I'll become a value investor because to me value should hit you in the eye and not require complex valuation equations. An example was in early 2003 when banks dividends reached 10% (when franking credits were taken into account).

When I was running my first mechanical system, you sometimes get more signals than you can afford. I used to look at PE, PEG and brokers recommendations to pick. I found that I did worse than random selection of the choices. I've since seen a document that shows that picking a portfolio based on High PE values can out perform the market (I wish I kept the link).


With technical trading and in particular mechanical trading you have a very good idea of your total drawdown. The percentage return of a system does not have to be particularly crash hot because if the drawdown is small you can leverage up to the hilt. 

 I use a margin loan and my LVR ranges between 65%-70% just below the buffer. I have never had a margin call as I am usually stopped out of a stock before hand. My highest actual drawdown (Based on no leverage) is 4%. The highest theoretical system drawdown is 6.5%

I would assume that a person that buys and sells on fundamentals alone can not leverage as much as individual stocks can go down 50% or more but still maintain the same fundamentals. I have a friend (Masters in Finance) who has held IIN since $3 and still thinks it is fundamentally a good stock and even more so at 60 cents.

Anyway my 2cents

MIT


----------



## It's Snake Pliskin (16 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> You can't value a company from a chart, therefore a chart gives no indication if a company is undervalued. So true Fundamentalists can't use charts.




Value is a figment of the imagination.

True fundamentalists should use a chart to draw squiggly lines on when bored.


----------



## Realist (16 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> I use technical trading almost exclusively. After being involved in 3 major company acquisitions and having all of their books open in front of me I can tell you that even the most honest companies can have no idea of their value. In one company we found errors which revalued the company 25% down.
> 
> What chance do we have with the limited information we get from companies.




I disgaree, NPAT is usually correct.

Here's a basic one that works!!

Look at a companies NPAT for the last 5 years, add them then multiply the total by 4 to get a rough value.  

Try it for a well established blue chip (that makes profits). It works.     

CBA came out exact!!   Macquarie Bank is close, BHP slightly overvalued, but then it's growing quickly so it should be.


----------



## Julia (16 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

At the risk of over-simplifying the question, on the basis that we are in the market to make money, a company's "valuation" is pretty meaningless if the market doesn't regard it as good value at the time for whatever reason.
Does it really make sense to hold on to a company which you have decided is just terrific value if no one else thinks so and hence the SP doesn't rise?

Julia


----------



## Realist (16 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Does it really make sense to hold on to a company which you have decided is just terrific value if no one else thinks so and hence the SP doesn't rise




The second richest man in the world thinks so.

Infact it is impossible to buy an undervalued company any other way.

How could you buy an undervalued company if people like it and its stock price is going up?  

A popular undervalued company is an oxymoron. There is no such thing.


----------



## It's Snake Pliskin (16 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> A popular undervalued company is an oxymoron. There is no such thing.




How true!


----------



## Happy (16 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

But, you don’t have to be contrarian, with some preparation you can hop on a bandwagon after they are off.

Guppy’s idea not mine, but it makes sense.


----------



## Julia (16 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> The second richest man in the world thinks so.
> 
> Infact it is impossible to buy an undervalued company any other way.
> 
> ...




Well, of course.  I'm just wondering how long you are going to hold on to your undervalued company waiting for others to realise how undervalued it is and therefore start buying it, thus causing the SP to rise?

i.e. I'm simply questioning the practice of holding on to a stock which is showing no growth for 12 months or more.  Wouldn't you be better off putting those funds into something which is actually appreciating and then buying into your favourite stock * when you can see an upward trend happening?* 

btw I don't think I used the term "a popular undervalued company".  Indeed, it is an oxymoron.

Julia


----------



## bunyip (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> The second richest man in the world thinks so.
> 
> Infact it is impossible to buy an undervalued company any other way.
> 
> ...




No, the second richest man in the world definitely does not think so. Buffet doesn't simply buy stocks that are fair value or undervalued, then sit on them forever and a day in the hope their share price will come good.
What he's done for decades is buy companies that have great prospects but are currently struggling for whatever reason....usually because of poor management. 
Having aquired the entire company, or at least the majority share, he then uses his expertise as a business man to pull the compnay into shape, make it lean mean and efficent so that it starts realising its potential.

This strategy is very different to that of an investor who buys a non performing stock because his assessment is that it's cheap or is fairly valued, then he sits on it sometimes for years, hoping that one day it will start rising. 
This is the 'BHP' strategy....BUY, HOLD, PRAY.....and it's one of the main reasons that so many stockmarket players barely keep their heads above water.

A far better strategy is to only buy stocks that are already performing strongly, and to hang on to them only as long as they keep performing well.
To implement this strategy you don't need to concern yourself with fair valuation or any other form of fundamental assessment.

Nick Darvas started with a $3000 stock investment in 1952 and by 1959 had made more than 2 million dollars from the stockmarket. In todays values his 2 mill would be worth somewhere around 50 to 60 million.
For the first couple of years Darvas got nothing but frustration from his efforts to make moneyfrom stocks.
He bought stocks on tips from taxi drivers, waiters, and just about anybody else who told him that such and such was a great buy. He lost money.
He employed the industry 'experts' (brokers) to tell him what to buy. He lost money.
He did his own comprehensive fundamental research with the aim of assessing the value of stocks, and he bought those he considered undervalued. He lost money.
He was just about at his wits end, thinking that he'd never crack the stockmarket game, when one day in the quote pages he came across  a stock called Texas Gulf Producing.  He knew nothing about this stock...he simply noticed that its price was rising strongly.
Darvas thought to himself "What the hell...everything else I've tried has failed - this one might be worth a punt, at least it's going up.
He bought the stock, and his subsequent profits were enough to recoup more than half his losses of the last couple of years.
This was the turning point in the stockmarket career of Nick Darvas. His success with this stock made him question the value of examining company reports, studying the industrial outlook, the PE ratio, the Net Tangible Assets, whether or not the stock was fairly valued. He came to the conclusion that fundamental research was a waste of time.....the most important thing in selecting stocks was to buy only those that were already rising strongly.
Darvas put his new found discovery into practice from then on....rather than attempting to assess the fundamentals of a stock, he invested purely on the basis that a stock was strongly uptrending.
The rest is history.

Bunyip


----------



## nizar (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> The second richest man in the world thinks so.
> 
> Infact it is impossible to buy an undervalued company any other way.
> 
> ...




The problem is; even though you see value where the market doesnt, if the stock price doesnt go up, U DONT MAKE MONEY

So unless you have 50 years to wait and billions of dollars to spend, can u afford to sit on a stock YOU THINK is undervalued waiting for the market to realise its value ??

For me, i cant, coz then i got to deal with opportunity cost; while my money is sitting in this undervalued stock not going anywhere becoz every1 is so stupid to see the value that i do; i miss out on gains elsewhere

Its much better to buy a stock already rising IMO... just as Bunyip explained regarding Nicholas Darvas's tactics...


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

bunyip.

Buffets business ability to re build a failing company into a power house is way understated.If he had simply bought at "Undervaluation" and done nothing the result would have been similar---Nothing.
Another big difference is he didnt just buy shares---he bought the company.
With that sort of investment you can and he did make a difference.

Nizar.
Darvas is a great read.
Although a techie myself there are just as many horror stories.
Jack Schwagger reputedly lost badly when he attempted to trade futures---his favorite topic.
Turtle Traders Blew up.
Depending on who you wish to believe Gann died either a porper or rich---no one seems to be able to find his riches.

*I agree that its better to buy a rising stock.
But I also believe that being out of the market at times (Completely) is a strong position to have and may well be one of a traders most profitable.*


----------



## happytrader (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I just thought I would add to this discussion afew overlooked facts.

'Charts don't lie, people do'
'The body never lies, the mouth does'

Cheers
Happytrader


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

First of all I am glad no-one agrees with me.

If most people invested my way I'd have to change.    

Secondly trying to convert someones method of trading /investing is like trying to convert someones religion - why bother, it's probably in your interest that they don't invest like you anyway.

True Story...

I saw a pair of jeans in David Jones a couple of years ago, man did I love them. I tried them on, they were perfect - even if I gain a bit of weight they fit perfectly, made in Italy, real good quality tough denim, they'd last forever. But they were very expensive. Far too expensive for my liking. But you get what you pay for and they'd last forever. They were $360!   I reckon I'd wear them over 1000 times that's only 30 cents a wear - excellent value maybe?

I did not buy them, but seriously I'd wander in that DJ's in Chatswood at least once a month looking at them and wondering. They were too expensive though. About 10 months later I wandered in and they were on sale, marked down by about 40%.  I bought them without even trying them on - I'd done my research already.

I still have those jeans - and they fit perfectly and I wear them at least 2 or 3 times a week. I still love them. Last time I saw in DJ's they were $360.

I got them at a discount by being very patient.  Was that a good buy or not?

I'm waiting to buy shares in Woolworths the same way. An excellent company that I'd love to own a piece of.

Let me know when they are on sale - I want some!!  It may be years away but it will happen.


----------



## bunyip (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Thats right Tech.....Buffet is without equal in his ability to turn underperforming companines around and convert them into financial powerhouses. That's why his appraoch is nothing even remotely similar to the approach of someone who employs the BHP (Buy Hope Pray) strategy. Buffet takes aggressive action once he buys a company, whereas the BHP brigade sit back and do nothing.  The BHP strategy isn't really a strategy at all, it's merely an example of an investor being paralysed by indecision, a bit like the deer caught in the headlights of a car and being frozen to the spot, unable to make the decision to get out of the way.

Agreed about Darvas's book, it's well worth reading. But he was better at dancing and trading than he was at writing. For anyone wanting to learn more about the Darvas trading method, I suggest reading Frank Watkins book "Exploding The Myths". He devotes an entire chapter to Darvas methodology and he explains it very well, better in fact than Darvas himself explained it.

Regarding the discussion about technical analysis vs fundamental analysis, it's worth relating something that Frank Watkins said during his presentation to an ATAA meeting recently.
Frank started his presentation by asking a confronting question....."How many of you have made a return of 35% or greater from the stockmarket over the last year or so"?
Only two hands went up among the audience of more than thirty people. 

His next question was "Well, why haven't you? 35% has been the rise of the All Ords over the last year or so. You could have easily outperformed the All Ords if you'd only bought stocks that were outperforming the All Ords, and you'd hung on to them only as long as they continued outperforming. And every time one of your stocks stopped outperforming, if you'd dumped it and replaced it with another outperformer. No fundamental analysis, no assessment of fair value, none of that other time consuming stuff that so many stockmarket players waste their time on.....just buy strongly uptrending stocks that are well and truly outperforming the market average ."

There is just so much wisdom in Frank's advice, yet so few investors follow it. 
Perhaps the reason they don't follow it is that they tell themselves "Everyone would be doing it if it was that easy".
Perhaps the reason most investors shun this approach is that it seem just too simple, not complex enough to be any good.

I'm not sure what the reason is.....all I know is that it never ceases to amaze me that so many investors use complex analysis to achieve mediocre results, when they could be using simple analysis to achieve spectacular results.

Simple analysis can be simplified even further if you use decent trading software that enables you to overlay one chart on top of another. Decent software can also analyse hundreds of stocks in just a couple of minutes and tell you the percentage gain or loss of each stock over whatever time period you nominate.
Decent software will also allow you to scan for stocks that have a high ADX or ROAR rating. Both ADX and ROAR are trend strength indicators.
Such software enables a technical analyst to quickly and easily find the best performing stocks in the market.
While the poor old fundamental analyst is spending hours poring over company reports and doing his time consuming fundamental analysis in the hope of finding some stock worth investing in, the technical analyst sets his software scans in motion, and within a couple of minutes is presented with a list of stocks that are performing well RIGHT NOW. Not stocks that might (or might not) perform at some time in the future, he finds stocks that ARE PERFORMING WELL RIGHT NOW.

Take any strongly performing stock of the last year or two...lets use WPL as an example. If you had good scanning software it would have alerted you to WPL shortly after it started performing strongly. You coud have then overlayed the All Ords chart on the WPL chart to confirm that WPL was indeed heading north at a steeper angle than the All Ords.
You could have overlayed the WPL chart on a chart of its sector to see how it was performing relative to its sector.
Your software would have given you a report on WPL's gain over your nominated time period, so that you could compare its performance with other stocks.
The possibilites are endless when you have good software. It makes stock selection easy and efficient, and sure beats the hell out of time consuming fundamental analysis that doesn't produce anywhere near as good results.

The debate about fundamental analysis vs technical analysis is a no brainer as far as I'm concerned. If you want to consistently outperform the market then technical analysis is the way to go. But it has to be simple technical analysis, based primarily on price performance. Forget all these complex indicators that only give you a headache.

The cardinal rules are...
*Only buy rising stocks, or short falling stocks.
*Set a performance benchmark, and dump any stock that falls below that benchmark.
*Control losses but let your profits run as long as the stock keeps performing well.

Bunyip


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> unless you have 50 years to wait and billions of dollars to spend, can u afford to sit on a stock YOU THINK is undervalued waiting for the market to realise its value ??




I've got 30 years to wait and thousands of dollars to spend - that's enough for me to wait.




> What he's (Buffett) done for decades is buy companies that have great prospects but are currently struggling for whatever reason




Exactly, he buys them when they are on sale. And holds onto them forever.



> A far better strategy is to only buy stocks that are already performing strongly, and to hang on to them only as long as they keep performing well.




So trading is better than investing?    

Tax, brokerage, effort, time, slippage and stress are 6 reasons why I don't trade.


Buffet has clearly stated that "The Intelligent Investor" is the best investment book ever written.  He said he is 85% Graham (Intelligent Investor) and 15% Fishcer.

He learnt from Fishcer not to be afraid to pay a fair value or slightly too much for something that is truly excellent. Graham only buys at discount.

Here's Buffet's quote from page 548 of the Intelligent investor..

"Adding many converts to the value approach will perforce narrow the spreads between price and value"

Like I said I'm glad you don't do it.

"I can only tell you that the secret has been out for 50 years, ever since Ben Graham and Dave Dodd wrote Security Analysis, yet I have seen no trend towards value investing in the 35 years that I have practiced it. There seems some perverse human characteristic that likes to make easy things difficult"

To me it is like Womens magazines having different weight loss secrets and diets every week.

To me it is absurd that they don't just write "Eat and drink healthy, eat less, and exercise alot"  and then the subject is closed.

They could then say "eat fruit and vegetables, drink water, and run/walk alot, play a sport if you can" if they really wanted to go into detail.

I mean there is no other secret to weightloss for christ sakes - people just make it hard for themselves.

People like to make easy things difficult. People will not accept that weightloss is that easy, and they will not accept investing is as easy as buying shares in a great company and mostly forgetting about them. If they want to make more pay less initially, wait for a sale.

I have no doubt that anyone who just bought some Woolworths, Fosters, Westfield and BHP shares today and reinvested the dividends and forgot about them for 30 years would end up richer than most, if not all of you on this board.

Your tax is nothing, brokerage nothing, stress nothing, effort and time involved nothing, Price slippage on trades nothing.  You don't actually have to do anything. But I have no doubt that none on you will do this.    

(speel over, apologies to all concerned    )


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Bunyip,  


How much tax going to have to pay this year for capital gains this financial year?
 (just a percentage of total capital - I don't want to get too personal)

Say you have $100,000 invested and your tax will be $7000 - just say 7%.

Tax worries me..


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> But, you don’t have to be contrarian, with some preparation you can hop on a bandwagon after they are off.
> 
> Guppy’s idea not mine, but it makes sense.




You can indeed, but when do you sell?


----------



## MichaelD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> You could have easily outperformed the All Ords if you'd only bought stocks that were outperforming the All Ords, and you'd hung on to them only as long as they continued outperforming. And every time one of your stocks stopped outperforming, if you'd dumped it and replaced it with another outperformer. No fundamental analysis, no assessment of fair value, none of that other time consuming stuff that so many stockmarket players waste their time on.....just buy strongly uptrending stocks that are well and truly outperforming the market average ."
> 
> There is just so much wisdom in Frank's advice, yet so few investors follow it.
> Perhaps the reason they don't follow it is that they tell themselves "Everyone would be doing it if it was that easy".



I hate to be a naysayer, but this methodology, despite its allure and seeming simplicity, is demonstrably untrue by (my own extensive) backtesting. Picking the outperformers for a given recent period is less profitable than random selection, and the more the stock outperforms the index, the less profitable the methodology becomes.


----------



## bunyip (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist

Nice buy on the jeans. One of the differences between a pair of jeans and a stock is that no matter what happens to the price of jeans after you buy them, it's not going to affect you one way or another. 
Different story with stocks. A bad decision such as buying at the wrong time could end up being very costly indeed.
Many investors who buy a stock because it's 'on sale' are dismayed to find that it's even more 'on sale' a few months later when it's dropped another 30 or 40%
A better approach is to buy a stock you like after it's bottomed out and has recently begun a new uptrend. That way you're still buying it at a cheap price, perhaps cheaper in fact than if you'd bought it while it was falling. Furthermore, there's every chance your investment will start performing well for you almost immediately, rather then you having to possibly wait ages for it to turn around and start performing well, if you'd bought it while it was falling.

Indicentally my friend....I'm not trying to convert you to my way of thinking, I'm just expressing my views because that's what this forum is all about....interchange of ideas.
Whether or not you do things my way is of no interest to me. I just like helping people, and I've had many investors come to me over the years and tell me that they turned their trading results around after implementing my approach. I always find this very rewarding, which is why I continue trying to help people. 
Who knows, even you might one day tell me that you've boosted your returns by incorporating some of my ideas into your own trading. 
But if you don't want to go down that road...not a problem. As you said yourself, it's a good thing that we don't all attempt to do things the same way.

Bunyip


----------



## BSD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> You could have easily outperformed the All Ords if you'd only bought stocks that were outperforming the All Ords, and you'd hung on to them only as long as they continued outperforming.
> 
> And every time one of your stocks stopped outperforming, if you'd dumped it and replaced it with another outperformer.
> 
> ...




Ho Ho, I hope nobody paid for that 'advice'. 

I will put my 2 cents into this discussion later, but Icouldnt help but laugh reading this.


----------



## bunyip (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> I hate to be a naysayer, but this methodology, despite its allure and seeming simplicity, is demonstrably untrue by (my own extensive) backtesting. Picking the outperformers for a given recent period is less profitable than random selection, and the more the stock outperforms the index, the less profitable the methodology becomes.




With all due respect Michael, what you're saying is wrong.
I'm not interested in the results of backtesting. I've traded this strategy with real money for years, so have my students, and we've consistently outperformed the market. And not just by a little bit either, I mean we've well and truly outperformed it.

Forget about backtesting, put some real money on the line and see how you go. It is simply not possible to underperfom the market if you buy only stocks that are outperforming the market, and sticking with them only as long as they continue outperforming the market.
Random selection over the long term will not outperform the market average, over the long term your stocks, when their performance is averaged, will only be of similar performance to the market average.

Bunyip


----------



## Julia (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> Ho Ho, I hope nobody paid for that 'advice'.
> 
> I will put my 2 cents into this discussion later, but Icouldnt help but laugh reading this.




BSD

Holding my breath here, waiting for the 2 cents worth!
Why the delay??

Julia


----------



## cuttlefish (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

There is a compilation of Buffets letters to shareholders in the Berkshire Hathaway annual reports over the years: 

http://beginnersinvest.about.com/cs/warrenbuffett/a/aawarrenletters.htm


I read them all in detail about 6 years ago, and my memory is that buying and turning around underperforming companies is not part of his strategy.  Buying and holding undervalued but good companies, with good management, and retaining that management to manage the business as they always have, seems to be more aligned with his strategy.   A quick skim through a few of the letters just now seems to confirm that opinion.

I'd be curious to hear examples the opposite scenario of where he's gone the opposite way and bought companies then turned them around. (apart from his original textile company purchase).


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Buying and holding undervalued but good companies, with good management, and retaining that management to manage the business as they always have, seems to be more aligned with his strategy.




YEP.   

You are correct.


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> You could have easily outperformed the All Ords if you'd only bought stocks that were outperforming the All Ords, and you'd hung on to them only as long as they continued outperforming.




I might try this at the horse track.

Bet on the horse that is winning the race and change my bet if another horse takes the lead.

I'd never lose!!


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> Ho Ho, I hope nobody paid for that 'advice'.
> 
> I will put my 2 cents into this discussion later, but Icouldnt help but laugh reading this.





Well its easy to judge and have a laugh when you havent experienced EXACTLY wht the guys talking about.

*I HAVE---I DO*

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000029

Ive been trading like this for 4 yrs. The results are public and have been all that time.

12 mths ago the portfolio was $220,000 today and during this corrective phase the portfolio balance is $305,000 which is *38% growth on portfolio.*
 AllOrds  20/6/05---4262 All Ords 16/6/06---4932 Growth----15.72%

http://tools.afr.com/apps/mkt/indexHistory.ac?idx=XAO&sy=afr

If you wish to check.
 So thats a 142% out performance.

Pretty funny.

*I have a Laugh myself*

And its at all the thorists who have nothing more to offer than hypothesis and "this is how it should be" with no evidence to their theoretical trading practices.

*There is a lot of hot air on forums * and very little practical hard core case studies to verify theory.
Duc's doing his best to show his Fundamental approach which is full of IF's Could be's and maybe's,the results at this point show a nett loss.

Very few have the guts to do what Duc and I are doing---simply failure in the public forum environment isnt palatable.
*I say if your so sure then RUN IT and SHOW all how smart you really are!!*
You may well learn something in the process.



> Bet on the horse that is winning the race and change my bet if another horse takes the lead.




Funny as hell on a racecourse,*yet you CAN do exactly that on the stock market*
But people laugh like hell and never do it!!

*Experts---drips under pressure!!*


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> 12 mths ago the portfolio was $220,000 today and during this corrective phase the portfolio balance is $305,000 which is 38% growth on portfolio.




Well done.  Do you do this fulltime or you work as well?

But how much tax do you owe on it, and how much time and effort have you spent?

What are your brokerage fees and other related expenses? Were they taken out?

Have you taken every possible expense and tax out yet?

And do you believe you would have done better had you just spent $22000 on each of the ASX top 10 and reinvested the dividends and not sold any? 

You get the year off from even bothering to look at the market if you do that.

I think you would have come close (don't forget dividends)....


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> And its at all the thorists who have nothing more to offer than hypothesis and "this is how it should be" with no evidence to their theoretical trading practices.




Well I have no new theories or hypothesis myself, I've not ever discovered anything truly successfull that was not known before. I just spout Ben Graham's theories, because I believe in them so strongly.

Have you invented any truly successfull theories yourself?

As for evidence whether my (Graham's) theories work or not?    stupid question.


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Well done.  Do you do this fulltime or you work as well?
> 
> But how much tax do you owe on it, and how much time and effort have you spent?
> 
> ...




I dont trade full time. I have 2 companies (One Civil Construction and one Property developement) and trading is part of my investment strategy. 

As part of the whole tax is calculated upon the total business/s I have an Accountancy firm look after this. I dont mind tax as its a cost of being profitable,profit allows me to be in the position to employ professionals to minimise tax.

If you wish to answer questions like brokerage and dividends then take some time to trawl the site all info is disclosed in the 100s of pages.

Time spent-- around 10 mins a day on the 3 portfolios I trade---only one is public all are performing similarly.

Other methods---I dont know or care as I'm happy with the way i trade---however constantly looking at ways of improvement. Being a systems trader there are a few of us working on minimising drawdown--an on going challenge for all traders.

I trade margin so dividends pay the interest and levergae on initial capital fades the nett return on portfolio dramatically.
3 yrs ago I started with $30K on margin as you will see if you read the link.




> Have you invented any truly successfull theories yourself?
> 
> As for evidence whether my (Graham's) theories work or not? stupid question.





*No only placed in practice what really makes profit in any business and its NOT ANALYSIS fundamental OR technical*

Grahams theories,Darvas's,Williams,Buffets all work for them but Ive not yet found one other who is applying any of these "FACTS" in live trading which allows verification of results.
Easy as hell to say your profitable because you mimick another traders success. Thats their success yours isnt guarenteed.
I dont see 100s of Buffetts,or replications of Darvas sucess---

*Stupid question???*
Stupid response.


----------



## MichaelD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> It is simply not possible to underperfom the market if you buy only stocks that are outperforming the market, and sticking with them only as long as they continue outperforming the market.



I'm interested in a bit more precision here - could you define your entry/exit methodology more precisely. Since my backtesting of this proposition was based on a trailing ATR exit, it is certainly possible that a different exit methodology could produce significantly different results.


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hey tech/a - your link goes to a weird page - is it Reefcap.com your website?    

Do I have to login or something?


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

No Its not my site its Nick Radges.

Yes you'll have to log on.
Its a very knowledgable site with some no nonsense contributors.
More for the serious established trader/investor.

Ive just directed you to the Tech Trader site which Nick separated from main stream about a year ago.


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> It is simply not possible to underperfom the market if you buy only stocks that are outperforming the market, and sticking with them only as long as they continue outperforming the market.




Okay Bunyip, or anyone else that agrees with this theory...

To prove this please advise me of the last share you bought, or the next you intend to buy.  Assuming I buy it this Monday morning 11am.


I'll tell you 2 ASX shares to buy on Monday morning and we'll see what happens.

Okay my shares are FGL ($5.55) and WDC ($17.20) - and I recommend you hold them for 30 years minimum and reinvest dividends.

Why buy them?  Great companies, great brands, they pay dividends, worldwide market leaders, property and wine is a bit out of fashion at the moment but will surely be back in fashion sooner or later.  They are fairly valued. And I firmly believe people (mainly Aussies but worldwide as well) will shop at Westfield and buy beer and wine in 30 years time.

It'll be interesting to see what you recommend. 

We'll meet back here on June 17th 2036 to compare. (just kidding   )  

But I am keen to see what you would recommend. As I've said before here I am not even adequate at trading or charts and don't try so I'd be interested to see what stocks traders are recommending and buying right now. I don't want to hear about the past I want to know about now! 

What can I buy Monday morning that is trending up?


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> What can I buy Monday morning that is trending up?




This is part of the equation.
*Seriously* I suggest you *FIRST* look at and understand how to run a Trading or Investment business. No matter how small it is. If you dont look at how you place your hard earned in this manner (as a business) then you'll have a similar dis jointed result.
Do you think Buffet or Graham approach their finances any different?

Why wouldnt you or anyone else?
Would you rather spend time building a sound boat to cross the Pacific or just dive in and swim---without even a life jacket!

Not a simple task but one which will ensure your around (financially) to compare your successes in 30 yrs!!!

You asked for an opinion--often the unexpected is worth more than the (seemingly) obvious.


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Tech/a - did you think I was actually going to buy your stock recommendations?    


It is amazing that whenever you ask a tech what to buy they can't tell you.  

Yet they can review historical price changes so expertly. They all have 20/20 hindsight   

All I was doing is proving a point.   Anyone who thinks they can buy stocks that are outperforming the market, and sticking with them only as long as they continue outperforming the market is quite simply wrong.

If you or anyone disagrees then please tell me what stock I can buy on Monday that is outperforming the market and will continue to do so for a week or so at least? 

If you can't tell me what to buy how can I use this theory, and if I can't use this theory what is the point of it?


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Im only to happy to play.
Your however missing the whole point of the post.
Doing so is only part of the equation. 

Its about running a profitable portfolio over as long a period as you can.
One stock and its trading over the next week or month is hardly a full investment business stratagy.

Now if you wish to prove the point with a group of stocks (portfolio) starting as of Monday similar to that which has been run on Reefcap for the last 4 yrs then I'm happy to do that.

I'll simply start trading one of the mechanical methods I currently use from scratch.
So past performance will mean zip. 

I will disclose the trade (when it triggers),the stop and the exit (when it triggers).
What I use technically to determine the trade I will not disclose---one is enough already on Reefcap.It will be similar though.

I will however disclose the methodologies (Systems) parameters.
IE
R/R,expected initial drawdown,position sizing,leverage (I trade margin at 2:1)
Plus anything else seen as relevant. Like universe used to trade.
All relevent as part of "the Business"

Dont expect it to be a power packed presentation as its as boring as hell and takes a few minutes.longterm methods trade like elephants.

Actually it would be best started when I get back from the UK.

I leave in 4 weeks for 6 weeks so would be a little pointless and to difficult to do properly now.

Let me know and Ill get it going say September.
Perhaps I could run it parallel to duc's!


----------



## Julia (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist

You mention WDC.  I also hold this but not for much longer.
It started the year at around $17.50 and is currently below that.
If you have a 30 year time frame as you have suggested, then  the odds are that this company will make you money, but where are your profits coming from in the meantime?  

Could I suggest that you are being a bit too black and white in your definitions of trading vs investing.  My own preference is to own stocks which will show steady and sustained growth.  I'm not interested in short term trading, partly because I lack the necessary technical skills, and I'm also conscious of the increased costs of brokerage etc.  Consequently my portfolio is mainly blue chips across all sectors.

However, if a stock is simply not performing, i.e. Westfield Group, it will be sold and the funds used to buy something which IS going up.  Why?  Because I am in the market to make money and I am not making money holding stocks which are standing still or decreasing.  This doesn't make me a "trader".

In the end, surely it just comes down to whether or not your philosophy is allowing you to actually make money, as Tech and Bunyip and others have suggested.

Julia


----------



## ducati916 (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*tech/a* 



> I will however disclose the methodologies (Systems) parameters.
> IE
> R/R,expected initial drawdown,position sizing,leverage (I trade margin at 2:1)
> Plus anything else seen as relevant. Like universe used to trade.
> All relevent as part of "the Business"






> 12 mths ago the portfolio was $220,000 today and during this corrective phase the portfolio balance is $305,000 which is 38% growth on portfolio.
> AllOrds 20/6/05---4262 All Ords 16/6/06---4932 Growth----15.72%




Which of course means that TT results mimic almost exactly the ALLORDS, okay, you added 0.28%



> Let me know and Ill get it going say September.
> Perhaps I could run it parallel to duc's!




jog on.


With regards to buying *undervaluations* very rarely will you find the so called *"blue chips"* selling at a *true* undervaluation.
I would suggest that currently there is *nothing on the ASX that is a blue chip designate, that even remotely approaches an undervaluation* The only times tend to be at the bottom of Bear markets.

However, if other *fundies* wish to examine this closer, we can all *value* say *BHP* and place a price that represents an undervaluation, and the techies can identify *support* points if they choose.

It would be interesting to me anyway, to see the results.

jog on
d998


----------



## MichaelD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> If you can't tell me what to buy how can I use this theory, and if I can't use this theory what is the point of it?



You do not make money buying stocks. You make money when you sell them. Working out what to buy is the least part of the equation. It's how you manage the trade from there onwards that makes the money (or otherwise).

There is much experienced wisdom in this thread for those that wish to see it.

Any technician could offer you a list to buy on Monday. 50% of these trades or more would be losing trades, however, the technician would still make money because they know what to do after buying. The short-sighted would point at the 50% losers and proclaim the list a failure.


----------



## ducati916 (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Michael* 



> Any technician could offer you a list to buy on Monday. 50% of these trades or more would be losing trades, however, the technician would still make money because they know what to do after buying. The short-sighted would point at the 50% losers and proclaim the list a failure.




Fundies actually have a much clearer understanding of the selling part of the equation.

Techies rely upon *the market* to exit them.
We, conversely do not. We have an exit at *fair value*
Should you be a little greedier, after fair value is reached, just trail a technical stoploss.

The advantage of the fair value+ exit, is that to truely qualify as *undervalued* your purchase price must be 50%+ below your fair value calculation.

jog on
d998


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Which of course means that TT results mimic almost exactly the ALLORDS, okay, you added 0.28%




Duc you disappoint me.

*Same period All Ords rose 15.72%
TT out perfromed the ords by 100%+ --A little better!*

Have a closer look I even posted the link.


----------



## MichaelD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				ducati916 said:
			
		

> Fundies actually have a much clearer understanding of the selling part of the equation.



I see very few indications in this thread of the importance of the exit (with several exceptions), regardless of the entry methodology.

Techies and fundies will disagree on the details of the entry and the exit, but on the necessity of having a pre-planned management and exit strategy BEFORE a trade is entered there is agreement.

No pre-planned exit strategy = inconsistent profits = loss in the long run.


----------



## ducati916 (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*tech/a* 

You must compare apples with apples.
If you use leverage, which you do,[2:1] then you must compare the unleveraged return. Of course, your return, when you eventually realize it, will reflect the leverage.

Therefore, TT's unleveraged return,[19%] is more or less the same as the ASX. Again this does not truely represent the return, as the losses realized, and the #of trades in total are not reported. Therefore, based on *"open equity" which I disagree with, your results are circa 19% as of the closing prices* 
This simply demonstrates that outperforming the *Averages* is no mean feat, and why so many people struggle.

This is the underpinning of my questioning your methodology.
In a Bullmarket, yes, you see good results, but, nothing much more than the market return.

In a Bearmarket, would you outperform, or return much the same?
In the recent correction....drop, TT dropped almost the identical % as the ASX.

jog on
d998


----------



## ducati916 (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Michael* 



> I see very few indications in this thread of the importance of the exit, regardless of the entry methodology.




True, but the discussion has thus far centered, as far as I can see on the merits/demerits of the underlying philosophies.



> Techies and fundies will disagree on the details of the entry and the exit, but on the necessity of having a pre-planned management and exit strategy BEFORE a trade is entered there is agreement.




I think that is about all we agree on.



> No pre-planned exit strategy = inconsistent profits = loss in the long run.




jog on.


jog on
d998


----------



## MichaelD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

A plea to Duc and Tech/A.

Can we please keep the Duc vs TT argument over at Reef. This is a potentially interesting thread and it would be sad to see it go off on a tangent.


----------



## ducati916 (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Michael* 

The results must be accurately reported.
If they are not, then the whole result is nonsense.

The only way that you can evaluate the success or failure of any method, system etc is via *relative results.* 

To achieve *tech/a results, you MUST LEVERAGE by the same margin as he used, in this case 2:1.............if you do not, then your results are equivalent to the ASX returns* 

This is just common sense.
jog on
d998


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Michael.

The posts are relevent.
TT is the only technical method offered up with verifiable results in an effort to show that Bunyips post about the ATAA presenter arent as laughable as Realist and BCD would have people believe.

DUC

Your having a bad day.

The results I gave are NETT void of leverage.
Portfolio went from 220K to 305K

Relativity 1:1

Comparing ONLY to nett portfolio value NOT initial capital.


----------



## ducati916 (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*tech/a* 



> I will however disclose the methodologies (Systems) parameters.
> IE
> R/R,expected initial drawdown,position sizing,leverage *(I trade margin at 2:1)*
> Plus anything else seen as relevant. Like universe used to trade.
> All relevent as part of "the Business"




Nonsense.

jog on
d998


----------



## MichaelD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

SURELY the more important point here is NOT "my plan is better than your plan". The point is you must have a *PLAN*. The plan must have entry, exit, risk and money management. Miss any of these points and there will be pain sooner or later.

I would suggest that the majority of market participants here have worked on the following plan over the last couple of years;

Buy and make profit when it goes up. Feel good about self and consider self a market mastermind.

It's a plan that worked...until now.

Now what?


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I have $220K worth of stock and in one year it rises to a value of $305K

Thats a 38% rise.

Whats leverage got to do with it?

Other than allowing you to buy more stock with less initial capital.

Go for another jog!


----------



## ducati916 (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*tech/a* 

You seem to have a basic misconception on how to report results.
If you list your results in $won/lost, the results will reflect the leverage.

If you report your results in the %+/- of each positions change in price, you will eliminate the effect of margin.

Therefore TT currently reports 8 open trades.
Take one example,

BIL
Opened 27/05/2004 .......26months and currently open
Average Purchase Price = $5.94
Current Price = $10.68
% Return = 79.7%
Annualised return = 36.8%

SFE [the best one]..........currently open
Opened 6/08/2003
Average Purchase Price = $3.69
Current Price = $16.14
% Return = 337.4%
Annualised = 119%

Therefore to get a true apples against apples, you need to calculate all your trades for the aggregate return. It may well turn out that you *HAVE* outperformed the ASX on that basis, but the method that you have illustrated tells us nothing of value.

jog on
d998


----------



## BSD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Julia the reason for the delay is I was going to the Casino to play some hands. 

There are many strategies available and congrats to those who are happy with the performance of their own strategy.

 I start to laugh though when I am told that making money in the market is a simple matter of leveraging 2-1 and buying stocks that have outperformed or have strong momentum. It is the same in a bear market when we hear nothing but Buffett and writing covered calls. 

All strategies will have their time in the sun. But beating the market over a few years gives no statistical inference of success. As someone (who was shouted down) said - backtesting these strategies offers no significant outperformance. 

Quant teams full of physics and maths gurus who are paid heaps and manage 100s of millions (of house money) have 'outperformance' (over various periods) and 'momentum' in their multi variable models - but the ability of these two (of many) indicators to forecast future outperformance both varies depending on market environment and is never absolute. The models are dynamic and designed to change with the market. 

If momentum and past performance were all that was necessary, why do the quants add many more variables to their models? 

From time to time, the market rewards factors like mean reversion, value, yield, low beta - these are all not very good for the guys who have riden the recent bull market. Over time however, the market is more random than anybody assumes. 

The momentum players had their backsides tanned over the last fortnight. Pity the seminar attendees of May!

Congratulations on making $100K in a year Tech - it looks like such a performance is what you were looking for. 

But it doesnt:

a. Mean anything
b. Float my boat enough to want to trade the way you do 

It doesnt mean anything because it is:

Not statisically significant. Your excellent returns have come from a bull market. Your strategy needs to be tested over decade of different market before you can say you have cracked any code. 

If you had of bought BHP shares on the open June 17 last year at $18.36 you would be up 47.5% now. Geared at 66%, the same trade is up 76%. 

Is that proof of the amazing skill of a persons ability? Of course not, it doesn't mean anything. 

In my 'trading portfolio' (currently spread across 1 company and 1 options series) I have one stock that has fallen by 40% in a month, but it is still almost 6 times more than where I accumulated it.

This performance (and the subsequent fall) can both be put down to fundamental analysis. But does it prove the acendency or stupidity of such a strategy?

No, not in the slightest. It doesnt mean anything

Some further comments:

A lot of the tech strategies sound great but are not quantifiable. Is the stock going up (?) is a favourite. 

At the end of June BHP was 'going up' on the yearly and monthly charts. On the daily and weekly it had started to fall. 

It is now going up (sort of) on the daily, but down on the weekly and all others. 

Is it going up or down?


Many say the charts dont lie, but this is total rubbish.

 Every other day I see some terrible execution of a tiny order where a large spread is crossed or a mechanical stop is set-off in an illiquid stock and the little candlestick stays there for perpetuity for some chartist to draw a trend line from. 

The break outs and support failures in micros are often evidence of some poor mug stuffing up on execution to save $100 doing his own trades.  

The main thing that grabs me on this site is the interest in complete dross stock with no liquidity or insto interest. You could manipulate such stocks with a 100k and get the graph folk believing all kinds of things. 

This leads me to my final point, a lot of the tech strategies do not lend themselves (outside of derivatives) to swing a decent sized line of stock. A lot of the very small margins guys use in their targets ups and stops down is impossible to use if you need to buy a couple of hundred grand in a position. 

When you are moving the market by 4% in accumulating your line in a mid/small cap fundamentals become almost the only tool you have.

This is why the sharp bloke like Wayne trade futures. 


In any case, in share trading I believe INFORMATION is the key. 

Sitting a watching a chart does not tell you who owns the stock, how much the stock is worth, who is buying who is selling and why a stock is doing what it is doing on the chart. 

Why dont the seminar gurus talk about fundamentals? Because it isnt conducive to get rich quick dreams not requiring hard work.

Why dont the investment banks just hire a team of chartists with etrade accounts and margin loans?


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Rubbish.
$220,000 worth of stock regardless of leverage or no leverage rose to a value of $305,000 thats a 38% rise.

Leverage in this context has absolutely no bearing.
I'm not comparing it to anything other than a nett initial start value and a final finished value.

If I divide the initial value by 2 and the final value by the same---38%

if I multiply it x 2 same deal.

$110 as against 167.5
440 as against 610

Ive taken the DEFINED period 20/6/05 to 16/6/06 not the whole 4 yrs.
in 20/06/05 the value of the portfolio was $220,000
as at 16/06/06 it is $305,000 rise over that period 38%.
Rise in all Ords over the exact same period 15.7%

No need to annualise anything.

*Forget the jog take a nap.*

I'm out the door myself for a real jog.


----------



## ducati916 (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*tech/a* 

Taking the previous example,

BIL
Opened 27/05/2004 .......26months and currently open
Average Purchase Price = $5.94
Current Price = $10.68
% Return = 79.7%
Annualised return = 36.8%

SFE [the best one]..........currently open
Opened 6/08/2003
Average Purchase Price = $3.69
Current Price = $16.14
% Return = 337.4%
Annualised = 119%

First lets argue that these were the only trades taken, then the aggregate result would be; 77.9%

But if you had taken 10 trades, 8 were stopped out at 10% [your stoploss]
then, we would have the following result;

Aggregate result = 7.5%
Big difference.

Conversely, if only 5 trades taken, and 3 stopped out;
Aggregate result = 25.2%

By reporting the results in $ terms, we cannot see the true results, because that does not take into effect the total # of trades required to generate the $ returns.

If you believe that leverage makes no difference in your results, so be it.
From an alternate view;



> If you had of bought BHP shares on the open June 17 last year at $18.36 you would be up 47.5% now. Geared at 66%, the same trade is up 76%.




If you're happy at 38%, I'm happy.
jog on
d998


----------



## cuttlefish (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> Many say the charts dont lie, but this is total rubbish.
> 
> Every other day I see some terrible execution of a tiny order where a large spread is crossed or a mechanical stop is set-off in an illiquid stock and the little candlestick stays there for perpetuity for some chartist to draw a trend line from.




Though that candle will at least reflect that on that day there was a large spread that could be crossed, and psychologically someone felt eager enough to either buy or sell (even if a small amount) to cross that spread.  I think in moderate liquidity stocks it could still be argued as a valid reflection of a psychological situation (which is all charting is trying to study from my viewpoint). 

I'm a firm believer in investing based on fundamentals. I'm still interested in understanding the charting viewpoint as well though because I think combining the two could possibly be used to accellerate returns.  Its become second nature to me now though to not buy a stock without researching the fundamentals and I won't enter a stock that doesn't match a set of criteria.

I've been mucking about a bit with options the past 9 months trying to understand them better because I'm interested trying to use them to leverage the long term value investing approach and also to capitalise on overbought markets. (again judging overbought markets largely based on fundamentals but for shorting its important to get the timing and strategy reasonably right because hyped markets can jump so much at the end stage).


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Its a very simple mathamatical example made complex by the master himself.
Leverage was not mentioned and is not required in the example.


If you bought anything for $220,000 on 20/6/05 and sold it Friday 16/6/05 for $305,000 then you would have increased its value 38% on the sale.

Hell duc you argue and put forward arguement just to fill up space Im sure of it.


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> $220,000 worth of stock regardless of leverage or no leverage rose to a value of $305,000 thats a 38% rise.




It is not a 38% rise unless you have taken every possible expense out of the $305,000.

I do not believe you have. (please clarify??)

Have you taken out all of the below?

TAX
Brokerage
Your Accountants fees
Time spent (if it is significant time you could have spent working for other income)
Computer, software, subscriptions, magazines, phone bills, internet, all expenses...

I do not believe you got a 38% after all these expenses have been taken out.

If so well done!

The true beauty of buy and hold is there are no, or virtually none, ongoing expenses whatsoever. That is the one true indisputable advantage of investing over trading.


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Im only to happy to play.
> Your however missing the whole point of the post.
> Doing so is only part of the equation.




I'm fully aware of the point.  You are a trader, you can't (or wont) even tell me a stock you think is a good buy now. If this is incorrect - please list one?

I am also aware some traders can make money and it is a genuine occupation for some. 

But in terms of investing it is laughable to think you can buy stocks to outperform the market then sell them before they underperform. Traders do do this though I agree.

I am fully aware traders lose on some trades and use stop losses to minimise this. But the original question was about investing - buying a share that outperforms the market and selling it before it underperforms, you have not shown me how this can possibly work in reality unless you are purely trading (not investing). It certainly is not an investment strategy.

An investor buys a good company and waits, A trader buys a stock price and watches.  There is no in between in my opinion.  You can't be a short term investor, you either invest with longterm goals or you trade/speculate - simple as that.


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> However, if a stock is simply not performing, i.e. Westfield Group, it will be sold and the funds used to buy something which IS going up. Why? Because I am in the market to make money and I am not making money holding stocks which are standing still or decreasing. This doesn't make me a "trader".




Julia, by my definition and that of many investors you just described yourself as a trader.

It is black and white - investors buy companies, traders buy stock prices.

If you buy a nice house, or investment property and it is revalued 6 months later for less than you bought it for would you sell it and buy a better performing house?


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> But in terms of investing it is laughable to think you can buy stocks to outperform the market then sell them before they underperform.




Out of interest how do you think it is done?
How do traders and investors make a $? 

I fail to see the humour in the trade below?



> But the original question was about investing - buying a share that outperforms the market and selling it before it underperforms, you have not shown me how this can possibly work in reality unless you are purely trading (not investing). It certainly is not an investment strategy.




Hell if you dont call what Im doing longterm Trading/investing what do you call it.
In 4 yrs only about 20 trades (I havent counted them)


----------



## NettAssets (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I don't think TAX can be taken as a cost of trade in your example realist.
the Investor hasn't made a tax free gain - merely deferred paying the tax.
The Investor will also have other costs if they wish to use the profit portion of equity in their holding which the trader is able to access free.
John


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

So you bought QBE in 2003 and still hold it?    

Should you have done this?      I thought you said no silly questions. 

Well done an excellent purchase obviously.

What exactly does it prove though? 

How about you show us one of your losing trades - what would that prove - nothing.

As I said traders love history - Please list a stock you suggest we buy now. DO NOT TELL ME ABOUT THE PAST I, AND EVERYONE ELSE ALREADY KNOWS IT.

TELL ME SOMETHING TO BUY NOW !!


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> I don't think TAX can be taken as a cost of trade in your example realist.




Okay everyone forget tax, lets just imagine it doesn't exist.    




> the Investor hasn't made a tax free gain - merely deferred paying the tax.




Correct. 

But the investors tax rate is halved AND the investor is making profits on the tax he is deferring.

How much do you think Warren Buffett has paid in tax on his shares, how much does he make off his defferred tax each year?

Billions!!


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> It is black and white - investors buy companies, traders buy stock prices.
> 
> If you buy a nice house, or investment property and it is revalued 6 months later for less than you bought it for would you sell it and buy a better performing house?




You have much to learn.

You are looking at your theories through a tunnel.
I bought and still hold on one thing *PRICE* I dont care if the company is undervalued,Overvalued,I only care whether the share price remains above its exit.Infact some holdings I have no idea what the company does.

House.
WOW if only. If I could liquidate a house as quickly and as cheaply as I can liquidate a stock ---*YOU BET I WOULD!*


----------



## BSD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

On QBE - nice trade, great company.

Where is your "trailing stop"?


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> House.
> WOW if only. If I could liquidate a house as quickly and as cheaply as I can liquidate a stock ---YOU BET I WOULD!




 

Well we are definately coming from completly different perspectives and will never agree or even meet halfway.  You need investors in the market and I need traders. So it is a good thing.

I'm outta here off to the pub, have a great one guys.  I'll continue this argument, I mean indepth discussion, later.    

realist.


----------



## wayneL (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> You need investors in the market and I need traders. So it is a good thing.




Indeed! That's why I've never understood the disdain investors have for traders and visa versa.


----------



## MichaelD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> What exactly does it prove though?
> 
> How about you show us one of your losing trades - what would that prove - nothing.



I beg to differ. This trade shows you exactly what technical trading is on about.

Technical traders let their winners run (eg QBE) and cut their losses. For every QBE there will be another trade which was closed at a SMALL loss whilst the VERY LARGE gain is left to run until it stops performing. If Tech/A posts a losing trade chart you will see this in action.

With long term trading systems, hold times for winners are usually 6 months or longer. Personally, I see it as fishing for the big catch. Throw the minnows back and keep the blue marlins.

Realist - what is your exit strategy? (or do you simply buy and hold?)


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I'm still here, off in 5 minutes.

I respect traders and want to learn from them and even dabble myself with a small part of my capital. Trading is very interesting. And I can see how you can make quick profits.

I am an investor though, through and through, and PROUD OF IT!


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

BSD

The method has only a 180day EMA of the low exit any close below.
Which as you can see aint that far away.


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Realist - what is your exit strategy? (or do you simply buy and hold?)





Okay off in 2 minutes..   : 

My exit strategy is to sell companies that become too overvalued.  That is it!

( can see the traders laughing already.)

If a company's profit starts to go down, or god forbid they make a loss, I'd review them closely. But probably still hold.

I have not sold any shares ever though...     

I have some Nasdaq listed shares which worry me.

But for instance I see no reason to ever sell Fosters. Unless it becomes too overvalued (unlikely) in which case I'd sell it and buy back if/when they become fair or undervalued again.

Bear in mind I only buy companies that I see as having an excellent longterm future.  No specs whatsoever.

I could not watch the market for a year and be safe my companies arew performing adequately.


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Ive just had a look at outperformers in the ASX100

There are quite a few.
2 that I like chart wise are.
CML,BHP 

CML has out performed consistently.
BHP over longer timeframes of late underperformance (last week compared to this week) However last 3 mths compared to the previous 3 mths has out performed.

You get the picture.



> My exit strategy is to sell companies that become too overvalued. That is it!




Was QBE ever over valued over the last 3 yrs?

Is it now?


----------



## Realist (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> There are quite a few.
> 2 that I like chart wise are.
> CML,BHP




I bought more BHP about 9 days ago!!     

We agree!  WooHoooOOOO!


Off now !


----------



## Knobby22 (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Good on you Realist.
I think the main difference between a trader and an investor is patience.
Trader's want the zing!


----------



## tech/a (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I bought more BHP about 9 days ago!!
> 
> We agree!  WooHoooOOOO!
> 
> ...




That makes it at $29
Hmm The techie $25.6


Who has better value?


----------



## It's Snake Pliskin (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Tech or fundamental it doesn`t matter.

Some find a guru and read their books and then think it is the code for life itself.


----------



## MichaelD (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Tech or fundamental it doesn`t matter.
> 
> Some find a guru and read their books and then think it is the code for life itself.



One of the most sensible things said in this thread.


----------



## Julia (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Julia, by my definition and that of many investors you just described yourself as a trader.
> 
> It is black and white - investors buy companies, traders buy stock prices.
> 
> If you buy a nice house, or investment property and it is revalued 6 months later for less than you bought it for would you sell it and buy a better performing house?




Depends whether I am buying the house to live in myself or if it is an investment.

  If I buy a house to live in, I am not in the least concerned with its subsequent market valuation.
This would only become of interest if I decided to sell it.  I have bought the house for the pleasure of living in it, not as necessarily a means of making money.
If I buy an investment property, however, and it has appreciated in price over, say, a couple of years, but then market assessments indicate it has achieved its maximum likely capital gain in the foreseeable future, and I can see another property in an area which is beginning to show good appreciation, then, yes, I will sell my initial  investment property and buy where I can expect further appreciation.

It's nothing more than maximising opportunities.

Julia


----------



## Staybaker (17 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> The true beauty of buy and hold is there are no, or virtually none, ongoing expenses whatsoever. That is the one true indisputable advantage of investing over trading.



I am going to dispute that statement, thus it is not "indisputable"   

The lack of expenses associated with buy-and-hold investing is only an advantage over trading if it produces superior results.

Suppose investor "A" generates a long-term average annual return of 15% (i.e. greater than the general market return due to superior stock selection). This return is achieved _after_ expenses, which are minimal.

Meanwhile, suppose trader "B" can generate a long-term average annual return of 25% before expenses, but expenses account for 5%, leaving him with a 20% return. He would still be doing better than "A" even after expenses are taken into account.

Now, it is clear from your many posts, Mr Realist, that you are tacitly assuming that the trader cannot outperform the investor - if you are correct, then clearly the trader is irrational if he continues to trade rather than invest. Traders, however, clearly believe they can outperform the buy-and-hold investor.

The real question, then, is whether traders can outperform investors over the long term. The "advantages" of investing that you continue to mention (low expenses, low tax, less time commitment, etc.) are really irrelevent without knowing the degree to which one group can outperform the other.

Furthermore, even if we can make a general statement about whether trading or investing gives a better result, it wouldn't necessarily translate to any individual's case. Maybe, in the aggregate, investors _do_ outperform traders over the long term. (I'm willing to accept that that may be true.) But that doesn't mean that _every_ investor outperforms _every_ trader. (For example, it may be true that Americans, in general, are more overweight than Asians. But that doesn't mean that every American is heavier than every Asian. And you certainly couldn't conclude that every American should therefore be on a diet, while no Asian needs to watch their weight.) So even if investing outperforms trading in general (which is debatable), a _talented_ trader would still be rational to stick to trading if he is sufficiently good at it. It really comes down to each individual finding out what works best for them, given their skills and experience and personality.

I know of traders who have made over 50% per annum consistently over the last four years (some nearer 100%), _after_ expenses. You'd certainly be hard-pressed trying to convince them that they shouldn't be trading, because of the high expenses involved!

Cheers, Staybaker.


----------



## Realist (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> That makes it at $29
> Hmm The techie $25.6
> 
> 
> Who has better value?






Actually I bought more at 26.60 - even announced it on here at the time.


Did you buy any?   No - tough luck...   


I got the better value.


----------



## wayneL (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

:sleeping::sleeping::sleeping:


----------



## nizar (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Staybaker said:
			
		

> I am going to dispute that statement, thus it is not "indisputable"
> 
> The lack of expenses associated with buy-and-hold investing is only an advantage over trading if it produces superior results.
> 
> ...





Great post there Staybaker - on the ball...


----------



## Realist (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> but then market assessments indicate it has achieved its maximum likely capital gain in the foreseeable future, and I can see another property in an area which is beginning to show good appreciation, then, yes, I will sell my initial investment property and buy where I can expect further appreciation.
> 
> It's nothing more than maximising opportunities.




Well Julia, in my opinion if you sold an investment property soon after buying it because its "value" had decreased then you made a mistake. Either in purchasing the wrong property, or in believing other peoples valuations.

Do not ever forget "values" are merely other peoples opinion. They change constantly depending on peoples moods. 

Be a leader, not a follower in life!  Make your own decisions, do not let other peoples judgement decide what you do. If you have a damn good house that you like - keep it!!  

Surely no-one thinks real estate agents give fool proof valuations on properties??  Just like share prices are not fool proof valuations of a companies worth.

Sometimes they are wrong.


----------



## NettAssets (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Realist,
You said yourself that you would sell a company if the fundaments went bad and its the same in the housing market.
There needn't be anything wrong with the initial valuation but suddenly you get a freeway realignment or a flightpath change, things that are impossible to see a few years in advance because they are rarely mooted for this very reason.
Whats happened - the fundamentals have changed so you take the loss and move on.
I've never seen a jockey win on a dead horse.
John


----------



## ducati916 (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*tech/a* 



> Its a very simple mathamatical example made complex by the master himself.
> Leverage was not mentioned and is not required in the example.
> 
> 
> ...




Not at all.
It is simply calculating the percentage return on open equity does not even remotely start to provide a relevant comparison, because you assume that *every trade taken is a winning trade. This while it may be true, may also not be true.* Therefore you must detail the total number of trades taken required to be left with the *winning* trades. The trades you used were currently your open trades, they have been open for variable time periods.
How many trades were required to be taken to be left with the current portfolio....................let's find out!

This thread is discussing the merits & demerits of predominantly two schools of thought, or philosophy, Fundamentals & Technicals.

Therefore, if you wish to utilize returns as an argument for the strength, or weakness within a methodology, you must present them accurately, or else they become misleading. Thus the only accurate way to gauge the *accurate* returns is to take all the results.

Ok, I have gone back to the results page [from "DL"] and calculated from these results the following;

http://home.iprimus.com.au/trono/Tech_Margin_System.xls

Total # of closed trades = 28
Losses = 14
Wins = 14
Current open trades = 8
Total trades taken = 36
Total time period 33mths

Now for the purposes of these results, I shall take all positions, open and closed, and annualise them for ease of comparison.

The ASX from Sept 2002 to the close on Friday returned 76% in total, or 27.6% annualised to date.

TechTrader from Sept 2002 to the close on Friday has a total return of 13.35%, or 4.85% annualised to date.

This is why *Leverage* is so important.
With returns unleveraged, the dollar return is not as exciting.
If it is leveraged, then suddenly the dollar returns start to become worthwhile

The exact same principal works in property with a mortgage.
Pay 10% deposit, borrow 90%
At an aggregate 4% long term return, it makes sense.

TechTrader started with $30K
Margin loaned $70K or utilised 2.3 leverage
Therefore the dollar returns are as follows;

Starting capital $30K + $70K = $100K
Finishing capital = $305K - $70K = $235K = 683% total return on $30K
Annualised return = 248% on capital

Leverage will supercharge moves to the upside, or downside.
The rather boring returns based on trading returns, become astronomical when leveraged.

My point however is this; the leverage can work if correctly applied to a number of trading methodologies. The question therefore reverts back to, *what is the best trading methodology?* 

Is it a Technical system?
Is it a Fundamental system?
Is it a combination?
Or something else?


*Realist* 



> I bought more BHP about 9 days ago!!
> 
> We agree! WooHoooOOOO!




I am interested in your *valuation*
Would you be prepared to provide an analysis of BHP and your valuation?

I will also provide an analysis, and a valuation.
The two can then be compared to 2 other valuation methods, providing a total of 4 valuations..............Interested?
Of course if any other fundies would want to do the same, the more the merrier.


jog on
d998


----------



## tech/a (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Honestly all too hard.

Doesnt help anyone.
The master of complex confuses the simple beyond normal understanding of those who have a genuine interest---the thread becomes impossible to understand.
On the other hand young in experienced people are chest beating --look at me look at me I'm clever.
Experience---zippo it shows in the posting.
Again of no value.

Trading/investing is simple,there are simple winning formulas.
These pointless arguements are time consuming and frankly tedious.

If everytime I or anyone else posts---and the master of the complex wants to turn the discussion into endless dribble---I'm afraid Ill be desisting.
As I will with kids who are simply wanna be's.


----------



## MichaelD (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> My exit strategy is to sell companies that become too overvalued.  That is it!
> 
> ( can see the traders laughing already.)
> 
> ...



So what happens if the share price goes down by 10%? 20%? 50%? 90%? It can and will happen. Unless you have considered what to do in advance you are going to suffer a lot of pain when this happens.

I am not going to bag investing vs trading or fundamental vs technical here since the arguments are perpetual and circular, but am going to thump my chest about having a PLAN which covers every contingency. A written down and fully considered plan, not just a vague idea in the back of your head.

The sharemarket is an intriguing beast - in bull markets bad planning is usually rewarded with profits; not so in a bear market. It is a great humbler.


----------



## tech/a (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> The sharemarket is an intriguing beast - in bull markets bad planning is usually rewarded with profits; not so in a bear market. It is a great humbler.




Many if not most traders fail in Bullmarkets.They equate the odd win to consistant profit.
Bear markets bring stupidity from traders who design methods for bullish conditions and expect them to perform in bear markets.
Corrections arent bear markets.


----------



## MichaelD (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> Many if not most traders fail in Bullmarkets.



Is there any solid evidence for this? (genuinely interested)


----------



## BSD (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> On the other hand young in experienced people are chest beating --look at me look at me I'm clever.
> Experience---zippo it shows in the posting.
> Again of no value.
> 
> ...





Please name names.


----------



## bunyip (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

It's always interesting to observe the reactions you get when you outline a trading strategy that you know from personal experience can produce excellent returns. Some people , particularly those who have difficulty  thinking outside the square, react with scorn and tell you it couldn't possibly work, even though you and many others (including some of the most respected people in the industry) have been using it for years to consistently outperform the market.
What these critics are telling you in effect is that you and the others who claim success with this method are fools and pretenders.
They challenge you to prove your method works. Personally I can't see any good reason to rise to that challenge. I've already proved it to the one person who matters most....myself. Others who have adopted the strategy after I showed it to them have also had excellent results. Some of them have told me it completely turned their trading results around. If you want something to be proven then the best suggestion I can make is that you put in the hard yards and prove it to yourself, just like I did.
I'm not interested in giving stock recommendations....I've never done it in my life and I certainly won't be doing it now just to comply with a request from someone I don't know from a bar of soap. Apart from that, the market is falling.....hardly the time to be making buy recommendations. I like to trade with the trend, not against it.
Making a couple of stock recommendations, regardless of whether they turn out to be good or bad, does not prove or disprove the validity of a trading or investment strategy. 

Realist tells us that tax worries him? Why? Having to pay tax at least proves you're profitable. Long term investors still have to pay tax sooner or later anyway, they're just deferring it for a while. Only way I can think of to avoid tax is never to sell. I doubt very much if many of you will hold any stock for your entire lives. If you do, there'll be times when they perform terribly...no company performs strongly each and every year. The lost opportunity cost of tying up your capital for years in a non performing or plunging stock may well be a far larger expense than any tax you might pay by selling the stock and redeploying that capital in a strong performer.
Tax can be handled to some extent anyway.....if you're making great profits then some of those profits can be sunk into tax effective investments. Talk to your accountant. 

Trading involves too much time? Rubbish......about an hour each weekend if you trade from weekly charts, or about 15 to 30 minutes a day if you trade from daily charts.

Brokerage bites into your profits too much? Not at all.....that might be the case with a day trader who is constantly jumping in and out of the market like a grasshopper, but a longer term trader who keeps riding  strong trends as long as they continue will sometimes be in a trades for a year of even a couple of years. Such a trader might own only half a dozen or so stocks at any given time and his overall trading activity will be surprisingly light. Brokerage is not a major consideration in this style of trading.

Impossible to get out of an outperformer before it becomes an underperformer? Absolutely true, but I made no claims about getting out before it starts underperforming. The thing to do is set a performance benchmark and then sell the stock if its performance drops below the benchmark. This is the strategy employed by Alan Hull in his 'Active Investing' approach. It's very successful.
Another way to manage a trade is to trail a stop below the stock price so that if the trend runs out of steam, your stop hauls you out of the trade automatically. 

MichaelD asked me to outline my entry and exit rules so that he can do further backtesting. Michael, while you're one of the doubters, I at least give you credit for not resorting to scorn and sarcasm to make your point. 
As I told you in an earlier post, I don't think computer testing is of much benefit. So far your computer testing has brought you to the completely wrong conclusion that buying outperforming stocks is a poor strategy. This of course is utterly ridiculous. Computer testing will always come up with different results to real trading. There are just too many variables that a real trader will take into account, but a computer will not.  Most systems have an element of discretion in them that make them impossible for a computer to backtest in a meaningful way.
Even a simple moving average crossover system can't be backtested meaningfully.  The computer would test every single crossover of two moving averages, whereas a trader would reject some trades for any number of reasons, eg. he considers the market to be too choppy (like now for example), or he considers the price history of a stock to have been too erratic to be worth trading. Or maybe he gets a moving average crossover signal but he rejects the trade because there's strong overhead resistance that could put a ceiling on prices in the short term, and he'd prefer to wait for the stock to trade decisively above this resistance level before he starts watching it for entry signals from his crossover system.
There are just so many variables that an experienced trader takes into account. Computer backtesting just can't make allowances for these variables, and will therefore tend to come up with misleading results.
Another consideration is that a computer will test an entry strategy on say all 200 stocks in the ASX 200, whereas a trader who analyses the same block of stocks will select just two or three that he considers standouts. 
Michael, I won't give you the finer details of my system that you've asked for....this thread is not about specific trading rules, it's about discussing whether we use fundamental or technical analysis, and our reasons for doing so.
What I'll do is summarise the strategy I've used for years to trade stocks.

1. Identify the weekly and daily trends of the overall market.
2. If both trends are bullish, identify which of the main sectors are bullish.
3. Run a computer scan on the stocks in those sectors to find those that are outperforming their sector, but are currently putting in a retracement.
4. Buy them once they finish their retracement and resume their uptrend. 
5. Set a stop loss below the most recent swing low.
6. Trail the stop under the swing lows on whatever time frame chart you choose to trade from. 

During a bear market, you can use the mirror image of this system to find good shorting candidates. You don't have to get mauled in a bear market. On the contrary, bear markets offer some amazing opportunities to a competent trader.

The system I've outlined is called the 'top down' trading approach. It's a robust and profitable strategy that has the ability to consistently outperform the market......providing it's implemented properly and with absolute consistency.
I didn't invent it, my strategy was formulated by borrowing ideas from people such as Weinstein, Hull, Guppy, Darvas, Bedford, Elder, Watkins, Landry. All of these people are highly respected in the industry and all use some form of a trend riding approach that identifies outperforming stocks and buys them on retracements.

 I'm intrigued by the claims of those who dismiss this approach as unworkable. 
Do you really believe I'll underperform the market by only buying stocks that are outperforming the market? 
Are you really suggesting that the pople I've mentioned above are fools and pretenders who don't know what they're talking about and can't trade successfully?

Bunyip


----------



## Realist (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> So what happens if the share price goes down by 10%? 20%? 50%? 90%? It can and will happen. Unless you have considered what to do in advance you are going to suffer a lot of pain when this happens.




Okay so I have shares in Fosters - I think they are fairly valued now.

If the share price drops by 10% I ignore it.

If the companies fundamentals are the same (it makes a profit and has a future) and the price drops by more than 10% I'd probably buy more shares.

Simple as that.    

I had BHP shares they went up to $32 I did nothing - they then dropped to $25 2 weeks ago, so I bought more. The company is the same just the share price was on sale for a short time only.



Shares in Fosters, Westfiled, CBA, and BHP can not go down 90% - basically impossible!!!

Maybe the company will go belly up ala HIH, Enron - it is a remote and ridiculous possibility.  In which case I may lose all my money.  But I diversify so well I'd lose maybe 7% of my money at most and calim that loss against a gain so really I'd lose 3.5% - woop de do.  And the chances of it happening are so remote it is not worth thinking about.  I do not need an exit strategy - hence I do not really have one.  I do monitor fundamentals though, of course.

Share prices going down in a good company is a good thing for me, means I can buy more!!


----------



## Realist (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> There needn't be anything wrong with the initial valuation but suddenly you get a freeway realignment or a flightpath change, things that are impossible to see a few years in advance because they are rarely mooted for this very reason.
> Whats happened - the fundamentals have changed so you take the loss and move on.
> I've never seen a jockey win on a dead horse.




Hi John,

Correct.

If the fundamentals change then yes maybe you need to sell. You don't want to be riding a dead horse.

If just the valuation changes, and the fundamentals are sound - keep it!!

So if the price goes up or down who cares really, you are in for the longterm.  But if the local bikie gang set up a headquarters next door it may be time to sell and quickly.


----------



## ducati916 (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*tech/a* 



> Honestly all too hard.
> 
> Doesnt help anyone.
> The master of complex confuses the simple beyond normal understanding of those who have a genuine interest---the thread becomes impossible to understand.




Not really, in fact it's quite simple really;

ASX returned on an annualised basis 27.6% since Sept 2002
TT returned on an annualised basis 4.85% since Sept 2002

If you had simply bought the index in Sept 2002, and done nothing, your returns would have been outstanding, far in excess of TT.



> Many if not most traders fail in Bullmarkets.They equate the odd win to consistant profit.
> Bear markets bring stupidity from traders who design methods for bullish conditions and expect them to perform in bear markets.
> Corrections arent bear markets.




Do any techies have the *vaguest* idea about the market?

*Realist* 



> Realist
> 
> 
> Quote:
> ...




I take that as a not interested then?

jog on
d998


----------



## swingstar (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> 1. Identify the weekly and daily trends of the overall market.
> 2. If both trends are bullish, identify which of the main sectors are bullish.
> 3. Run a computer scan on the stocks in those sectors to find those that are outperforming their sector, but are currently putting in a retracement.
> 4. Buy them once they finish their retracement and resume their uptrend.
> ...




That is nearly identical to my system.

I agree regarding backtesting, in that it doesn't take in a huge number of factors such as market sentiment and news that a trader will take into account. Backtesting is only useful as a guide. For such a system like ours, it's probably best to paper trade and note down any outside factors that may have affected the trade. 

As George Pruitt said who has tested thousands of mechanical systems... in real trading the profit is half as much and the drawdown double of what backtesting showed.


----------



## MichaelD (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> So far your computer testing has brought you to the completely wrong conclusion that buying outperforming stocks is a poor strategy.



No, that's not precisely what I found nor what I asserted. In more detail;


1. Take a given universe of stocks.

2a. Filter them such that the CLOSE compared with the CLOSE 12 months ago has increased by a given x% i.e. essentially find stocks uptrending at a given % per annum.

2b. An alternate filter which is even better at finding outperforming stocks selects those that would not have breached a given trailing stop loss in the last 12 months.

Looking at the charts produced by entry filter 2b shows stocks in sustained uptrend - exactly those that look juciest to select for trading; a straight line from bottom left to top right.

3. Use these as the entry for a trading system.

4. Use a trailing stop to exit.


What I found;
1. Such a system is profitable (and yes, index beating in bull conditions).
2. Increasing the % increase required from the entry filter DECREASED profitability. eg it was more profitable to select stocks rising at 20% PA than to select stocks rising at 35% PA.
3. However, to my unexpected surprise, random entry performed even better again.

So, I'm NOT saying your methodology is unprofitable - it most definitely is. My explanation for the observations I have made so far is;

1. Picking a stock in a long term uptrend and expecting the trend to continue is prediction, which is not possible. It may continue, or it may not. The end of the trend may be tomorrow or it may be 2 years from now. Either way, a significant period of the trend has already passed.

2. The EXIT of a system selects for the outperformers because it weeds out the underperformers, not because they are preselected by the entry strategy.

3. It is the EXIT which confers the profitability, not the ENTRY.


It is entirely possible that changing some of the testing parameters will completely change my results around and I acknowledge that.

It is entirely possible that an experienced trader using discretion could improve the methodology.

I do not claim to know everything about the market. I know almost nothing. The market is teaching me and I am learning its lessons. I am open to considering new and different concepts, even ones which initially seem like madness. However, I will only incorporate them into my trading system if I can prove that they are likely to improve my trading results. For me, that means provable over a range of stock universes and time periods via backtesting and then monitoring the results via system performance going forwards.

So far, the major two things I have found to improve my trading results are; 1. a trailing stop, and 2. an entry above a long term moving average. The great majority of other strategies I have tried have impaired system results.

Your beliefs and results may be different.


----------



## BSD (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> I'm intrigued by the claims of those who dismiss this approach as unworkable.
> Do you really believe I'll underperform the market by only buying stocks that are outperforming the market?
> Are you really suggesting that the pople I've mentioned above are fools and pretenders who don't know what they're talking about and can't trade successfully?
> 
> Bunyip




How much to attend your seminar Bunyip?


You are peddling simple answers to extremely complex systems that NOBODY has an answer to. I am not attacking you, just the apparent simplicity and passiveness in which you frame your strategy to meet the holy grail of beating the market.  


You say the methods works undeniably "providing it's implemented properly and with absolute consistency". But how does this match up to the claims it can't be backtested because it requires trader's intuition?

You are picking 'outperformers' bull markets, I assume you need to seek 'underperformers' in bear markets. Do you have a formula to work out what type of market we are in? 

How much do your bull market strategies have to lose before you switch to a bear strategy? Or does the same strategy work in bull and bear markets?

As I discussed earlier, quant models typically prove that in a bear market factors like mean reversion, value and yield will be more than likely to be predictive than momentum. Thus, the high flyers all fall and the boring yielders (who may only go sideways) beat the market. 

Quant models use maths to actually quantify the things you are looking for in charts (outperformance, momentum etc)


By definition, if you are in stocks that ARE outperforming, you beat the market. But simply choosing stocks that HAVE been outperforming and buying them because they have dropped a bit is not going to outperform consistently. 


ZFX over the last fortnight is a great example. A large manager (a Quant I understand) places a bucket of stock through Citigroup at $10.80 and the broker can't get it away. 

A stock that HAS been outperforming and has a RETRACEMENT. Your strategy ignores the FUNDAMENTAL factors (zinc price and placement overhang) and buys $50,000 worth in the mid $10s

Subsequently, the overhang of stock, the falling zinc price and momentum traders selling pushes the ZFX price down. 

One day it opens down over 10% on the OPEN as stop losses are triggered. A massive gap is created because everyone wants to get out at the same time. The stops set at 5% under the previous close get matched well below the plan and the punters lose 20% of their invested capital. 

If Geared 2-1 the $50,000 of equity is turned into $150,000 and loss of 20% in two days loses $30,000 of initial capital. 

The punter now has to get a trade that does 150% to get his $20,000 back to $50,000. 


Another reason I don't think you will beat the market consistently is the fact you must hardly ever be fully invested. With all the pre-requisites for a buy in your strategy, 


Have you got some numbers that analyse the level of risk in your portfolio? 

You mention that you and your subjects beat the market, but how much is due to gearing or taking more risk than the benchmark. What is the volatility like compared to ASX200 or similar benchmark?

Would gearing-up an index fund beat your strategy? On an after tax basis?

Finally,

*I dont agree 100% with the way realist works*, but the tax point is far from mute. Regularly paying full rate CGT has enormous effects on long *term compounding*, making the break-even level of outperformance from a trading strategy to meet a buy and hold a lot higher. 

Simplistically:
If Realist makes an average of 8% per annum and never pays tax for 15 years. His $100,000 turns into $317,000

If a trader paying 40% gets 12% per annum and turns over his portfolio once per annum he only accumulates $284,000. At 30% the trader accumulates $335,000

You need to have pretty incredible outperformance (50%) to beat the buy-hold guy. 

And while the buy-hold investor has simply delayed tax, he has delayed it to the extent where:

 a. he is now potentially on a lower tax rate, he gets full 50% discounting
 b.  is probably living off the dividends anyway. 

The buy and hold guy takes 50% less risk along the way too.

If you are an expert on managing money, you would not make such offhanded comments regarding tax. 


I have no real view on the folk you refer to. Some of them are highly successful managers of large amounts. Other make their money selling books and courses training people to use charts and such.  

As I said before though:

If it is so easy, why don't investment banks have rows of guys trading like you do and sack the floors of fundamental research analysts who guide the investment decisions of trillions of dollars globally?


----------



## nizar (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

BSD - agree 100% with what your saying

The best post on this thread by far


----------



## Julia (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Well Julia, in my opinion if you sold an investment property soon after buying it because its "value" had decreased then you made a mistake. Either in purchasing the wrong property, or in believing other peoples valuations.
> 
> Do not ever forget "values" are merely other peoples opinion. They change constantly depending on peoples moods.
> 
> ...




Realist

If you are going to respond to a post it's probably best to read it properly so that your response makes sense.

Here is what I said:

Depends whether I am buying the house to live in myself or if it is an investment.

If I buy a house to live in, I am not in the least concerned with its subsequent market valuation.
This would only become of interest if I decided to sell it. I have bought the house for the pleasure of living in it, not as necessarily a means of making money.
If I buy an investment property, however, and it has appreciated in price over, say, a couple of years, but then market assessments indicate it has achieved its maximum likely capital gain in the foreseeable future, and I can see another property in an area which is beginning to show good appreciation, then, yes, I will sell my initial investment property and buy where I can expect further appreciation.

It's nothing more than maximising opportunities.

Julia

We are talking about the investment property, yes?  I suggested the said property had *appreciated in price over, say, a couple of years.* 
You have "translated" this to it having decreased in value.  No such thing.
I have made money on this property.
My own assessments of recent selling prices of similar properties in the area indicate that the appreciation my property has enjoyed has peaked.
I have nowhere mentioned using the views or advice of real estate agents.
My own research on prices in another area, plus my own assessment of all the factors affecting that area, indicates that a purchase of an investment property in that area will be likely to provide me with a capital gain I will not experience by staying with the existing property.  
Therefore, imo it makes sense to move the funds from the one into the other.

Whilst I am grateful for your generosity in offering me advice about how to make decisions, I think I'll stick with my present criteria.

Julia


----------



## Realist (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> You have "translated" this to it having decreased in value. No such thing.




Hi Julia, my original question was would you sell a property if it decreased in value soon after you bought it?


----------



## Matt123 (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Technical analysis works, but for what timeframe, you can't work out for how long. For the simplest example, find a stock with an upward trend, buy in, and it will continue on it's upward trend. But for how long. No one can predict this and this one of the biggest flaws of technical analysis that I can see. Fundamental analysts look to see which stocks are over/under valued. Problem with that is that lots of people have already done this and so the current SP is likely a good indication of a shares actual value. If you find that a share is undervalued, providing that it is a share that more than a few people have looked at, you have likely missed some piece of information or done a calculation wrong. In the end the only way to perform consistently is to diversify across many industries and hope the economy does well, which is usually does in the end.

However this does not mean that you cannot outperm the average investor. If you wait for the right time, such as when the market rebounds as it did last friday you can make money. However it is still a question of timing and it is still impossible to predict. However I have found one share that still seems to be below the price before the downturn and I will be buying it on monday. Opportunities like this will occasionally present themselves and it is possible to make substantial returns. However this is far from the norm.

If you meet someone who claims to be making squillions by following a particular strategy, and tells everyone what this strategy is, then even if the strategy works everyone will be applying it and so the original investor must be able to get in and out before everyone else. This is another reason why neither technical or funamental analyis's work, everyone uses them and so the only real way to succeed in using them (if it works at all) is to be able to get in and out before everone else which is pretty much impossible. The claim that you can beat the market by using a particular strategy is ridiculous since if other people also use the strategy then you must be able to beat them first. Only one person win can do this and it is likely he is able to able to do this consistently.

So, my recommendation is to diversify and do research into companies that are likely to succeed. It is likely that over a long time period you will only earn a return that is the average of the market return for that period, but since this is usually a decent return relative to interest rates etc, trading does have its appeal.


----------



## wayneL (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

The problem with fundamental analysts is that they fundamentally misunderstand the fundamentals of technical analysis. (pun intended)

The problem with most technical analysts is precisely the same. That why most fail. Those that understand what they are doing outperform the market standing on their ear.

Now extrapolating that out to investors and traders (as most investers us FA and most traders TA) and we have a similar problem. Investors don't understand the fundamentals of trading.

I won't go through it again, I've said it (as have others) many times.

The two should not be compared. If you wanna be a pretend Buffet, fine, go do it. If you wanna be a pretend Soros, thats fine too. But I doubt Buffet would continuously denigrate George Soros because he is a trader.

Sheesh these threads are so tiresome!!!!!


----------



## It's Snake Pliskin (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Okay so I have shares in Fosters - I think they are fairly valued now.
> 
> If the share price drops by 10% I ignore it.
> 
> ...




Pure dribble :sleeping: 

No exit strategy?


----------



## GreatPig (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Shares in Fosters, Westfiled, CBA, and BHP can not go down 90% - basically impossible!!!



That's right... even AMP only went down 80%...

GP


----------



## It's Snake Pliskin (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> If it is so easy, why don't investment banks have rows of guys trading like you do and sack the floors of fundamental research analysts who guide the investment decisions of trillions of dollars globally?




... currencies.


----------



## swingstar (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> If it is so easy, why don't investment banks have rows of guys trading like you do and sack the floors of fundamental research analysts who guide the investment decisions of trillions of dollars globally?




I don't consider myself an expert, but I've read enough and from personal experience to conclude that the trader is the most important aspect of any 'system'. 

Marty Schwartz says in Market Wizards that he tried to train some employees, but none of them were any good... it shows that he didn't have a proven technical or fundamental system that worked for anyone, but was still able to amass millions.


----------



## bunyip (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

BSD

By all means attack the simplicity of my system if you want.....that's exactly the reaction I expected from at least a few people. There's always opposition from those who just cannot accept that excellent trading results can be achieved by simply hitching rides on strongly trending stocks, and jumping off when they stop trending strongly. And that this strategy can be applied in both bull and bear markets.

You've challenged me with a host of questions to put me on the defensive. But the fact is that when you have a simple system as I do that consistently outperforms the market year after year, you don't feel much obligation to defend your methods. I have very little interest in what you think. I'm not the slightest bit interested in spending my time in answering your questions, refuting your arguments or pointing out where you're wrong, or throwing a heap of challenging questions at you. And even if I did, I wouldn't have much interest in your answers.
I'm not interested in trying to change your beliefs or convert you to my way of trading. On the contrary, I want you to keep doing what you're doing.

I've outlined my system, explained how it works, told you how it performs. If you remain unconvinced that this system really can outperform the market, then so be it. I really don't have much more to add. 
However, I'll make a couple of brief comments in relation to some of the issues you raised.

Forget about leverage....the stocks I've invested in have, on average, made far larger percentage gains than the All Ords. In the bear market of 2002 I continued making good returns by shorting the market.

I've only traded the blue chips.

The students I referred to were not paying students....some were friends who I helped out, a couple were strangers who rang me and asked if I'd help them. I don't run seminars or a trading education company and I don't derive one single dollar of income from trading education.

I'm not a expert on managing money and I'm not a tax expert either.....nor did I claim to be. But I do have tax effective, wealth creation type investments that have some effect in reducing tax. Don't bother asking me what they are......I have no intention of discussing my personal business on a public forum.

Why isn't everyone, including the investment banks, trading this way if it's so simple? Probably for the same reasons that not everyone is looking after their health by eating lots of fruit and vegetables and getting lots of exercise. Probably for the same reason that not everyone is creating personal wealth through buying investment property on borrowed money, then letting the rental imcome and the tax deductions pay most of the bank committments.
Probably for the same reason that most people waste thousands of dollars each year on takeaway food, when it'd be much much cheaper to pack a sandwich or two and a couple of pieces of fruit, and take them to work.
If you subscribe to the theory that 'everyone would be doing it if it was this easy', then you are showing just how little you know about human nature.

Bunyip


----------



## It's Snake Pliskin (18 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

..for some reason people think that banks should be competent at trading. There may be individuals capable, but.........

..or do banks do well on the in?


----------



## Realist (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> That's right... even AMP only went down 80%...




AMP made big losses in 1998 and 1999 I would not have bought them. I do not buy companies that make losses, simple as that.

And if I had bought earlier and the Fundamentals changed so dramatically. I would have sold them

But if I held them over the whole time I'd be only down a bit after dividends anyway.  They are down about a 3rd now.

Sure I could buy shares and they go belly up, I diversify widely for this very reason. I'd lose 8% at most of my total capital, and claim that back against a gain - reducing my losses further.


----------



## ducati916 (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*enzo* 

As usual total nonsense.
Technical analysis can be summarised in one sentence.
*Technical analysis seeks to TIME the market. Fundamental analysis seeks to VALUE the market* 



> Now extrapolating that out to investors and traders (as most investers us FA and most traders TA) and we have a similar problem. Investors don't understand the fundamentals of trading.




Based on what evidence?
As usual, lots of opinion, very little factual basis supporting the opinion.

What becomes very apparent from observing traders, or investors, that place their trades into the public forum, is that generating these fantasy land returns is a very much more difficult proposition than you would have been led to believe if all you listened to were the *claims* of the hindsight traders club.

What we do see a lot of however is, oh my returns are XYZ, but my system is secret, you wouldn't understand my system, posting live interferes with my psychology, and excuse after excuse.

There is no real requirement to disclose your method if you choose to keep it secret........post the trades.

If, your method could be extrapolated from an analysis of the posted trades by second parties.........guess what......your system ain't nothing new.

What will become very apparant, is that beating the market is not as easy as is made out by all the hindsight traders. You beg to differ.......post your trades and demonstrate that you can outperform the market.

And you are one of the people most guilty of this.
I see much braggadicio, very little action.
Every trade commentary is a classic hindsight, no real time trades from you.

There are others that place their trades in the public forum, on a real time basis, and irrespective of their results they deserve respect for actually trading their methodology. It is these results that actually demonstrate the likely success or failure of the underlying strategies, and or philosophies.
These are the results that would generally be achieved or are achievable by others.

jog on
d998


----------



## ducati916 (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

And as an afterthought, as your post seemingly implies that *investor's not only can't trade, but don't even understand trading,* well, time to put that to the test.

We both *trade* the US Market, so pick an Index, a lively one, IWM, or DJIA or pretty much whatever you want and we can trade one of them live over the next year or so.

Use whatever instruments you want, Options, Futures, Common, long, short, hedged, anything goes.

You can pontificate theory with the best of them.
Lets see if there is substance to the theory.

jog on
d998


----------



## GreatPig (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist,



			
				Realist said:
			
		

> Sure I could buy shares and they go belly up, I diversify widely for this very reason. I'd lose 8% at most of my total capital, and claim that back against a gain - reducing my losses further.



Whether I agree with it or not, it's good to see that you have a plan and have obviously thought all this through.

Taking solid companies and simply adding to the portfolio when the price drops is not such an unusual strategy. The AIM algorithm works on that principle, as does Navra's DCT system (which I think is also based on AIM).

As long as your time frame is long enough to cover potential extended low periods, then this may well give reasonable returns. From my study of the AIM algorithm though, it rarely gives outstanding returns, but then that algorithm involves regular selling during price rises as well. If you basically just hold forever while the stock is looking good, then your short-term return is essentially just the dividend yield.

Cheers,
GP


----------



## Realist (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> If you basically just hold forever while the stock is looking good, then your short-term return is essentially just the dividend yield.




Not even that - I always reinvest dividends when I can.

I'm not interested in short term income or returns anyway, I've still got 30 odd years of working to do unfortunately.   

Shares are investments for me, not income.

I worked out the other day if I can start with $70K invested and add another $40K a year to the pool for the next 22 odd years and make 10% a year after tax (I don't sell so mostly no tax anyway) I'll have $4 Million.  That should be enough.    

And adding $40K a year in 10 years will be easy - not so easy now but I still do it....just.

10% return should be fairly easy as well as all my shares pay dividends. And I reduce my tax. If I get 4% in dividends I only need a 6% price gain.

So $4M in 20 years is a good aim, and very realistic and possible. The one problem is I need to buy a house.  Or do I?  Should I just rent forever - yet to decide.

If house prices drop another 15% I'll buy though.


----------



## bunyip (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> 1. Picking a stock in a long term uptrend and expecting the trend to continue is prediction, which is not possible. It may continue, or it may not. The end of the trend may be tomorrow or it may be 2 years from now. Either way, a significant period of the trend has already passed.
> 
> 
> I do not claim to know everything about the market. I know almost nothing.




Michael

Your comment about prediction is interesting. If there's one way to get a spirited debate going, it's to raise the question of "Does technical analysis attempt to predict the market"?

Buying a strong stock that's starting to take off again after pausing briefly, is simply a case of the trader reacting to what the market is doing. There are no predictions involved. I don't know what the stock will do in future. As you say, it might go a long way or it might quickly run out of steam. If it goes a long way then I'll attempt to ride it for all it's worth. If runs out of steam shortly after my entry, then I'll cop a small loss when it hits my stop.
But although I don't know what it'll do in future, I do know what the probablilities are. 
Strong trends tend to last longer than we think they'll last. Momentum breeds momentum....people pile into stocks in increasing numbers when they see a hot performer. 
The main reason a strong stock takes off again after a pause, is that lots of buying pressure is coming into the stock and pushing it higher. If we can recognise a strong performer relatively early in its trend, and we buy it after it pauses, then takes off again, odds are that it will run far enough to give us a profitable trades. No guarantees of course, and no predictions either......just a realistic assessment of the probabilities, and the potential for big profits if we're right, or a small loss if we're wrong.

You've stated "Either way, a significant period of the trend has already passed."

My answer is sometimes, and sometimes not. The trend strength tools I use do a pretty fair job in most cases of giving me a timely alert that a strong new trend has emerged. 
In any case, missing the first part of a trend is not such a bad thing. Trends frequently stuff around initially before really starting to build up a head of steam. The last two thirds of a trend is where the real strength tends to be.
No trading system can consistently get you in right at the bottom and out right at the top. If you know one that does, please tell me about it and I'll start using it immediately.
If you look at some big trends of the past, and you chuck one of the trend strength indicators on the chart (ADX or ROAR), you'll see that in most cases these indicators started reading 'strong trend' in plenty of time for you to get in the trade and take a substantial bite out of that trend.
And that, in a nutshell, should be our objective.....to take large bites out of big trends.

You've admitted you know almost nothing about the market. So let me give you a few tips that I believe can help you.

Realise that you don't need to know much in order to profit consistently from the market. Too much information and knowledge can be detrimental to trading results. There's a colossal amount of information out there, both technical and fundamental. 
Most of it is pretty damned useless in my experience.
The important things in trading are...
* Identify strong trends.
* Have one or two simple setups to signal an entry into these strong trends.
* Use stops and money management to strictly control your losses.
* Have an exit strategy that's designed to keep you in the winning trades as long as they keep performing well, and take you out when the party is over.

In other words, keep it simple and be consistent.

Bunyip


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				ducati916 said:
			
		

> And as an afterthought, as your post seemingly implies that *investor's not only can't trade, but don't even understand trading,* well, time to put that to the test.
> 
> We both *trade* the US Market, so pick an Index, a lively one, IWM, or DJIA or pretty much whatever you want and we can trade one of them live over the next year or so.
> 
> ...




...chest beating for bananas :bad:


----------



## ducati916 (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Snake* 

Sure if you like.
But then I guess you'd rather listen to all the stories.
You obviously think beating the market is easy, I see precious little evidence, but plenty of claims..................all in hindsight.

jog on
d998


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				ducati916 said:
			
		

> *Snake*
> 
> Sure if you like.
> But then I guess you'd rather listen to all the stories.
> ...




Duc,

It`s all entertainment whether it`s fiction or fact.

Beating the market is not easy but earning a healthy income off it is not as difficult as one might think. As far as evidence it is not relevant.Perhaps you want some losses posted to make you feel better about your own losing system?

I`m not playing your game and find your consistent attack on enzo, most know him as WayneL, silly.

It`s part of the mindset one must have: don`t listen to crap.

If you want bananas go to the store.

Snake


----------



## GreatPig (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> for the next 22 odd years and make 10% a year after tax (I don't sell so mostly no tax anyway) I'll have $4 Million. That should be enough.



Will $4m be enough though in 22 years?

Even now I think they say you really need $1.5m or so to retire comfortably. In another 20 odd years, I imagine that would be somewhat more than $4m.

However, you'll probably still have good dividend income, which in itself might be enough.

Cheers,
GP


----------



## bunyip (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Duc

You've mentioned the lack of evidence to support the claims about beating the market. 
I'm one of the blokes who has made such a claim. Not only that, but I've clearly outlined the system that's enabled me to do it. 

Now, my question to you is this.........'Why should I feel obliged to provide you with evidence"?

Incidentally, the use of the word 'simple' to describe a trading methodology does not in any way mean that beating the market is easy. 
No matter how simple the system used, there are various factors that ensure that beating the market will never be easy. Overcoming emotion and implementing self discipline are two that spring to mind. Neither of them is easy to achieve, hence trading itself is not easy.


Bunyip


----------



## bullmarket (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi GP

I think $4M in 22 years time should still be more than enough to generate sufficient income to allow someone to live a comfortable lifestyle......but of course that depends on what they see as 'comfortable'   

eg.......if in 22 years time you invest that $4M and receive a yield of 7% (which is pretty easy today with LPT's at least) then you'l have an income of $280k pa.

If you than assume average inflation of 3.5%pa for the next 22 years and use it to discount the $280k back to today's dollars you get:

NPV of that $280k = 280000 x (1 - 0.035)^22 = $127867

So everything else being equal, $280k pa in 22 years time should have the same buying power as ~$127k pa today.

cheers

bullmarket


----------



## ducati916 (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Snake* 



> Duc,
> 
> It`s all entertainment whether it`s fiction or fact.
> 
> ...





Well if it's entertainment that you're looking for, my mistake, you have undoubtably found it.

Regarding beating the market, you think beating the market is hard, yet earning an income from the market is easy, or easier..............I have yet to see consistent evidence from any but a select few. And enzo is most certainly not one of them.

As regards my *system* time will tell.
But more importantly, so will you.
You won't have to take my word for it, guess what you can follow it each week, and you'll see any disasters, how they are managed, or not as the case may be, and you can make an informed judgement.

Without that accountability, I could claim anything I choose, and who's to gainsay me?.....................This is the situation currently with this debate, discussion..........we have multiple people claiming all sorts of results, but not a shred of accountability.

If you are happy with that situation, then jog on.....................
I personally would like to see some evidence of profitability if profitability is claimed. If it is a discussion on *theory* that's fine, I enjoy discussing theory as much as the next person.

jog on
d998


----------



## Realist (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Actually I just worked it out again.

$70,000 invested at 10% a year, and topped up with $40,000 per annum extra would turn into $5M after  27 years.

Remember, this is not my super, this is an investement, I also have Super which could be another $@M.

How much tax would I owe in 27 years? If I never sold anything along the way


----------



## ducati916 (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*bunyip* 



> Duc
> 
> You've mentioned the lack of evidence to support the claims about beating the market.
> I'm one of the blokes who has made such a claim. Not only that, but I've clearly outlined the system that's enabled me to do it.




bunyip,
Actually I do not really require disclosure of your methodology at all.
If you wish to claim results XYZ, I would like to see results from trades taken in real time that support your assertion




> Now, my question to you is this.........'Why should I feel obliged to provide you with evidence"?




If you wish to claim the results, then provide the evidence.
If you do not wish to provide the evidence, save your breath claiming the results.



> Incidentally, the use of the word 'simple' to describe a trading methodology does not in any way mean that beating the market is easy.
> No matter how simple the system used, there are various factors that ensure that beating the market will never be easy. Overcoming emotion and implementing self discipline are two that spring to mind. Neither of them is easy to achieve, hence trading itself is not easy.




Agreed.
Which is why when people claim the ability to consistently beat the market, immediately my ears prick up.

Using TT as an example yet again, *tech/a* posts his trades and his results live. He made a lot of money.............but he didn't beat the market.
His is a technical methodology.
There are some live *traders* on REEF, I hate their methodology, but I would never criticise, as, they are doing it live, and are accountable.

People are giving *Realist* a bit of a hard time for advocating a buy and hold strategy............now I actually don't advocate a buy & hold, however he has some trades listed................yet all the *techies* jump in with a loud collective shout of how that method will not beat XYZ.

Really?
Where's the evidence?

I've followed a number of live traders through the years, only the odd one has made any serious money, most have struggled.

jog on
d998


----------



## swingstar (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> It`s part of the mindset one must have: don`t listen to crap.




Agreed. There's a lot of crap posted on this forum. 

Perhaps there should be an ignore option?


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Duc,


> Well if it's entertainment that you're looking for, my mistake, you have undoubtably found it.




yee, haa



> Regarding beating the market, you think beating the market is hard, yet earning an income from the market is easy, or easier..............




a fabrication of what was actually written :nono: 




> As regards my *system* time will tell.



yes, time is on your side right?



> Without that accountability, I could claim anything I choose, and who's to gainsay me?.....................This is the situation currently with this debate, discussion..........we have multiple people claiming all sorts of results, but not a shred of accountability.




Your accountability is important isn`t it? 




> If you are happy with that situation, then jog on.....................
> I personally would like to see some evidence of profitability if profitability is claimed. If it is a discussion on *theory* that's fine, I enjoy discussing theory as much as the next person.




As I said don`t listen to the crap. If I do decide to post some realtime trades I`ll PM you to inform. Theory, love it.

Walk the plank...
Snake


----------



## ghotib (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> AMP made big losses in 1998 and 1999 I would not have bought them. I do not buy companies that make losses, simple as that.
> 
> And if I had bought earlier and the Fundamentals changed so dramatically. I would have sold them
> 
> ...



Yabbut this is not Graham or Buffet. They do not diversify, they concentrate. 

Not saying your approach is wrong, just as far as I can see that it's not the same as Graham or Buffet. 

Ghoti


----------



## Realist (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Yabbut this is not Graham or Buffet. They do not diversify, they concentrate.




Correct!!   Buffett does concentrate and specialise.  And I do not.

I'm no Warren Buffett, I'm not as smart as him, I don't do the research and have the knowledge he has. I know my weaknesses.

Both Graham and Buffett would recommend I diversify.


----------



## bullmarket (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

hi ducati

I think you'll find the vasy majority of people place no credibility or whatever in any claims of trades, profits etc etc in chatrooms.....*I certainly don't * 

I also haven't seen any claims of trades in real time, live or whatever else you want to call them.....I've only seen people make claims *after * they allegedly made a trade, albeit only by a few mins in some case but imo whether it is only a few mins or 6 hrs it makes no difference because anyone with access to the course of sales can look up a historical profitable entry point in the c.o.s and claim it is theirs _and since you have no way of knowing who is actually siting at the keyboard at any particular time_ there is no way of verifying with 100% certainty whether a chatter's claim is true or not.

_So the bottom line here is, don't get worked up when people make claims and then run away when asked to verify them.....it happens all the time for various reasons _ 

cheers

bullmarket


----------



## bunyip (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Duc old mate, You've got 'evidence' on the brain. 
If it was important to me that you believe me, then I'd be going out of my way to convince you, including providing evidence if need be. 
If I was trying to sell my system commmercially, then once again I'd be providing evidence in an effort to convince people.

But I'm not selling my system, I'm sharing it in the hope that it will help othes. 
And it's not important to me that you or anyone else believes me. I don't give a stuff whether you do or don't. Quite honestly, I couldn't care less.

If you want proof of the workability of a particular system, then I suggest you try out the system for yourself to prove or disprove its value.

I guess you've read a book or two on trading or investing? Maybe you should  write to the authors and demand that they supply evidence to back up their claims in the book!

Bunyip


----------



## ducati916 (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Snake* 

If I make a claim,..........and I love making claims, I'll always be prepared to back it up by offering real time trades.

I'm aways interested in *live* trades from anybody, novice or expert.
Live trades expose you to the volatility of the market, **** happens, and the manner in which the market environment is managed is always a source of interest to me.

Therefore feel free to PM your trades to me.



> As I said don`t listen to the crap.




There is however subtle differences within the offered stool.
We have the stool sample provided by the easily discerned novice.
Then we have the stool sample provided by the alleged *expert*

It is the second stool sample that I take issue with, as it masquerades as common earth soil, and is all the more dangerous due to the difficulty in running laborotory tests on said sample.

Therefore, to test the stool sample and gather evidence is important.
This is done in the scientific manner, and asking for a fresh stool sample, not one that was brought from home and is stone cold.

*Mr bullmarket* 



> I also haven't seen any claims of trades in real time, live or whatever else you want to call them.....I've only seen people make claims after they allegedly made a trade, albeit only by a few mins in some case but imo whether it is only a few mins or 6 hrs it makes no difference because anyone with access to the course of sales can look up a historical profitable entry point in the c.o.s and claim it is theirs and since you have no way of knowing who is actually siting at the keyboard at any particular time there is no way of verifying with 100% certainty whether a chatter's claim is true or not.




In essence I agree.
I am not unduely concerned about exact to the second timing.
I am quite happy to be generous............I am an extremely generous chap.
I have found that most posters who post trades in real time tend to be pretty genuine, and confident of their methodology.

This is especially true of *longer term* methodologies.
Day-trades..........hell a couple of seconds either side is fine.

jog on
d998


----------



## Realist (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Some traders make alot of money Bullmarket. I've noticed the really smart traders make money the easy way....

By running $5000 courses, or $600 one-day seminars spruiking their revolutionary methods to unsuspecting newbies.

"The Director of Trading Secrets is Louise Bedford. Louise has more than a decade of trading experience and has profited in all types of market conditions"

Wow, someone that made some money in all types of market conditions.  Where do I send my cheque?  

 "For one week out of every month, Louise Bedford will take you through appropriate trading psychological theory and set a series of mental exercises to complete, sometimes on a daily basis."

Mental exercises, very useful.    

"topics to be covered will include relaxation techniques, your inner child, how to create a morning journal and how to re-train your mind to derive superior trading results. These psychological techniques have stood the test of time, 
and represent the culmination of over 2 years of research."

Relaxation.  Hahaha.   Give up trading. If you want to relax - invest!!

2 whole years of research. Oh dear   

gimme a break, this angers me bigtime..    :swear: 

(I am not against trading, I am totally against $5000 courses that teach relaxation, inner child, and mental exercises though)


----------



## ghotib (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Correct!!   Buffett does concentrate and specialise.  And I do not.
> 
> I'm no Warren Buffett, I'm not as smart as him, I don't do the research and have the knowledge he has. I know my weaknesses.
> 
> Both Graham and Buffett would recommend I diversify.



I think they'd recommend that you buy into an index fund 

I'm trying to figure out my own approach to value investing, same as you are, so I'd really like to understand how we've got to such different positions about it. As far as I can see, you're buying blue chips on price dips. I haven't seen anything about how you determine values, and hence how you know when the prices have dipped low enough for you to buy?

For instance, what made you decide to buy BHP recently instead of WOW? 


Ghoti


----------



## wayneL (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Dear Mr Ducster,

You do like to carry grudges don't you.  

I respectfully decline your offer of a trading challenge. I also decline, in accordance with the agreement both you and I made to Joe, to indulge in acrimonious discourse with you. I will be honouring that agreement.

Good Day and Best Wishes.


----------



## Realist (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> For instance, what made you decide to buy BHP recently instead of WOW?




The main reason is Woolworths almost has hit market saturation in Aus, and their P/E ratio is high at 21.4. I can't see WOW growing significantly, they have about 57% market share already from what I know.

I bought BHP a while back for $23 and they went to $32 then back down to $25 - I thought what the hell I'll buy some more while I can.

BHP dipped 21% recently and the P/E is only 12 (way less than WOW), WOW did not dip at all.  I believe I got BHP at a discount.  If WOW dipped 25% next week I'd buy them.

I'd be pretty sure BHP will rise more over the next few years than WOW will.

Only time will tell.


----------



## eddievanhalen (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

This thread cracks me up - I'm not sure whether to laugh or cry actually.  We have a whole lot of one-upmanship here dominated by traders who refuse to believe that anyone has an approach that produces "mega returns" just because they cannot manage it themselves. 

I am not going to even try and make any claims myself , but let's just say that I am in contact with traders all day every day and have seen trading statements/tax returns of my closer trading friends.

I'm not going to get myself into an argument with the usual suspects here but let me say that I talk from some experience - I in fact used to be a one eyed Buffet fan who believed that the returns he has produced over a very long period (say 20-25% pa ) were the ultimate and that technical analysis was akin to palm reading.

Over the years my opinions have changed.

Let me just make a few points to those who refuse to believe that there are possibilities beyond what their closed minds might suggest and I will leave it at that.  I have no wish and no need to get into a philosophical argument or to prove anything to anyone other than myself.  I get the feeling Bunyip is a bit the same and for mine I'd be guessing he's the most likely here to be making spectacular returns.

My points as follows:

-most beginning traders suffer from undercapitlisation and are not aware of what is possible until they trade more significant amounts (myself included).
- the key to making large returns on your "trading kitty" is to have no money sitting around doing nothing or dwindling in poor FA picks. I am as much a fundamentalist as I am a TA trader but I realise that I can outperform a buy and hold strategy with a certain amount of my funds by actively trading.  The key is to understand how to trade sentiment and trends.
- the best traders I know have an open mind and use both TA and FA.
- the best traders I know are "discretionary" and have a system based upon experience and some concrete principles which cannot be punched into a system tester and "proven" - they are based upon a huge amount of observation , experience and hard work.

- there ARE a few traders who are making 50,60,70,80,90% returns on large sums of money.   Quite obviously making 80% pa over a long period on billions is nigh on impossible and there must be diminishing returns as you get larger or we'd have new trading billionaires all the time. That's not to say that there's not traders out there making 80% pa on 6 and 7 figure sums - there are!! (and that's WITHOUT leverage, CFDs, margin loans,options , warrants,futures)

- people turning over large amounts in the market neither have the time nor inclination to try and compete with others and prove themselves.........or hang around forums in most cases.  I personally trade AND invest.........turn over in excess of $1m/month most months.  Do you think I could be stuffed posting my trades (around 70 positions currently) and trying to prove myself to some people on the internet I don't know.   I actually spend a lot of my free time helping other traders with general queries and am all for pointing people in the right direction but as far as trying to explain my system and prove it to everyone??  Couldn't be bothered and it's actually nigh on impossible to teach a discretionary system anyway unless you sit with someone and "mentor " them for months on end. And then you come across another hurdle - getting them to THINK like a top trader is nigh on impossible unless they have the ability to teach themselves to leave emotion at the door. You can however teach some very important general principles that make up that system as Bunyip has indicated.

- most of the traders I know making really big money from the markets do it full time.  TechA does a fantastic job using a low maintainence system - those who wish to do significantly better can expect to spend 40+ hrs a week on it.

- I am aware of the actual trading results of some of the overexposed seminar promoters out there and let's just say that most of their money must come from books and seminars.


That's my piece - make of it what you will.  I have made no claims about my own results - I have been making a living fulltime from the market from the age of 27 (currently 32) and have no need to prove myself to anyone.

The only reason I bothered posting was to try and get across to some of those with a more open mind that YES .......a very small minority are making a killing from the markets.  If you open your mind , forget conventional wisdom about what is possible and just get in there and try and come up with some unique ideas then you might just be one of them

The only way to seriously outperform everyone else is to do something everyone else isn't doing.

Over and out

Ed


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> This thread cracks me up and was why (other than lack of time) I give many forums a wide berth - I'm not sure whether to laugh or cry actually.  We have a whole lot of one-upmanship here dominated by traders who refuse to believe that anyone has an approach that produces "mega returns" just because they cannot manage it themselves.
> 
> I am not going to even try and make any claims myself , but let's just say that I am in contact with traders all day every day, have seen trading statements/tax returns of my closer trading friends.
> 
> ...




Thank you Eddie Van Halen. 
it is entertainment.


----------



## swingstar (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Nice post Ed.


----------



## bullmarket (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi eddievanhalen

It looks to me you're trying to have it both ways   since you say you haven't made any claims but when I read your post you clearly make claims of various sorts.  Personally I have no idea if your claims are true or not but it doesn't really matter.

What I find amusing is that people make unsubstantialted and unverifiable claims in chatrooms like this and then expect others to just blindly believe them   ......I for one have always had and will always have a policy of not blindly believing what I read in chatrooms.

The way I see it, the more people get upset and aggressive towards those who justifiably choose to not believe unsubstantiated/unverifiable claims the more confident I am that their claims were horse manure in the first place because if their claims were true, I cannot see how on earth it should matter to them  if I or anyone else blindly believes them or not......being aggressive/abusive towards other chatters indicates to me they have other agendas which require them to be believed for their agendas to be achieved.    

cheers

bullmarket


----------



## David123 (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

im no guru, but wouldnt u think u shud use both coz, a share price u wud think wud rise because of a fundamental reason?  

i myself just enter in direction of trend,volume and keep stops tight, and look at fundys to make sure its making money..i make a little from a little  : 

 

cheers


----------



## eddievanhalen (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

You're right bullmarket ofcourse.  That's the problem with these discussions and I acknowledge the logic behind what you say.  Having said that I'd like to think what I posted has a bit more substance than "Buy XYZ..whoosh ..going to the moon".  Hard to see how I could possibly benefit from what I posted.........the so-called "agenda"    I only pop into this forum occassionally and not looking to build (or destroy  :  ) my reputation here.

I never normally get involved for that very reason.  I was just a bit frustrated with how some people are limiting their own progress based upon conventional wisdom. Obviously some of the contributors to this thread have a lot of experience and their beliefs are based upon that experience...........fine.  It's more the newbies who read this that I'm worried about.

The only reason I posted at all was to try (in vain probably) to maybe influence some of those who refuse to believe that returns greater than 10-20% pa are possible to think outside the square a bit.

I see no reason for anyone to believe me any more than those who claim that nobody (trading smaller amounts) can beat Buffett.  This thread will never get anywhere in my opinion and I almost regret posting in it.    

Back to work.

I'll come back in a few weeks and see how may more times we've gone around in circles

Ed


PS the only real "claim" I made to illustrate a point was that I currently hold 70 positions and TURN OVER 1m/month.   When I say turnover I mean total sales.  I could do that buying in and out of BHP 50 times for the month using only $20,000.  It doesn't imply a level of profit at all.


----------



## bunyip (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Thanks Ed.....that was an outstanding post. You show knowledge and wisdom beyond your years. 
I doubt if you'll convince the non believers though....maybe one in fifty of them will be prepared to think outside the square he's living in, get off his backside and start putting in the hard yards necessary to learn a better and simpler way of profiting from the market. 
Most of them however will continue to believe the age old crap that keeps them slugging along at 10 to 15% annual returns (if they're lucky) and believing that because they can't get above this level, nobody else can either.

Anyway, at least we've tried to help they eh? But we won't try too hard because as you've pointed out, we really don't need to convince anyone of anything and we feel no need to prove ourselves to anyone.

Bunyip


----------



## Bobby (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> Over the years my opinions have changed.
> 
> The only way to seriously outperform everyone else is to do something everyone else isn't doing.




Like that !   Yep if everyone is trying to stick their paw into the cooky jar at the same time, how are you going to get any cookies?

I do something manualy that works, but is so slow as I need to physically monitor one stock at a time.
Now if I could find a programmer to do the code so as to run the thing through a software package ~ 
But would it get pinched  ?

Bob.


----------



## MichaelD (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> Realise that you don't need to know much in order to profit consistently from the market. Too much information and knowledge can be detrimental to trading results. There's a colossal amount of information out there, both technical and fundamental.
> Most of it is pretty damned useless in my experience.
> The important things in trading are...
> * Identify strong trends.
> ...



All absolutely true. My plan does all of this and so do I. So far, the plan (and I) are performing to (backtested) specification.

Really our only point of difference is in my belief that many "fashionable" entries are no better or even worse than random. Interestingly, I am currently reading Van Tharp's Trade Your Way To Financial Freedom which essentially supports that philosophy.

Let's settle on middle ground; the entry is the least important part of the trade for technical traders.


----------



## Realist (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> The only way to seriously outperform everyone else is to do something everyone else isn't doing.




Why try and outperform Warren Buffett? Why not just copy him?

I'd be happy with 1% of his success actually. 

He can be 100 times better than me at what he does and I'll be very happy with my return.




> Like that !  Yep if everyone is trying to stick their paw into the cooky jar at the same time, how are you going to get any cookies?




You're not. But everyone else will. Put your bloody hand in the jar while you still can.


----------



## Magdoran (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Bunyip, eddievanhalen, (even tech/a),


*Applause.*


Magdoran 
P.S.  I worry about the newer players being misled too…


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				David123 said:
			
		

> im no guru, but wouldnt u think u shud use both coz, a share price u wud think wud rise because of a fundamental reason?
> 
> i myself just enter in direction of trend,volume and keep stops tight, and look at fundys to make sure its making money..i make a little from a little  :
> 
> ...




David could you please write correctly?


----------



## nizar (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Why try and outperform Warren Buffett? Why not just copy him?
> 
> I'd be happy with 1% of his success actually.




Really??

Its well documented that $10,000 invested in Berkshire Hathaway in 1965 would by 2005 have become $50million

Thats 24% annually compounded

You'll be happy with 2.4%... good effort son, i hope u dont have to do much research to get u there  : 

Oh sorry i actually worked out for 10%.... but im sure u get the drift...

There are many traders out there that make heaps more money than Buffet does... they just havent been around long enough to become as famous... but would u rather the cash or the fame?


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Magdoran said:
			
		

> Bunyip, eddievanhalen, (even tech/a),
> 
> 
> *Applause.*
> ...




Magdoran,
Just for the newbies who are they? 

What are they being misled by? By whom?

If one has the authority to say one is being misled, then that person, or people, have a moral obligation to reveal what is misleading. That`s if there is a real concern for those being misled.

Snake


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Why try and outperform Warren Buffett? Why not just copy him?
> 
> I'd be happy with 1% of his success actually.
> 
> ...




It`s very hard to copy Mr Buffett, even for Buffett wanna be`s.

If you have a spare few million dollars contact Mr Buffett and get some advice on how to buy a company and then build it up.

Yes, keep that hand in the jar and it might get bitten by an ant in it.


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				swingstar said:
			
		

> Agreed. There's a lot of crap posted on this forum.
> 
> Perhaps there should be an ignore option?




Swingy,
Actually this is a better forum than most.

There is an ignore button that can be utilised.

Snake


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bullmarket said:
			
		

> Hi eddievanhalen
> 
> It looks to me you're trying to have it both ways   since you say you haven't made any claims but when I read your post you clearly make claims of various sorts.  Personally I have no idea if your claims are true or not but it doesn't really matter.
> 
> ...




Bull,

As always your philosophy is out there.

Pure entertainment :remybussi 

Snake


----------



## bunyip (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				David123 said:
			
		

> im no guru, but wouldnt u think u shud use both coz, a share price u wud think wud rise because of a fundamental reason?
> 
> i myself just enter in direction of trend,volume and keep stops tight, and look at fundys to make sure its making money..i make a little from a little  :
> 
> ...




David

What very few people ever learn is that the chart is one of the best fundamental analysts you can have on your team.
A technical analyst utilising a trend riding approach is really using fundamental analysis in the first instance, simply by looking at the chart and identifying the trend of the stock.

If you'd looked at the plunging charts of  Sons of Gwalia, Pasminco, and HIH, there could have been no doubt that investors were dumping these stocks because they had lousy fundamentals.

Conversely, strong uptrenders like BHP, RIN and WPL clearly had money pouring into them from investors who believed their fundamentals were excellent. 
Incidentally, while Pasminco was plunging south and heading for oblivion, Renee Rivkin was busy talking the stock up and giving it a buy recommendation, based on its good fundamentals!!!!!!!

I was trolling through some stocks one day when I came across a stock that was downtrending on the weekly chart. I immediately thought 'poor fundamentals' even though I knew nothing about the stock (which happened to be ION).
A couple of days later I got a call from a friend who is right into fundamental analysis. Just out of curiosity I asked him what he knew about ION. He confirmed that the stock had been getting negative reports in the various financial publications, and was fundamentally considered a bit of a basket case.
ION, as we know, ended up going broke.

The concept of using trend analysis to make an assessment of company fundamentals is just so alien to the average fundamentalist that he simply can't accept it as a viable way of assessing whether or not a stock is worth buying.

Bunyip


----------



## Realist (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> There are many traders out there that make heaps more money than Buffet does...




   ridiculous.



> If you have a spare few million dollars contact Mr Buffett and get some advice on how to buy a company and then build it up.




Buffett did not build Coke or Gilette or the Washington Post up at all.

Buffett is a stock analyst, he saw value in the Coke brand, saw the company was undervalued, bought stock, and Coke is still Coke and he's still making money from Coke. If you think Warren Buffett invented Diet Coke or something you are dreaming.

Every time you buy a can of Coke probably 0.1 cents go to Warren Buffett.

Every time you buy a can of VB about 0.00001 cents go to Realist.    

Go on, have one!!


----------



## wayneL (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Re outperforming Buffet.

I read somewhere (wish I could find the damned article so I could post it) that Buffet readily concedes that people can outperform him. There was only one condition, that the investor didn't have a huge capital base. Less than $1million was the figure mentioned I believe, from memory.

I think there are many on this forum who would bear that out.

Cheers


----------



## Realist (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Buffet readily concedes that people can outperform him.




Absolutely.

Over the short term some traders will massively outperform Buffett.

Some wont though, some will lose money, infact most will lose money I'd guess.

But life and investing is no sprint race, it is a long distance endurance race.

No-one can beat Buffett over a long distance endurance race. Hence why he is so goddam rich. And we're not.


----------



## wayneL (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Ahso! Found it!



> Big Winners for Small Investors
> 
> By Paul Elliott (TMF Rael)
> February 10, 2006
> ...




http://72.14.203.104/search?q=cache...on&hl=en&gl=au&ct=clnk&cd=15&client=firefox-a


----------



## Magdoran (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Snake,


I could ask you the same moral question.  Let’s just agree that you and I have “different approaches” and leave it there shall we?


Magdoran

_P.S. I have my finger on the "ignore button" - *click!*

P.P.S.  I suggest that newer serious traders/investors fully research and read the posts in the more professional sections (like Commodities and Derivatives), for those who want to continue in this comedy, please go for it!_


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> ridiculous.
> 
> 
> 
> ...





Yes I`m quite aware that Mr B is not in marketing. :topic 

Realist,

Here is a thought for you to ponder:

It is what it is. It is what it isn`t.
Those who blindly believe, believe. Those who don`t, don`t.
It is all in the numbers, but that doesn`t mean much to those who really know.

Snake

Closing point: technical or fundamental they are all relevant.

Enjoy everyone


----------



## It's Snake Pliskin (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Magdoran said:
			
		

> Snake,
> 
> 
> I could ask you the same moral question.  Let’s just agree that you and I have “different approaches” and leave it there shall we?
> ...




Magdoran,

Click that button baby.

Question:
How do you know when you have been taken for a ride?

Answer: On forums you don`t.


----------



## nizar (19 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Absolutely.
> 
> Over the short term some traders will massively outperform Buffett.
> 
> ...




Thats because they havent been around long enough to give a fair comparison

Lynch made 29%pa for 13 years; and several others who run hedge funds made 30%+pa for 10 years or so (Richard Farleigh from memory is one of them)


----------



## bunyip (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> All absolutely true. My plan does all of this and so do I. So far, the plan (and I) are performing to (backtested) specification.
> 
> Really our only point of difference is in my belief that many "fashionable" entries are no better or even worse than random. Interestingly, I am currently reading Van Tharp's Trade Your Way To Financial Freedom which essentially supports that philosophy.
> 
> Let's settle on middle ground; the entry is the least important part of the trade for technical traders.




While the entry is generally considered less important than the exit, nevertheless I wouldn't discount the importance of getting a timely entry, no matter what Van Tharp says.

Try entering a stock at open on the day following a big spike up. Chances are you'll be quickly stopped out as the stock is knocked down by profit takers bailing out to lock in yesterdays gains.

Try buying a stock just below strong overhead resistance. Chances are that once it reaches the resistance level it will stall, and spend the next week or two chopping around until it gets your stop.

If you notice that a stock runs up for about 14 days on average, then has a pullback for a few days, try entering on day 12 or 13 of an upswing...chances are you'll be soon stopped out as a retracement sets in.

Try entering once the stock resumes its uptrend after a retracement. Chances are that the stock will accelerate away from your entry point and your stop won't be in danger. No guarantees, but that's the most likely scenario.
That's why I like entering from a trend resumption immediately after a retracement.....it puts the odds in your favour that you'll get an immediate move in the right direction.

As you can see, entires are an important part of trades. The entry is where the trade begins. Get the entry right and you increase the likelyhood of the rest of the trade falling into place.

Bunyip


----------



## ducati916 (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*enzo* 



> Dear Mr Ducster,
> 
> You do like to carry grudges don't you.
> 
> I respectfully decline your offer of a trading challenge. I also decline, in accordance with the agreement both you and I made to Joe, to indulge in acrimonious discourse with you. I will be honouring that agreement.




I didn't for one minute expect you to partake.
<code of conduct breach>

And while I'm still on the topic of excuses let's examine the evidence from the techies...........that is, *claims of superlative trading results, combined with an excuse of why they cannot demonstrate * 


*eddievanhalen* 



> I am not going to even try and make any claims myself , but let's just say that I am in contact with traders all day every day and have seen trading statements/tax returns of my closer trading friends.




So no claims from you sir.




> there ARE a few traders who are making 50,60,70,80,90% returns on large sums of money.




I thought you said no claims?
Where is the evidence?
What no evidence...........I'm scandalized.




> Do you think I could be stuffed posting my trades (around 70 positions currently) and trying to prove myself to some people on the internet I don't know. I actually spend a lot of my free time helping other traders with general queries and am all for pointing people in the right direction but as far as trying to explain my system and prove it to everyone??




You can't post a few trades, that takes 5mins, but you can spend your free time helping the peanuts.

I should be extremely contrite in the face of such philanthropy. Jog on.




> most of the traders I know making really big money from the markets do it full time. TechA does a fantastic job using a low maintainence system




No, now you are confusing someone who made a claim, and *backed it up with a publically traded system* Irrespective of his results, and as much as I quibble with him over his methodology........you cannot place your *traders* in the same category.




> That's my piece - make of it what you will. I have made no claims about my own results - I have been making a living fulltime from the market from the age of 27 (currently 32) and have no need to prove myself to anyone.




But of course that's total nonsense.
You have made a claim right there.
*I have been making a living*...........that my freind is a claim, that implies you or any potential aspirant can make returns good enough to live off.

This is difficult.
You say otherwise.
Provide the evidence.



> The only way to seriously outperform everyone else is to do something everyone else isn't doing.




Well here we can agree.
But *Technical analysis* is by definition, exactly what everyone else is doing.



> The only reason I posted at all was to try (in vain probably) to maybe influence some of those who refuse to believe that returns greater than 10-20% pa are possible to think outside the square a bit.




They are, no argument.
There are people that do it.
Their results are in the public domain, and their funds are closed to new investors.

My assertion is that very few who participate on this BB are capable.
There are many claims.
Almost zero action.

Why is that?
Because to actually do it, day in day out, is very hard to do.
Most like *enzo etc* like to talk the talk, but bail out very quickly when required to put up the goods.



> PS the only real "claim" I made to illustrate a point was that I currently hold 70 positions and TURN OVER 1m/month. When I say turnover I mean total sales. I could do that buying in and out of BHP 50 times for the month using only $20,000. It doesn't imply a level of profit




Of course it doesn't.
It tells people absolutely nothing.

*bunyip* 



> Thanks Ed.....that was an outstanding post. You show knowledge and wisdom beyond your years.
> I doubt if you'll convince the non believers though....maybe one in fifty of them will be prepared to think outside the square he's living in, get off his backside and start putting in the hard yards necessary to learn a better and simpler way of profiting from the market.
> Most of them however will continue to believe the age old crap that keeps them slugging along at 10 to 15% annual returns (if they're lucky) and believing that because they can't get above this level, nobody else can either.




More nonsense.
Buffett, Lynch, Gabelli, Ruane, Washington Post Pension Fund, etc.
All have publically verifiable records.
There are even some *techies* that manage it for periods of time.
Public knowledge.

<code of conduct breach>



> What very few people ever learn is that the chart is one of the best fundamental analysts you can have on your team.
> A technical analyst utilising a trend riding approach is really using fundamental analysis in the first instance, simply by looking at the chart and identifying the trend of the stock.




<code of conduct breach>



> I was trolling through some stocks one day when I came across a stock that was downtrending on the weekly chart. I immediately thought 'poor fundamentals' even though I knew nothing about the stock (which happened to be ION).




<code of conduct breach>



> The concept of using trend analysis to make an assessment of company fundamentals is just so alien to the average fundamentalist that he simply can't accept it as a viable way of assessing whether or not a stock is worth buying.




That's because it's total nonsense.
You are confusing the basics, and yet you claim so much.

*Magdoran* 



> Bunyip, eddievanhalen, (even tech/a),
> 
> 
> Applause.




tech/a is worth his applause.
<code of conduct breach>
We'll come to blows on Friday.


jog on
d998


----------



## wayneL (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Duc,

Last warning, cut the crap!


----------



## ducati916 (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Code of conduct breach* 

Jog on!!


But seriously, here are some *professionals* and their publically traded results over the last 6mths including that rather nasty May break.

Final Portfolio Totals
10/31/2005 - 6/1/2006


Global Investor 
$116,174.17  16.17% *  Fundamental Analysis

All-Star Team  
$127,436.80  27.44% *  Fundamental Analysis

Trend Trader 
$103,939.60  3.94%    Technical Analysis

Quite Contrary 
$86,826.41  [-13.17%]    Technical Analysis

Rational Investor  
$109,033.89  9.03% *  Fundamental Analysis

Model Behaviorist 
$110,618.08  10.62% *  Mixture of the two methodologies
* out-performed the S&P 500

So with some real evidence, from the world of *professionals*.........doesn't look that easy to me.

jog on
d998


----------



## bullmarket (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi eddievanhalen.....no problem 

I agree in general with what you posted and obviuosly there are traders/investors out there who do generate large returns.......but given that anecdotal evidence suggests less than 10% of traders are profitable to any great extent in the long run I simply choose to not blindly believe any unsubstantiated/unverifiable claims of returns/profits etc in chatrooms like this, especially when there is no way of verifying with 100% certainty who is actually sitting at the keyboard of the chatter making the claim   

Imo, people mostly post alleged profits etc in chatrooms in an attempt to big note themselves in the hope others will follow their recoomendations or whatever in the future and from my point of view all they are doing is leaving themselves wide open to being laughed at by those who are much more successful and profitable than they are   

cheers

bullmarket 



			
				eddievanhalen said:
			
		

> You're right bullmarket ofcourse.  That's the problem with these discussions and I acknowledge the logic behind what you say.  Having said that I'd like to think what I posted has a bit more substance than "Buy XYZ..whoosh ..going to the moon".  Hard to see how I could possibly benefit from what I posted.........the so-called "agenda"    I only pop into this forum occassionally and not looking to build (or destroy    ) my reputation here.
> 
> I never normally get involved for that very reason.  I was just a bit frustrated with how some people are limiting their own progress based upon conventional wisdom. Obviously some of the contributors to this thread have a lot of experience and their beliefs are based upon that experience...........fine.  It's more the newbies who read this that I'm worried about.
> 
> ...


----------



## tech/a (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> I agree in general with what you posted and obviuosly there are traders/investors out there who do generate large returns.......but given that anecdotal evidence suggests less than 10% of traders are profitable to any great extent in the long run I simply choose to not blindly believe any unsubstantiated/unverifiable claims of returns/profits etc in chatrooms like this, especially when there is no way of verifying with 100% certainty who is actually sitting at the keyboard of the chatter making the claim




Who cares wether they are Daffy Duck---as of course I am.
If a methodology is shown particularly over a prolonged time, both the "Motor Bike" and myself will have furnished the masses with information based upon the methodologies we use. What they do with it in full or in part is up to them.



> Imo, people mostly post alleged profits etc in chatrooms in an attempt to big note themselves in the hope others will follow their recoomendations or whatever in the future




Those who simply ramp stock with no discussion on methodologies I tend to agree.
However those who participate in the general discussion directed from other who are interested in their results and methodologies are generally I have found people who are passionate about their trading and how they do it.
Exchanges are both ways I have learnt a great deal from others during discussions related to my own methods.
Leading me to trade 2 others which have been refined from these collaberations.



> and from my point of view all they are doing is leaving themselves wide open to being laughed at by those who are much more successful and profitable than they are




Other than the obvious rampers and those who copy other published forms of trading and pass it off as their own---hence no discussion on their form of trading--
*People who "Laugh at others"* specifically those genuine people who enjoy helping others achieve success,are purely pretentious human waste,who cant fathom that there are people *who actually dont give 2 sheets about reward---THEY DONT NEED IT.*

Those that pontificate in circular non informative pompus babble are worth a good giggle though.


----------



## MichaelD (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> Try entering once the stock resumes its uptrend after a retracement. Chances are that the stock will accelerate away from your entry point and your stop won't be in danger. No guarantees, but that's the most likely scenario.
> That's why I like entering from a trend resumption immediately after a retracement.....it puts the odds in your favour that you'll get an immediate move in the right direction.



This entry gives you a 50% or less chance of a profitable trade. i.e. A coin toss is just as good as this entry. At the end of the day, it's the expectancy of a given entry in a given trading system that is relevant, not whether it moves up/down in the next day or two.

We'll have to agree to disagree I'm afraid. My backtestable belief is that restricting entry to something such as that outlined above lessens system expectancy. Your non backtestable belief is the opposite.

i.e. you think you are making a positive difference with your entry strategy. I don't agree. Neither do Van Tharp or Le Beau.


----------



## bullmarket (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi MichaelD

I prefer to buy stocks that have begun to trend up after a retracement or sieways consolidation.......the tricky bit, of course, is developing a strategy (charts, indicators etc etc) that help you determine if a stock is trending up.

Imo if a stock is trending up then, although there are no guarantees it will continue to trend up after buying, there is a better than 50% probability that it will continue to trend up.......the aim here is to develop a trading plan (which includes risk and capital management) and TA skills that will enable you to interpret charts that result in continuing uptrends at least 2 times out of 3.......hence the need to keep losses small for the times you inevitably get it wrong.

cheers

bullmarket


----------



## bunyip (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> We'll have to agree to disagree I'm afraid. My backtestable belief is that restricting entry to something such as that outlined above lessens system expectancy. Your non backtestable belief is the opposite.
> 
> i.e. you think you are making a positive difference with your entry strategy. I don't agree. Neither do Van Tharp or Le Beau.




Yes Michael...we'll just have to agree to disagree. I'll keep using what has worked for me. Incidentally, I do have a couple of entry setups.

Can you give us a brief rundown on what Tharp and Le Beau are using as entry signals. And what you're using yourself?

Bunyip


----------



## bunyip (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hey Duc

I've had a pretty good run with real estate.....by my calculation my portfolio would be up aprroximately 100% in the last five years, plus about 5% per year dividends in the form of rentals.
Oh dear.....another claim by me! Now you'll be demanding that I supply evidence. Let's see.....I could start with the contracts of sale from when I bought the properties, then I could follow up with some documentation from the Lands Department to prove ownership, and finally I could get Herron Todd White to do some valuations to prove the worth of my properties. Oh, and I almost forgot the rentals.....no problem, I could put together my rental statements of the last five years.
And having got all this documentation together, I could probably scan it and attach it to a post and fire it off to this forum just to pacify my old mate Duc who harbours the misguided notion  that I am under some obligation to supply him with details of my private business dealings.

Duc, I have reason to believe that you're sailing dangerously close to copping some sort of disiciplinary action on this forum. In some ways it would be good to see a boring, repetitive trouble maker get his just desserts. On the other hand there are some of us, myself included, who would miss the outstanding entertainment you provide. Trading is a serious and at times a lonely business. It's not such a bad thing to have a forum clown who provides us with plenty of laughs.

Bunyip


----------



## Realist (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> That's because the world's greatest investor would focus on undiscovered, lightly traded small caps -- the area of the market where individual investors have an advantage over the pros.




 

Wayne, that is from the Motley Fool, and is perposterous.

Warren Buffett would not invest is small undiscovered lightly traded small caps. The very notion is laughable.

The Motley Fool is a joke, a scam and a spam generated nuisance, anyone that takes any advice from them is asking for trouble.


----------



## ducati916 (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*bunyip* 



> Hey Duc
> 
> I've had a pretty good run with real estate.....by my calculation my portfolio would be up aprroximately 100% in the last five years, plus about 5% per year dividends in the form of rentals.
> Oh dear.....another claim by me! Now you'll be demanding that I supply evidence. Let's see.....I could start with the contracts of sale from when I bought the properties, then I could follow up with some documentation from the Lands Department to prove ownership, and finally I could get Herron Todd White to do some valuations to prove the worth of my properties. Oh, and I almost forgot the rentals.....no problem, I could put together my rental statements of the last five years.
> And having got all this documentation together, I could probably scan it and attach it to a post and fire it off to this forum just to pacify my old mate Duc who harbours the misguided notion that I am under some obligation to supply him with details of my private business dealings.




Oh dear, yet another peanut.
I do not require proof in the form of documentation.
I do not require proof or disclosure of your methodology.
What I would like to see is you place your trades, or a selection thereof, in *real time.* 

Why?

Simply because trading is difficult.
Claiming high returns is one thing, any peanut can claim a high return.
*Delivery of high, consistent returns is quite another matter you see. Sure you claim XYZ, but I see no evidence to support your assertions currently.* 



> Duc, I have reason to believe that you're sailing dangerously close to copping some sort of disiciplinary action on this forum. In some ways it would be good to see a boring, repetitive trouble maker get his just desserts. On the other hand there are some of us, myself included, who would miss the outstanding entertainment you provide. Trading is a serious and at times a lonely business. It's not such a bad thing to have a forum clown who provides us with plenty of laughs.




Of course.
But you see not every peanut has a sense of humour, as you undoubtably do.
Enzo Peanut, takes it all so personally.
I shall continue to castigate the peanuts, for their totally fabricated claims until the peanuts throw me off, or continue the censorship to a level that nothing remains.

jog on
d998


----------



## bullmarket (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi ducati

Since I and most probably you and everyone else have no way of verifying with 100% certainty who is sitting at a chatter's keyboard at any particular time I'm not sure what anyone posting alleged 'real time' trades, as you request, will prove unless they also provide their real name and sufficient details to enable you to verify the trade.

_Now of course no-one in their right mind will post their name and pesonal details to a stranger in a chatroom like this and if they do then they have only their immaturity and stupidity to blame if their personal details end up in the hands of someone they would prefer not to. _ 

So in my case, I just adopt an overall policy of not blindly believing unsubstantiated/unverifiable claims made in chatrooms and leave it at that......if people get upset and abusive at me justifiably not believing them then so be it.

cheers

bullmarket


----------



## ducati916 (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Mr bullmarket* 

You are just too harsh.
If someone is willing to demonstrate their trades live, I always accept it at face value, as to do so invariably demonstrates strength of character.

Strength of character, after adequate knowledge, tempered with experience, is the most important ingredient to consistent market success.

As for the peanuts, well they have endless excuses as to why it's all just not possible..............my favourite............it interferes with my psychology.

jog on
d998


----------



## bullmarket (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

no problem ducati   

I don't believe I am being too harsh at all........from my point of view I am just being realistic and maybe erring on the side of caution.....but that's just the way I am........I'm a like it or lump it deal   

cheers

bullmarket


----------



## bunyip (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				ducati916 said:
			
		

> What I would like to see is you place your trades, or a selection thereof, in real time.




Duc, you continue to miss the point..... We.....Don't....Care...About....What....You'd.....Like.....To.....See....Or.....Not....See. 
Got it? Most of us on this forum just don't care about you! 
You're forever telling us what you'd like to see. But you fail to come up with any compelling reasons why the rest of us are supposed to care about what you'd like to see. You fail to convince us that we should feel obliged to comply with your requests.

I'll say it again, this time more strongly. Most of us on this forum couldn't give a toss what you'd like to see or not see. Most of us couldn't care two hoots for your opinions. Most of us are not the slightest bit concerned whether you do or don't believe us. And because we're not concerned about your opinions, we feel no need whatever to convince you of the truth of what we're saying, we feel no need to try and talk you into believing in our trading methodology,  we feel no need to do anything where you're concerned, except maybe read your posts and have a good laugh at you.

I wonder what would happen if you and I met each other face to face. Would two peanuts start punching each other on the nose, or would we slap each other on the back, head for the nearest bar and have more laughs over a few cold ones.

Bunyip


----------



## bunyip (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I support Bull in his tendency towards taking with a grain of salt what he reads on a forum.

With regard to a trading system or methodology that someone shares, I say don't believe it or disbelieve it until you've extensively tested it yourself...then and only then are you in a position to comment on its strengths and weaknesses.
Too often you see someone who is generous enough to share a system that he says works well for him, and next thing he cops a barrage of scorn and sarcasm from morons who don't even have enough get up and go to thorougly check out the system, before passing judgement on it.

Bunyip


----------



## cuttlefish (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I believe that both approaches - technical or fundamental (or a combination of both) will work if applied correctly. 

My own preference is a fundamentals, basically ben graham with a bit of buffet, approach. But I've seen quite a few comments about Buffet and Graham from both the fundamental and technical side of the debate that mismatch with my own impression of their philosophies.

At the moment I'm wanting to get a better understanding of technical trading and also use of leveraged instruments to improve on my underlying approach.

I think both approaches are not mutually exclusive.

My thoughts on the two approaches:

A fundamental investor  is trying to pick assets that compare well to other assets that are available (including other stocks, bonds, property, cash etc.)
They do this based on looking at the income that can be received when compared to the cost of the asset (income doesn't have to be dividends - the profitability of the company is income), and the potential growth of that income compared to income growth that can be achieved from other assets.  

Capital gains are not a strong focus for a fundamentals based investor, but often are a by-product of fundamentals based investing.  


A technical trader  is trying to pick the current market sentiment/psychology surrounding a particular stock or sector. All people that have bought shares are aware of the power of emotion, and as a result 'crowd' behaviour is to some extent predictable and follows repeatable patterns. These are the patterns that chartists look for.  They then try to capitalise on a particular psychology by either backing a trend (e.g. identifying a breakout and running with the herd untill it runs out of steam), or trading against the psychology of a trend (e.g. selling at the top of a range bound stock and buying at the bottom of that range -i.e. against the psychological trend).

There is plenty of room for both techniques - one is a more active process and more akin to running a business. The other is a more passive approach.

The things that _both_ require are:

* Doing your own hard work - either in trend analysis or fundamental analysis and making your own decisions and being prepared to back yourself.
* Having the discipline to formulate and stick to a plan. A plan needs to have metrics.  Buying because it looked good that day or didn't isn't a plan.  That doesn't mean the approach can't be discretionary, but there still needs to be a plan for entry and exit. 
* Investing or trading to a plan is essential otherwise you are investing based on emotion and that is almost guaranteed to fail.

From my own perspective I think a good understanding of both will benefit any trader or investor.


----------



## nizar (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Capital gains are not a strong focus for a fundamentals based investor




Yeh?

Peter Lynch was very FA based; looking at the company; management; sector...and he focussed on 10-baggers when he was running Fidelity Magellan Fund 1977-1990...

But i know Buffet did say something along the lines of: "Dont buy for capital appreciation. Be patient and the growth will come. In the meantime, collect the yield"


----------



## It's Snake Pliskin (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Bull*,



> I prefer to buy stocks that have begun to trend up after a retracement or sieways consolidation.......the tricky bit, of course, is developing a strategy (charts, indicators etc etc) that help you determine if a stock is trending up.




It`s not that difficult to see if a trend is in motion!



> Imo if a stock is trending up then, although there are no guarantees it will continue to trend up after buying, there is a better than 50% probability that it will continue to trend up.......the aim here is to develop a trading plan (which includes risk and capital management) and TA skills that will enable you to interpret charts that result in continuing uptrends at least 2 times out of 3.......hence the need to keep losses small for the times you inevitably get it wrong.




Nothing of value here!

Snake


----------



## ghotib (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> ...I've seen quite a few comments about Buffet and Graham from both the fundamental and technical side of the debate that mismatch with my own impression of their philosophies.



I agree with nearly all of the rest of this post too, but I've pulled this bit out because I'd like to ask the moderators if we can pull the "Buffet would  / Buffet wouldn't" posts into a separate thread. Seems to me there's a few of us trying to use Buffet and Graham as a model and there are a lot of different ideas about what that means. 

Ghoti (feeling like this is the longest learning curve since preschool)


----------



## It's Snake Pliskin (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Can you give us a brief rundown on what Tharp and Le Beau are using as entry signals. And what you're using yourself?




Van Tharp`s book is a good introductory book, nothing more. Not too much the serious trader can work with.


----------



## It's Snake Pliskin (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Do you think I could be stuffed posting my trades (around 70 positions currently) and trying to prove myself to some people on the internet I don't know.




And it is this comment here that is intriguing.


----------



## It's Snake Pliskin (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> But seriously, here are some *professionals* and their publically traded results over the last 6mths including that rather nasty  May break.





Duc I would say healthy May break.


----------



## bullmarket (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

:iagree: cuttlefish....I use both FA and TA 



			
				cuttlefish said:
			
		

> I believe that both approaches - technical or fundamental (or a combination of both) will work if applied correctly.
> 
> My own preference is a fundamentals, basically ben graham with a bit of buffet, approach. But I've seen quite a few comments about Buffet and Graham from both the fundamental and technical side of the debate that mismatch with my own impression of their philosophies.
> 
> ...


----------



## ducati916 (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*bunyip Peanut* 



> Duc, you continue to miss the point..... We.....Don't....Care...About....What....You'd..... Like.....To.....See....Or.....Not....See.
> Got it? Most of us on this forum just don't care about you!
> 
> I'll say it again, this time more strongly. Most of us on this forum couldn't give a toss what you'd like to see or not see. Most of us couldn't care two hoots for your opinions. Most of us are not the slightest bit concerned whether you do or don't believe us.




Ahhhh a rebellious peanut.
A rebellious peanut full of excuses.

Could it be due to time contraints?



> Trading involves too much time? Rubbish......about an hour each weekend if you trade from weekly charts, or about 15 to 30 minutes a day if you trade from daily charts.




But no.........it takes no time at all.

Because it's total rubbish?



> even though you and many others (including some of the most respected people in the industry) have been using it for years to consistently outperform the market.




Hell no!



> I'm intrigued by the claims of those who dismiss this approach as unworkable.
> Do you really believe I'll underperform the market by only buying stocks that are outperforming the market?
> Are you really suggesting that the pople I've mentioned above are fools and pretenders who don't know what they're talking about and can't trade successfully?




Well, I'm interested.
I don't need your methodology divulged.
I don't require explanations.

You see, I'm a doubter.
The people you've mentioned............all peanuts, [well, Guppy, Bedford & Hull anyway] 

So, all I asked for was a demonstration via some live trades.
Intrestingly that almost always produces one result out of two possibles;
The first, some trades are posted.
The second, always produces a flurry of excuses and abuse.

Obviously, you fall into category #2. Lots of excuses, and abuse.
Therefore no further analysis required, you are a peanut.



> I wonder what would happen if you and I met each other face to face. Would two peanuts start punching each other on the nose, or would we slap each other on the back, head for the nearest bar and have more laughs over a few cold ones.




Well you can ask Magdoran next week.
He's visiting our little village this week, and we are going to meet up.

*Snake* 



> Duc I would say healthy May break.




Healthy it is then.


jog on
d998


----------



## bullmarket (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi ducati

I'm intrigued that you don't practice what you preach when you ask other chatters to post live trades.

I assume that you are aware that anyone with access to course of sales can simply look up some potentially profitable buy/sell orders and then post in here that they are theirs without providing any verifiable information that proves the person sitting at the keyboard posting the alleged trade is the actually the person who placed the order in the cos.

_Therefore, in order to take you and your request for chatters' live trade information seriously, why not set an example and take up my challenge to you to practise what you preach and post in here any live trades that you have made along with verifiable information proving that the person sitting at the ducati keyboard actually did make those alleged trades.

Imo unless someone posts verifiable info proving the person sitting at the keyboard actually made the trades then it is 100% justifiable to dismiss the alleged trades as horse manure....and for obvious reasons no-one will post the verifiable personal information and so there is no point in posting alleged live trades._

My   says you won't practise what you preach 

cheers

bullmarket


----------



## eddievanhalen (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Doh - I've returned earlier than I said.  Got the sort of response I expected.

Despite my better judgement I will bite re SP's comment though ..........what do you find intriguing about holding 70 positions??

Cheers,

Ed

PS  I've said many a time that I have no desire to prove myself to anyone on the internet but if Duc ever visits my humble village (Melbourne) he is quite welcome to contact me via PM and arrange to catch up for a coffee and view some tax returns/trading statements that will very quickly put a sock in it. That's as far as I'll go..............you can hold me to that and I have only conceded that much ground because I feel it would make a big difference to the members in this thread to see Duc return to this thread with his tail between his legs (which I am sure he would do as I cast no aspersions on his honesty)


----------



## ducati916 (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Mr bullmarket* 

But I do post live trades.
I update my positions once a week.

*tech/a * loves to remind me of my *losses*.

https://www.aussiestockforums.com/forums/showthread.php?p=52194#post52194

I hope you research your positions with a little more diligence.
I also used to post live *daytrades* on reef, before my rebirth as a *fundie*

My results were approximately the following;
Average winning trade 1.5%
Average loss 0.5%
Wins to losses 50/50
1yr return 87%

jog on
d998


----------



## ducati916 (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*evh* 



> PS I've said many a time that I have no desire to prove myself to anyone on the internet but if Duc ever visits my humble village (Melbourne) he is quite welcome to contact me via PM and arrange to catch up for a coffee and view some tax returns/trading statements that will very quickly put a sock in it. That's as far as I'll go..............you can hold me to that and I have only conceded that much ground because I feel it would make a big difference to the members in this thread to see Duc return to this thread with his tail between his legs (which I am sure he would do as I cast no aspersions on his honesty)




I may well visit Melbourne, but this is what always intrigues me, why would you show me your trading statements, yet not post a couple of live trades?
Passing strange methinks. What's the big deal? No-one if *trading* wins every trade..........losing is part and parcel.......I think I remember a bad streak of about 10 posted trades all losers, one after the other....so what.

Hell *tech/ a * phones me at 1am to laugh at my positions. [not really]
If I ever get over there, Australia, gotta be careful, not terribly popular you know, if you are a market wizard, I would absolutely confirm it.

I am a bounder, but not a cad!

jog on
d998


----------



## eddievanhalen (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

No worries Duc - I've said my piece and said far more than I really wanted to.  The offer is open ANYTIME.  As Bunyip said you cannot seem to understand that some of us are too busy trading to be bothered trying to prove ourselves on an internet forum.  What the hell is the point??? I am about trying to share some of my ideas from time to time as I have some understanding of how hard the game is starting out (and all the time really   ).

I have no doubt that if you returned to this thread and acknowledged that what I have been talking about is possible that it may snap some people here out of limiting their goals to returning barely better than benchmark rates. I will have helped some people out.

Until I hear from Duc via PM this is my FINAL post on the matter , other than perhaps to address Snake's concerns.

Ed


----------



## bullmarket (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi ducati



			
				ducati916 said:
			
		

> *Mr bullmarket*
> 
> But I do post live trades.
> I update my positions once a week.
> ...




I don't know if your alleged 'live' trades are true or just horse manure  because of the reasons I posted earlier.....and therefore I have no reason to believe what you post is true in any way.....it may or may not be..

But in the mean time I will continue to exercise my 100% right to choose to believe that your alleged trades are not true in anyway whatsoever.

_If for some obscure reason it is important to you that I personally believe your alleged trades are true then the onus is on you to provide verifiable information substantiating your claims because no-one is under any obligation whatsover to just blindly believe what they see in chatrooms like this _ 

Let's see how you go....as I said earlier my   says you won't substantiate your alleged trades to me 

cheers

bullmarket


----------



## ducati916 (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*evh* 



> No worries Duc - I've said my piece and said far more than I really wanted to. The offer is open ANYTIME. As Bunyip said you cannot seem to understand that some of us are too busy trading to be bothered trying to prove ourselves on an internet forum. What the hell is the point??? I am about trying to share some of my ideas from time to time as I have some understanding of how hard the game is starting out (and all the time really



 ).

My interest in live trades stems from two main reasons;
#1
If the trader really can return the claimed profitability, and is willing to demonstrate his trading and psychological approach to the market, anyone who is starting out will see that it is not easy, that a disciplined approach is required, that losses happen, but more importantly, how those losses are managed, how winners are managed, what to do on days that absolutely nothing goes right etc.

They will then see, hell, it's not just them that can struggle and have a bad day, everyone is capable of a truely **** day.
If the trader really is as good as he says, his beating the market is not luck, it is not dependant on market conditions, good market, bad market, but on his skill, discipline, strategy, knowledge, experience.

There is a real peanut, lives and works in the UK.
He earns part of his living teaching people to daytrade.
He claims XYZ results.
After paying over some $3000 dollars to the peanut, he cannot even demonstrate his trading to you...........absolute nonsense.

Here on this forum, you have something similar.
No-one charges as far as I know, but you have the armchair experts.
When asked to demonstrate.............that's not what we do is the invariable excuse.

I don't daytrade anymore.
But I could post live trades.
Would I make any money? Hell who knows, but for a new trader seeing the good and the bad would probably be a big help.

Anyway I'm sure you take the point.




> I have no doubt that if you returned to this thread and acknowledged that what I have been talking about is possible that it may snap some people here out of limiting their goals to returning barely better than benchmark rates. I will have helped some people out.




No not really, most believe anyway...........because they desparately want to believe. What they are lacking is any practical help from the *experts*.

jog on
d998


----------



## Julia (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bullmarket said:
			
		

> Hi ducati
> 
> 
> 
> ...




Precisely how would you like Ducati to "verify" his claims?

Julia


----------



## bullmarket (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Julia



			
				Julia said:
			
		

> Precisely how would you like Ducati to "verify" his claims?
> 
> Julia




go back and look at my earlier posts and you will find the answer to your question there........I'm not going to place restrictions on the 'how' which could then be used against me as an excuse for not providing verifiable info.

All I would require is that the info conclusively proves that the person sitting at the keyboard making the alleged claims of 'whatever' is the actual person who did the 'whatever' 

cheers

bullmarket


----------



## ducati916 (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Mr bullmarket* 



> I don't know if your alleged 'live' trades are true or just horse manure  because of the reasons I posted earlier.....and therefore I have no reason to believe what you post is true in any way.....it may or may not be..
> 
> But in the mean time I will continue to exercise my 100% right to choose to believe that your alleged trades are not true in anyway whatsoever.
> 
> If for some obscure reason it is important to you that I personally believe your alleged trades are true then the onus is on you to provide verifiable information substantiating your claims because no-one is under any obligation whatsover to just blindly believe what they see in chatrooms like this




Fair enough.
The trades, whether real, or manure, have the following important points.
#1 They demonstrate a methodology, viz. value investing.
#2 They demonstrate the vagries of the market viz things that can go wrong.
#3 They demonstrate my management of the trades
#4 They will either support, or refute my claims of profitability, if employing the methodology.
#5 I'll always reply to any questions, queries, etc
#6 They demonstrate discipline in the execution of the plan
#7 They demonstrate an alternative to technicals etc.
#8 They demonstrate my willingness to walk the walk.

Whether you find that of value, or not, is immaterial.
I would hope that anyone contemplating a value methodology, would find something of value..........even that being that ....hell, this ain't for them.

The world is full of peanuts that talk endlessly, yet provide very little.

jog on
d998


----------



## bullmarket (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

no problem ducati 

cheers

bullmarket


----------



## tradez (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I would like to put a question to the investors who predominately rely on fundamental analysis and hold positions for the long term  If you are currently holding a portfolio of companies with sound fundamentals, is there a point at which you will bail out of your positions based on a substantial drop in the market and therefore the share prices of your stocks? or are you willing to hold those stocks (assuming their fundamentals have not adversely changed) regardless of how low their share price goes?  I only ask this because i think it would take a tremendous amount of courage and conviction to hang on to shares as they plummet even though you are convinced the underlying business  is sound.


----------



## MichaelD (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> Can you give us a brief rundown on what Tharp and Le Beau are using as entry signals. And what you're using yourself?



Haven't got to that part of the book yet, sorry.

Van Tharp's message to date is that it doesn't matter what you use as an entry setup/signal so long as you size and manage the trade appropriately. The underlying message simply is "use whatever you think makes a difference, but so long as you do the important stuff as well, you'll come out ahead".

Myself, I use;
Setup: 1. CLOSE above long term moving average.
Entry: 2. What is essentially a 3 candlestick bullish continuation pattern.

Both of these entry conditions improve system expectancy and decrease drawdown in all market conditions that I have backtested on (Bull, Bear, Crash, Delisted, Dead Cat Bounce) against random entry.

I do not at this stage have any other setup conditions, but am actively working in this area to improve system expectancy and drawdown. My belief is that I will find an edge in the use of an advance/decline line, but haven't found it yet - I still have, however, much to do.


----------



## wayneL (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Wayne, that is from the Motley Fool, and is perposterous.
> 
> Warren Buffett would not invest is small undiscovered lightly traded small caps. The very notion is laughable.
> 
> The Motley Fool is a joke, a scam and a spam generated nuisance, anyone that takes any advice from them is asking for trouble.




Not withstanding the comments about Motley Fool, which I can agree with, I think you have missed the point.

No, WB would not invest in small caps, because of his bloated capital base, I believe the article makes that clear. But if WB had *less than 1 million* to invest, then the implication is that the story is different.

Is this account apocryphal? Could be, no way verify 100%. But one thing is indisputable, folks with less than a million in capital who invest in smaller companies, can do a hell of a lot better than BRKA (which has been remakably resilient in the latest route btw... trading at $92,600 a share atm)

This is not to bag Warren or his methods. The man has done remarkably well. But smaller size has a definate advantage over the market megaliths. 

Trying to emulate the big fella though, is sub-optimal for a small individual investor. IMO

But if it does what you want it to do for you, then Godspeed. But ferchrissake the man ain't God and there are several other answers available to small investors, including trading.

Cheers


----------



## nizar (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Agree Wayne

Thats why some fund managers close their funds early after reaching a point, say 200million, coz once u get too big u cant move in and out of positions


----------



## BSD (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Trying to emulate the big fella though, is sub-optimal for a small individual investor. IMO
> 
> But if it does what you want it to do for you, then Godspeed. But ferchrissake the man ain't God and there are several other answers available to small investors, including trading.
> 
> Cheers




Absolutely correct. 

WB and 'value' investing usually gets wheeled out in bear markets. 

WB got so big he had to move into re-insurance to get any meaningful exposure to 'value' bets.

His 'old' strategies have limited relevance to his current work and WB's success over the years using a particular style has no relevence or predictive ability to the success of the style in the future.


Gates is richer than WB, why not set up an IT start-up?


As an aside, does anybody in here diversify their risk by outsourcing the management of any of their portfolio or hold assets other than Australian/US equities/derivatives. 

It probably needs another thread, but I limit my 'trading' in Aussie stocks to about 10-15% of my portfolios. The rest is spread globally across asset classes, managers, strategies long and short.

For instance, what happens when you rely on volatility in the Aussie market (up or down) to make a crust when the market gets boring for 18 months? 

Or alternatively, have the buy and hold guys ever thought of the effect of a five - ten year Australian bear market?


----------



## swingstar (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> Gates is richer than WB, why not set up an IT start-up?




Aren't you doing that? ZOMG you're gonna lose all your money and be poor.


----------



## Realist (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Wayne,

My point is Buffett did not invest is small undiscovered lightly traded small caps when he had less than $1 Million.  Why would he now if he had less than $1M??

It is not his style.

Ben Graham (Buffetts mentor) does invest in undiscovered lightly traded small caps but only if they have a NTA of over 1.5

If their (tangible assests less liabilities) is greater than the Market Cap by about 150%. And they make a profit year after year and they pay large dividends. He'd buy them.

The only ASX company I can find like this is CMI - I have bought them and lost a bit so far. 

My worst investment this year actually   

As a trader what do you think of CMI?


----------



## BSD (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Unlike most others, I see investing as a business of long term survival first, returns second. 

Lots of claims (from all camps) around "beating the market is easy" and "not being satisifed with 12%" really fascinate me. 

Too much studying risk perhaps. 


Absolute performance, as opposed to relative performance, is more important in my world. All the rest is a d$ck measuring contest.


----------



## Realist (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> "not being satisifed with 12%"




If I could get a 12% return after all taxes and expenses and dividends year after year I'd be absolutely stoked.


----------



## Bobby (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> If I could get a 12% return after all taxes and expenses and dividends year after year I'd be absolutely stoked.



 Well maybe I can help you ?
Try stopping the VB , that should be worth the 12% your after   

Or get a sponsor to pay you for each post on ASF !

Have Fun
Bob.


----------



## Realist (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Try stopping the VB




 

But for every VB I buy, I get 0.00001 cents back via Fosters dividends.

The more I drink the more money I make. Cheers!


----------



## MichaelD (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> As a trader what do you think of CMI?




**** This is not advice to buy or sell. This is what MY system would tell ME to do. MY system applies only to ME. As far as anyone is concerned, MY system is useless for THEM. ****

1. CMI is not within my trading universe so I would not have entered it at any time.

However, my system is still profitable when applied to the Entire Market (just a lot more choppy), so IF this stock were in my trading universe;

2. In the last 12 months, I would have received buy signals on 10-8-2005, 4-10-2005/5-10-2005 and 31-3-2006/3-4-2006. The first trade, if entered, would have exited as a breakeven trade. The second and third trades would have exited as 1R losses.

3. Currently CMI is not giving a buy signal, but is giving sell signal after sell signal.

It's a dog from technical point of view - long term downtrend, and currently trading below a long term moving average.


----------



## Julia (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> If I could get a 12% return after all taxes and expenses and dividends year after year I'd be absolutely stoked.





Really?  So what returns are you expecting from your current portfolio?

Julia


----------



## Realist (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> 3. Currently CMI is not giving a buy signal, but is giving sell signal after sell signal.
> 
> It's a dog from technical point of view - long term downtrend, and currently trading below a long term moving average.




No surprises there. they are going down and down and down    

Fundamentally it is quite excellent though. P/E of 5.18 a P/B of 0.4

They've made a growing profit and paid growing dividends for 10 years in a row.

They have 60M in debt but 114M in Assets - that is $54M up, the market cap is only $38M.

And the dividend yield is 11.3% 

Fundamentally that is a fantastic company.

Have they sent out profit warnings recently or something that I missed?

If they make $7M profit again this year I'll be stoked.  This is worth holding  for the yield alone!

I suspect Ben Graham would buy CMI


----------



## Realist (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Really? So what returns are you expecting from your current portfolio?




My Nasdaq shares doubled last year. So I got a huge return, they've eased back this year slightly and I get no dividends from them. I'll need to sell some soon and pay tax as well - dammit!  They are too risky to buy and hold unfortunately.

But for the ASX - I'd be happy with a 12% return this year.  4% from dividends, 8% from growth.

So far I am up slightly for the year. And the All Ords is up slightly.

$100,000 invested in shares adding $40K mopre shares a year and 12% a year return would give me about $9M by the time I retire. (And Ill retire quite early)

That's just shares, I have super already and will buy property as well.

12% is a fantastic return after expenses and tax whichever way you look at it.


----------



## cuttlefish (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> If their (tangible assests less liabilities) is greater than the Market Cap by about 150%. And they make a profit year after year and they pay large dividends. He'd buy them.
> 
> The only ASX company I can find like this is CMI - I have bought them and lost a bit so far.
> 
> ...




_WARNING - I'm not an accountant and not even that experienced in reading annual reports - so the statements below could contain significant factual errors and should be independantly verified before making any decisions based upon them._

Realist out of curiosity I had a look through CMI's annual reports and company announcements (yep its scary that someone would spend their spare time doing these sorts of things     ).  

I don't know if you noticed the various announcements last year about their converting preference shares being converted into Class A shares but it you look at that in detail it might cause a rethink of how you view their EPS and/or NTA from a value investment perspective.  

My interpretation, and I'm no accountant and could have this completely wrong, is that there are about 26 million Class A shares on issue, in addition to the 36 million ordinary shares on issue.  

If you read the reason that their converting preference shares were converted to class A shares it is because Australian accounting standards classified that the CPS shares should be counted as debt not equity - which sounds justifiable given that the CPS shares have preferential treatment both for dividends and return on capital - yep sounds like debt to me   . 

The conversion to Class A shares seems to have gotten around this accounting requirement however as far as I can tell the Class A shares still have preferential treatment in the event of a return of capital, and also preferential treatment in relation to dividend distribution, which is locked in at 14c per share per annum until 2015 and remains preferential beyond that date.  

I haven't done the exact numbers but clearly depending on how you interpret this situation it could have an impact on a view of either EPS or NTA from a value investment point of view.   

It would be interesting to hear a qualified accountant comment on this stuff from an opinion point of view (and they could clarify how accurate the stuff above is as well).

_WARNING - I'm not an accountant and not even that experienced in reading annual reports - so the statements above could contain significant factual errors and should be independantly verified before making any decisions based upon them._


----------



## Realist (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Realist out of curiosity I had a look through CMI's annual reports and company announcements




Where did you get them from??       

Their website doesn't haev them does it??    



> My interpretation, and I'm no accountant and could have this completely wrong, is that there are about 26 million Class A shares on issue, in addition to the 36 million ordinary shares on issue.




Wow, that is interesting.  

Thanks. You know your stuff.  Fortunately I bought only 1000 shares (my smallest investment presently).  I just wanted to experiment with undervalued small caps - it backfired though.    

Still with a P/E of 5, even doubling the amount of shares is not a killer. Or do you think it is?   Others do obviously.     

I bought it for the yield. And it may be a takeover target.

What do you think?  Would you buy shares in CMI ?  Even with $26M in extra debt they are a reasonably valued company...


----------



## wayneL (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> The only ASX company I can find like this is CMI - I have bought them and lost a bit so far.
> 
> My worst investment this year actually
> 
> As a trader what do you think of CMI?




Well I only have access to the last 1 year of data, because I don't trade ASX.

But looking at whats in front of me:

As a trader, its way to illiquid at this point. Average daily turnover is about $55k average. My normal position size is nearly that!

So potentially I could move the market and I need to get out fast, thats a humungous negative. Even if it could be shorted, I wouldn't go there because of said illiquidity. Short squeezes in such circumstances could be lethal.

Apart from that, a solid down trend. It would not even appear on a scan. i.e. no interest in something like this at all.

Bear in mind thats a traders perspective.

Cheers


----------



## Realist (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> i.e. no interest in something like this at all.




No one does except me.


----------



## Bobby (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> No one does except me.




Hullo Realist,

When you bought CMI, did you at any time have a look at their chart ?
If you did , were *You*  upside down ?   

Bob.


----------



## cuttlefish (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Where did you get them from??
> 
> Their website doesn't haev them does it??
> 
> ...




I read them on the announcements section of comsec, but you can also get them for free from the asx site: 

http://www.asx.com.au/asx/statistics/announcementSearch.do

Yeah I'd agree that even considering those class A shares they still seem fairly conservatively valued, but not necessarily a standout.

That fact that you've had a go at doing your own research and then backed it is commendable. I've made all sorts of mistakes (and will continue to do so) in relation to the fine detail of issued capital in stocks that have got me unstuck in the past, and as a result tend to sift through the reports and announcements pretty carefully myself to verify it.  

Its also a very good idea to look through their P&L and balance sheets for anomolies and discrepencies between the previous year. On that side, as far as I can tell this company has all the hallmarks of a classic boring earner with no great surprises year on year - though they did mention they expected difficult trading conditions this year but didn't go into much detail - you'd probably have to do some research on the auto industry sector to get a better idea of the factors at play there. But I'm pretty sure somewhere in there I read that they restated their earnings guidance for fy05/06 as in line with the first half, so I don't see any indication they expect any significant slump in earnings.

One thing I've found in looking for true value buys is sifting out the good ones from the potential candidates - it takes a fair bit of time and research - and I've been caught out by all sorts of unexpected things, which is why I always tend to get down to the raw announcements and read the actual reports.


----------



## ghotib (20 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> No surprises there. they are going down and down and down
> 
> Fundamentally it is quite excellent though. P/E of 5.18 a P/B of 0.4
> 
> ...



In your dreams, my blond friend.

In the real world Ben Graham would have needed a heck of a lot more information than you've given here before he made any decisions. He did not equate NTA with intrinsic value and he did not consider PER as fundamental to the value of the business.

Your system might be fantastic, but you're kidding yourself if you think it's following either Graham or Buffet. Do you have a copy of the Essays of Warren Buffet (edited Lawrence Cunningham)? I suggest you read the one called _"Value" Investing: A Redundancy_ several times before you spend another cent on shares, and then take another hard look at your strategy. If you're still happy with what you're doing, terrific, but don't call it following Buffet.

None of which necessarily means that CMI was a bad buy. But if you were really following Buffet you wouldn't need to ask; you'd have done your own detailed analysis of the company and you'd know exactly what you thought its value was and why you thought so. I didn't go as far as Cuttlefish but I did take a look at the ASX summary, and FWIW the questions that leapt out at me from that were provisions for updating machinery and variations in metal prices. The answers should be in the financial reports, and one day I'll feel confident that I can find them... I hope. 

Maybe it's time to go curly brunette for a while; better protection when you beat your head on the wall 

Ghoti (I don't think Buffet has all the answers and I know I don't)


----------



## It's Snake Pliskin (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> No one does except me.




Maybe there is a message in that for you.


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> When you bought CMI, did you at any time have a look at their chart ?




No.



> Your system might be fantastic, but you're kidding yourself if you think it's following either Graham




Well Graham liked : Relatively large unpopular large companies. The Purchase of bargain issues. and Special situations or "Workouts"

A bargain issue is quoted as 

Quoted from Graham's book "The type of bargain issue that can be most readily identified is a common stock that sells for less than the company's net working capital alone, after deducting all prior obligations."

Had a compay's NTA less liabilities been much larger than their market cap, in other words you could liquidate it for more than you bought it for - he'd have bought it.

Grahams brokerage firm bought many small caps low high P/B ratios, hundreds infact - he diversified big time on them of course.

And yes P/E is a big part of Grahams philospohy.  Add up the last five years earnings to get an average earnings though - do not just use the latest P/E given.

I don't try and follow Buffet as such - I try and follow Grahams ideas though.


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Maybe there is a message in that for you.




Well Snake, it is my worst investment in the past couple of years, and it gives a 12% yield. And has made a profit for 10 years in a row. I'll just hold and "hope".    

It is also my smallest investment - it did not seem entirely right to me at the time.  You live and learn.


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> One thing I've found in looking for true value buys is sifting out the good ones from the potential candidates - it takes a fair bit of time and research - and I've been caught out by all sorts of unexpected things, which is why I always tend to get down to the raw announcements and read the actual reports.




Thanks for your advice Cuttlefish.

I looked long and hard for the CMI annual report or balance sheet and could not find it.  I trusted Commsec.   

I still can not find it Cuttlefish. Not on ASX or CMI website...


----------



## ghotib (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Don't you ever sleep? I've just read the end of the StockVal thread and told myself sternly that I'd talk more nonsense than usual if I tried to respond now. Same goes for this one. But thanks for forcing me back to the books. I've noticed several things today in the Buffet essays that I missed before, and I'm taking Graham to bed with me before I write any more. 

See you on the morrow - and not in the morn. 

Ghoti


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Don't you ever sleep?




No     



> But thanks for forcing me back to the books. I've noticed several things today in the Buffet essays that I missed before, and I'm taking Graham to bed with me before I write any more.




Read Graham's Portfolio policy for the Enterprising investor.

He definately recommends smallcaps that you can liquidate for more than they cost.

Whether CMI is one of those companies I am now starting to question.


----------



## It's Snake Pliskin (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Eddie,



> No worries Duc - I've said my piece and said far more I have no doubt that if you returned to this thread and acknowledged that what I have been talking about is possible that it may snap some people here out of limiting their goals to returning barely better than benchmark rates. I will have helped some people out.




I don`t dispute that high rates are achieveable.



> Until I hear from Duc via PM this is my FINAL post on the matter, other than perhaps to address Snake's concerns.




Just interested in how you manage those holdings. 70 continuously changing per month or 70 in total as a limit regardless of time? Everything I have read, as well as my mentor, has warned against such high levels of holdings. I`m genuinely interested, so would anyone I believe.

Snake


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> 70 continuously changing per month




Is that 70 trades a month.    

Man, your broker must be rich!!


----------



## ducati916 (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*cuttlefish* 

In regards to your post on CMI;

From the ASX site;


> The issue is for 13,200,000 fully underwritten Convertible Preference
> Shares in the Company issued at $1.20 each.




So 13.2 million Convertible Preferred Shares are offered at Par value of $1.20
Convertible securities must be calculated by the potential investor as a dilution of the common shares for practical purposes, and thus would effect a dilution of net profits on *an adjusted basis, but not on a REPORTED basis* 



> 10 years - on the 10th anniversary of the Issue Date the Convertible
> Preference Shares may be converted into Ordinary Shares at the option
> of holders of Convertible Preference Shares or CMI. In certain
> circumstances, conversion may occur before that date.




Conversion is not permitted prior to 10yrs.
Excepting *special contingencies* which are not listed.



> Convertible Preference Shares convert into that number of Ordinary
> Shares equal to the Issue Price paid ($1.20) divided by the market
> price at the time of conversion. Maximum market price is $2.40 with
> the minimum being $1.00.




Therefore we have a maximum = 1.2 shares of common, and a minimum = 0.5 shares of common. [always assume the worst, thus 1.2 shares]



> RANKING:
> 
> The Convertible Preference Shares will rank ahead of Ordinary Shares
> for repayment of paid up capital. There is no entitlement to share in
> any surplus on a winding up.




In a liquidation, they rank ahead of the Common, but behind debentures etc.
Thus, the holder of the common could be disadvantaged, but probably no more than he is currently.

So much for the facts.
Does the issue serve to advantage either the business, or the owners?
The reasons put forward by the management are as follows;



> The issue of these shares will raise up to $15.84 million, which will
> be used to assist in funding an on-market buy-back of up to 20% of
> CMI's ordinary shares on issue, to retire debt, and raise additional
> working capital to build on our past growth in both domestic and
> overseas markets.




To retire debt.
The company does not specify the type of debt.
This is actually crucially important.

First, let's assume that it is Bank Short Term debt.
If this is the case, this is a concern, as what is really being said is that the business cannot float funded debt at a lower interest rate, as there are no banks willing to underwrite the float.

Therefore the credit rating must be B or less. In essence a Junk rating.

If it is retiring Funded Debt [Bonds] which is unlikely for the following reason;
Bond Interest is Tax deductible to a corporation.
Preferred Dividends are not.
Therefore the Cost of Capital is *significantly higher for dividend payments* this obviously is a large negative.

A 20% [up to] buyback of common shares.
Read, absolute maximum of 20%, but really probably 1%
Why?
Because we need additional working capital for expansion.
Expansion where?



> Our
> contracts to supply the US automotive sector continue to expand and
> we are planning to open the second distribution centre in that market
> to meet this demand.




So they are going up against the US suppliers on home territory, and the Japanese etc. Tough business. US consumer spending looking to weaken, not an area I would fancy at the moment. 



> We will also be looking to continue organic growth through the
> selective acquisition of new businesses which have the potential to
> strengthen our existing manufacturing and marketing proficiencies as
> they become available.
> ...




When management tell lies right to your face, you know things are dodgy.
Aquisitions *are not ORGANIC growth* 
Aquisitions are usually money losing propositions, destroying shareholder wealth. They invariably have serious integration problems, and cost in excess of their value, and very rarely are accretive to earnings anytime soon.

So in regards to current share prices heading south, no surprises there.
This looks like a real ugly mess currently.

jog on
d998


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hmm, thanks Ducati.

It is a mess.     But not too bad..

I've lost $300 on the share price but got $60 in dividends.  Down $240 - woop de do.  I've made that up on BHP in the past 10 minutes.

I'll continue to hold, even after hearing all the bad news - it still makes a profit and has done so for the past 10 years, and it still pays very good dividends, it is not in financial trouble at all, and is not overvalued at $1.05 (even taking into account the problems you've mentioned).

It is a takeover target for other company's I would have thought?

Yes, this is buy and "hope" at its best.

Thankfully it is the only "undervalued small cap" I've bought - and I'll put it down to learning.


----------



## cuttlefish (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Ducati,

Thanks for the comments - interesting additional information.  

In relation to the 26 million CPS figure I got it from the set of announcements put out on the 11 August 05  (there were a couple of three page releases describing the scheme and it mentions that at the time there were 26 million CPS shares outstanding).  The original par value was 1.20 and conversion to be based on average share price, but they agreed on a conversion scheme of 1:1 at an EGM.

I haven't noticed whether the class A shares are traded (I'm assuming they are but couldn't see them listed in the fin review). 

As you say they are effectively B or less grade bonds.

Interesting comment about the preferred dividends and tax deductions. If the company had kept the shares as CPS instead of converting them to class A (I still don't really see any functional difference between the two anyway except they're no longer converting) then I'm assuming based on the accounting standards change that as part of re-classifying it as debt they would also have been able to then claim the dividend payments as interest on debt and taken it as a tax deductable expense against earnings. 

I'm no accountant but maybe taking the hit and counting it as debt would have been the better option.

Realist, 

I reckon you're right - its paying good dividends and making pretty good profit and has done so consistently.  I'd be keeping an eye on their announcements to make sure nothing changes in this regard but to that end you can only trust that management is reponsible and reports all information to the market - in the meantime as you say you're collecting 12% dividends - better than a bank account - and the downside risk, unless there is some actual adverse news about the profitability of the business, is probably limited.


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Thanks Cuttlefish, I'll continue to hold CMI. (and hope   )

Hey, what do you think of RIC?  

They consistently make a profit and pay dividends, only problem is a pending Canadian court case.

Is this not a good safe, undervalued company that makes a profit and pays dividends, and a value buy at the current price?

I own them as well - they've done nothing - I've not gained or lost.


----------



## cuttlefish (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

heheh  - this could become a piece of string so I think I'll stop at CMI.   

I haven't looked into RIC at all, but I can say that when I said I've been caught out by all sorts of unexpected things - a change in legislation in relation to one company I invested in was one of them - so don't discount anything - take it all on board and make your own assessment of the potential outcomes of anything like that and how you think they might or might not impact valuations. (and thats not intended to be any comment on RIC - I literally haven't looked at them at all, couldn't even tell you the name of the business).


----------



## ducati916 (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Realist* 



> it still makes a profit and has done so for the past 10 years, and it still pays very good dividends, it is not in financial trouble at all, and is not overvalued at $1.05




Well I haven't looked at the financials, so I am in no position to comment.
But how have you appraised the value, and thus come to the conclusion that it is not *overvalued*?



> It is a takeover target for other company's I would have thought?




Well, if it is truely *undervalued*, yes it could indeed be a target.

If, it truely is undervalued, then you would expect Management to utilize the proceeds realized from the sale of the Preferred issue [at fair value] to arbitrage shareholder value by buying in the *undervalued* common shares.
This would be the the most efficient use of the funds.

If, they pursue their stated aquisition program, this either;
*provides no evidence of managements belief in the *undervaluation*
*provides evidence of inept management in pursuing unproven returns, in the face of proven returns.

*cuttlefish* 



> then I'm assuming based on the accounting standards change that as part of re-classifying it as debt they would also have been able to then claim the dividend payments as interest on debt and taken it as a tax deductable expense against earnings.




No, Interest payable on debt, secured, or unsecured bonds, debentures etc qualify as tax exempt. Dividend payments are taken from net profits after Tax

Therefore it is highly inefficient for a Corporation to issue Preferred Stock [convertible or otherwise] They should always issue Funded debt.
It is only low credit grade companies that MUST issue high yield preferred shares, as they have no other option, other than issuing more common.

For example J&J can issue 0% Bonds
They have the use of capital at no cost.
They provide a sinking fund to amortize the principal due at maturity
With clever accounting, depreciation can be utilized as a tax exempt way to amortize the sinking fund. Hence the true cost of capital = $0.00

That CMI are having to pay 9% rising to 11% tells you that this is a high risk offering. It is high risk because the underlying earning power must be cyclical, weak, or both.

Incidentally, a declaration of net profit in no way means a net profit has actually been earned. Remember Enron? It is quite legal to show a GAAP profit, yet have losses.

jog on
d998


----------



## eddievanhalen (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

OK Snake/Realist - I'll try and address the 70 positions as best I can.

I would agree that 70 positions would be overkill for the majority of people and , in fact, the great majority of people would struggle with the intensity of concentration required to actively manage a portfolio of that size + monitor potential new trades + read most announcements as they happen.  I do all that but it's my job - I am a full time trader/investor.

The number of positions is irrelevant to me as long as I achieve my objectives and I can cope with the workload.  I peaked at close to 90 positions (say 65 trading positions and 25 longer term investments) before the proverbial hit the fan , very quickly reduced to 30-40 and am currently rebuilding my holdings at cheaper prices.  The key point there is "if I can cope" and I am rapidly reaching the point where I cannot handle any more and will either need to increase position sizes (difficult - see later) , move to trading blue chips or look elsewhere.  Either way I am approaching the point where the law of diminishing returns with size will surely kick in.  At this point that doesn't bother me as I'd still be happy with half my current returns on a larger sum.

The key reason for all of this is that I specialise in small to mid cap stocks and the majority of them have issues with liquidity that restrict position size if you wish to be able to exit at anywhere near market price.  As I have grown my capital base I have stayed with that strategy and the only way to do that without increasing position sizes and taking liquidity risk is to increase the number of positions.  I have no trouble in most markets finding 70 stocks to hold.  The key is being able to handle the workload.  The whole small caps vs bluechips (with or without margin) is a whole new argument and something I don't wish to address here.  let's just accept that I believe the best returns in the market are to be had outside the ASX100.  I do hold a few "blue chips" but not many are acceptable to me.

As far as how often I turn them over ?........there is no answer to that.  If all is going well then very little action may be required. The only time I get in there and trade (other than new entries) is when something needs cutting or it has moved so fast that it is wise to take some $$ off the table- I will then hopefully buy back at a lower price.  No stock in my portfolio has a need to fear being cut as long as it performs to the level that I require.  By the way CGT is not really an issue for me as I am registered with the ATO as a "trader"......it's all income.

I acknowledge that overtrading is an issue many traders face - we all have at one time or another and I have systems in place to ensure I only trade when it is warranted.   My broker DOES love me Realist - I estimate they'll make $75k+ in brokerage from me in the current financial year.  I am getting very near the point of making claims I cannot justify again    but let's just say that I am happy enough that my brokerage expenses as a % of my profit are entirely satisfactory.  

Cheers,

Ed


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> My broker DOES love me Realist - I estimate they'll make $75k+ in brokerage from me in the current financial year.




 

My broker will make $280 off me this year. And the tax department will get 0$ from me.


How much tax will you pay?    

I dread to think.


----------



## eddievanhalen (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

   Well if the tax department got $0 off me I'd probably have to find another job.  Unless you're trading out of the Cayman Islands or something  :


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> But how have you appraised the value, and thus come to the conclusion that it is not *overvalued*?




Simply..
If the Price / (Average Earnings over the past 5 years) is less than 20 and P/B less than 1.5 and it has a yield above 5% and it has consistently made profits the past 5 years, and consistently paid dividends then it is undervalued compared to other stocks.  


How do you value a stock?


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Well if the tax department got $0 off me I'd probably have to find another job. Unless you're trading out of the Cayman Islands or something




Haha, fair enough for a trader. I'm just baiting.   

I have no tax on shares this year, yet a tidy profit. 

I have a secret, I just don't sell any - it works quite well!!


----------



## It's Snake Pliskin (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Eddie,

Thanks for the explanation.
Snake


----------



## bullmarket (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi realist



			
				Realist said:
			
		

> Simply..
> If the Price / (Average Earnings over the past 5 years) is less than 20 and P/B less than 1.5 and it has a yield above 5% and it has consistently made profits the past 5 years, and consistently paid dividends then it is undervalued compared to other stocks.
> 
> 
> How do you value a stock?




Regarding 'Average Earnings over the past 5 years' I assume you are talking about earnings per share (EPS)

If so, imo a better EPS to use than a historical one is a 6-12 month forcast EPS especially since markets are generally 6-12 months forward looking.

Although past performance can give an indication of future performance it by no means guarantees that the next year's earnings won't be less than the previous years for all sorts of reasons.

Imo, most investors when valueing a company will value it on anticipated future earnings with very little if any weight on past earnings.....ie...if I was looking to buy an investment property I would value it on what rents I could expect in the future and I would care very little about what rents were in  the past......similar logic can be applied to company valuations imo.

In my average market PER's spreadsheet I uploaded here a few months back I use the following year's general consensus forecast EPS numbers when calculating company PER's.

cheers

bullmarket


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> imo a better EPS to use than a historical one is a 6-12 month forcast EPS especially since markets are generally 6-12 months forward looking.
> 
> Although past performance can give an indication of future performance it by no means guarantees that the next year's earnings won't be less than the previous years for all sorts of reasons.
> 
> Imo, most investors when valueing a company will value it on anticipated future earnings with very little if any weight on past earnings.....ie...if I was looking to buy an investment property I would value it on what rents I could expect in the future and I would care very little about what rents were in the past......similar logic can be applied to company valuations imo.




Thanks Bullmarket, I agree analysts and most investors use forward EPS to predict future stock prices and estimate current stock prices. It is very commonly accepted and widely used.

I don't use them, don't read them, and don't care about them though.

I only go on past results - I do not try and predict the future, nor do I care what analysts think about the future of a company.  

Forward EPS forecasts are missed (both over and under) as often as they are hit.

If most analysts believe a stock is a crap and it has a poor future outlook I am more likely to buy it - because it is cheaper. If most analysts think a stock has an excellent future it is already too expensive for me to want to buy it.

If anything I try and do the opposite of analysts, and I ignore any predicitions - especially future EPS guesses.

If a company is making consistent profits, paying consistent dividends, and the P/E and P/B ratios are low I will definately consider buying it.

If a company does not make a profit but has just discovered 1Million tonnes of Uranium, platinum, gold, oil, and cream cheese, as well having rights to the fountain of youth, and the holly grail - I wont buy it.  I don't care what a company  can do, I care what it has done.

This is against most peoples ideas of course - which is why I do it!!


----------



## nizar (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist

Outlook is more important than historical performance

A perfect example is BlueScope Steel

Former market darling; earnings heaps of cash

Then u get zinc spot price increasing and iron ore price increasing and they are finished; and will not earn another NPAT of $1billion for a long, long time



> If a company does not make a profit but has just discovered 1Million tonnes of Uranium, platinum, gold, oil, and cream cheese, as well having rights to the fountain of youth, and the holly grail - I wont buy it. I don't care what a company can do, I care what it has done.




And thats exactly why you are happy with 12% a year

WHAT A COMPANY HAS DONE IN THE PAST WILL NOT DRIVE THE SHARE PRICE


----------



## nizar (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

And dont 4get that every1 is out there to make money for themselves

Its no coincidence that brokers/instos upgrade recommendations on companies in which they own a large stake


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Outlook is more important than historical performance
> 
> A perfect example is BlueScope Steel
> 
> Former market darling; earnings heaps of cash




I own Bluescope, and it has gone up 19% since I bought it. Excellent purchase even though some analysts predicted it would be the worst stock in the ASX50 this year.

Which other stocks do you not recommend?   I'm in the mood to buy.


----------



## Realist (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> And thats exactly why you are happy with 12% a year
> 
> WHAT A COMPANY HAS DONE IN THE PAST WILL NOT DRIVE THE SHARE PRICE




12% per year will give me $9M in investments alone before I retire, and I will retire early.

You want more than that?


----------



## Julia (21 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> 12% per year will give me $9M in investments alone before I retire, and I will retire early.
> 
> You want more than that?




If you are happy with 12%, particularly for the last couple of years, it just might be a good idea to consider some of the alternative approaches various members have put forward on this thread.

Julia


----------



## Realist (22 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> If you are happy with 12%, particularly for the last couple of years,




Well last year I would not be happy with 12% of course.

12% is for every year averaged, last year was too easy and will cover for worse years to come...


----------



## bunyip (22 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Ed

Regarding  your 70 odd positions and your heavy workload....... 
I don't doubt that you're doing well, however I won't ask you to prove it by providing details of your trades or divulging your percentage return on your account - I respect your right to keep your private business private.
But I find myself wondering if perhaps you could do a lot less work and give yourself a lot less stress, yet still achieve excellent returns.
Over the last 10 years I've tried various strategies to profit from the market, including longer term fundamentally based investing. Depending on the method, I've spent anything from all day every day at the computer, to just an hour or so once a  week. 
The strategy that's given me the best results with the least amount of stress is a trend riding approach from weekly charts, based on finding the best performing sectors, (or worst performing sectors in a bear market) then focusing on the outperforming stocks within those sectors.
Even during sideways markets I've been able to find at least one or two sectors that are trending strongly either up or down, and no shortage of strongly trending stocks within those sectors. And that's without going outside the blue chips.
An example is the US Energy sector which was very bullish over the last few years even while the S & P 500 was drifting more or less sideways for lengthy periods.
What I'm suggesting, Ed, is that if you ever find yourself burning out from your heavy workload, you might want to investigate the more laid back approach of working from weekly charts and spending just an hour or two at your computer each weekend.
I'll believe you'd find this approach would lower your workload and stress levels considerably, but still produce excellent returns.

Bunyip


----------



## Realist (22 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Finally a bit of luck for me today.

I bought CDO for $3.40 a couple of weeks ago. It is $4.25 today.

Takeover!    

Nice return.  Buying undervalued companies works!!


----------



## bullmarket (22 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

good luck with them if in fact you really did buy some


----------



## eddievanhalen (22 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> Hi Ed
> 
> Regarding  your 70 odd positions and your heavy workload.......
> I don't doubt that you're doing well, however I won't ask you to prove it by providing details of your trades or divulging your percentage return on your account - I respect your right to keep your private business private.
> ...





What you say has some merit Bunyip and that is the intention in a few years.  I expect that by the time I am 35yo I will have the capital base I feel I need (being extremely conservative) to be able to retire properly and only spend one day a week working on shares.  However until I reach my goal I am happy to continue doing the hard yards and wringing every last dollar out of the market...........especially seeing I'm recently married and we could very shortly be relying solely on my trading income if you know what I mean.

I spent 1-2 years managing things on a weekly basis quite a while ago and the returns were satisfactory for sure.  As I mentioned earlier I have been through a long progression from "buy and hold" FA only to TA based futures trader to weekly share trader to full time active manager (shares). Having done them all I can guarantee you I wouldn't be busting my gut if it wasn't improving my returns considerably.

What you have said makes perfect sense though and is part of the longer term plan.

Cheers,

Ed


----------



## bunyip (22 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> What you say has some merit Bunyip and that is the intention in a few years.  I expect that by the time I am 35yo I will have the capital base I feel I need (being extremely conservative) to be able to retire properly and only spend one day a week working on shares.  However until I reach my goal I am happy to continue doing the hard yards and wringing every last dollar out of the market...........especially seeing I'm recently married and we could very shortly be relying solely on my trading income if you know what I mean.
> 
> I spent 1-2 years managing things on a weekly basis quite a while ago and the returns were satisfactory for sure.  As I mentioned earlier I have been through a long progression from "buy and hold" FA only to TA based futures trader to weekly share trader to full time active manager (shares). Having done them all I can guarantee you I wouldn't be busting my gut if it wasn't improving my returns considerably.
> 
> ...




Fair enough Ed, your thinking is sound enough. I hope it all works out for you. If you can be pretty much retired by the age of 35, just working one day or less per week, then you will have achieved what very few people achieve.
I wish you well.

Cheers
Bunyip


----------



## Julia (22 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Eddie

Re your post from yesterday which was very interesting, in particular this line

   " I do hold a few "blue chips" but not many are acceptable to me.

Could you say why not many blue chips are acceptable to you, and if you mean "acceptable for relatively frequent trading", "for long term investing" or some other option?

Could you also if possible suggest which ones you do find acceptable for which situations?

With thanks

Julia


----------



## eddievanhalen (22 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Julia,

The term "blue chip" I suppose is a bit open to interpretation and everyone has their own idea.  Some people would say maybe the top 10-20 stocks, some might say the top 100 and I have read someone somewhere saying technically it should be anything in the All ords.  To me I tend to think of it in terms of the top 20-50 or so.

Well bearing in mind I am a "trader" AND an "investor"..........

With my trading hat on I find that not many of the top 50 trend in a way that suits me -just personal preference. They are just a bit too volatile for my liking and get thrown around like rag dolls half the time according to how the institutions view the nights action overseas. What I term "second tier bluechips" such as a WOR, JBH, BOQ, CTX etc........tend to move in a more predictable fashion, are less at the mercy of the instos and allow me to make clearer decisions.  It's really only the top 50 I don't tend to "trade" - anything else is fair game.  Having said that I did make an exception and buy BHP last week.


With my investors hat on it's pretty simple.  In most cases (ruling out rare events like the current resources boom and related action in BHP,RIO etc...) the larger companies have their biggest growth behind them.  Take HVN as an example.  Still a great company, well managed etc............but a dinosaur that has a hard time getting up any speed and is trading at less than it was 6 years ago.  A rapidly growing company like HVN from 1996 to 2000 is what interests me.............buying tomorrow's blue chips today.  Hmmm...........sounds like a good slogan for my managed fund   


Once again it comes down to how high you set your sights in terms of expected returns. Blue chips (eg the banks in recent times) can provide more than satisfactory returns for the average Joe that cannot it here all day like I do - even better when combined with margin.  If ,however , you're doing it for a living or permanent part-time    and are prepared to scour the small to midcaps accounts for the odd gem (a HVN/FLT in its infancy for example) then "blue chip" returns pale in comparison.  Easier said than done ofcourse and some would say more risky **  etc........ but well worth the trouble IMO and also quite enjoyable for someone who likes the research.

Cheers,

Ed


**  despite what some would say I would argue that a small-mid cap that is making nice,growing profits without debt is probably safer than holding a "blue chip" like Telstra .........or HIH     A good example in recent years would be COU.

PS I realise HVN has provided nice returns in recent months but I'm talking more in terms of the "life cycle" of a company.


----------



## Realist (22 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> good luck with them if in fact you really did buy some




 

No, Once a year I read the paper and find a share that went up (a bit) and I tell everyone I bought it just to pretend I'm a smart investor.

Oh dear oh dear....


----------



## bullmarket (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

no problem realist   

it's already well documented that I don't blindly believe unsubstantiated/unverifiable claims in chatrooms and why, so I'm not jumping on that merry-go-round again here   

If for some obscure reason it's important to you that I personally believe you then my earlier posts describe what I need to be convinced.

In the mean time - if you did really buy some then good luck with them 

cheers

bullmarket


----------



## Realist (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Fair enough BullMarket, I agree with you not believing other peoples claims.

CDO is the typical stock I would buy though, it makes a profit year after year and is (was) undervalued. Exactly what I buy!

If I told you I bought PDN 3 years ago - that would be suspicious.   

Asuming I did by CDO   - what should I do?

I bought them with a longterm view - if I sell them now I get hammered with tax.  But I can offset that by selling a couple of my losers - and now is the perfect time, one week before Financial year end?

Would you sell or hold in my position.  I'm sure most would say sell.

I'd like some money back as well - I wanna buy a car.


----------



## cuttlefish (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Fair enough BullMarket, I agree with you not believing other peoples claims.
> 
> CDO is the typical stock I would buy though, it makes a profit year after year and is (was) undervalued. Exactly what I buy!
> 
> ...




haha - sounds like you could do with a slightly more structured plan - maybe if you put some metrics around your valuations then your plan would give you the exit signals (and entry signals).    

Also mightn't be a bad idea to separate the investment funds from the lifestyle funds no?


----------



## Julia (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bullmarket said:
			
		

> no problem realist
> 
> it's already well documented that I don't blindly believe unsubstantiated/unverifiable claims in chatrooms and why, so I'm not jumping on that merry-go-round again here
> 
> ...




bullmarket

I think we've all got the message.  Perhaps you could consider not making a post about your disbelief every time someone happens to mention having bought something.  It adds nothing useful to the general discussion, and is frankly irritating.

With thanks

Julia


----------



## bullmarket (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

hi realist

re:



> Would you sell or hold in my position.




If you did actually buy some then just simply do what your trading plans tells you to do.   

cheers

bullmarket


----------



## Realist (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> haha - sounds like you could do with a slightly more structured plan - maybe if you put some metrics around your valuations then your plan would give you the exit signals (and entry signals).




Bollocks.

My plan was to buy and hold.  Nothing more!!    (piss off traders I know your thoughts on this   )

They've rocketed quickly, time to change plans.

Sell, and cut some other losers from myportfoilo - just before Financial year end.  I hate tax but this will even me out nicely.

I put a sell order for $4.35 - the price peaked at $4.34 and has gone down.


----------



## cuttlefish (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Ok so if I understand your strategy it is to find stocks that you feel are undervalued, then buy them and hold them forever, unless you feel they've risen by a lot in which case you'll sell them, and you'll also sell them if they've fallen in price and its near tax time and you want to buy a car.


----------



## Realist (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Ok so if I understand your strategy it is to find stocks that you feel are undervalued, then buy them and hold them forever, unless you feel they've risen by a lot in which case you'll sell them, and you'll also sell them if they've fallen in price and its near tax time and you want to buy a car.




 

I'll always sell stocks when they become overvalued.  I just sold CDO at $4.35. My first sale in years.  Time will tell if that was a good sale.

And yes I will sell stocks if I wanna buy a car, or for tax reasons - in this case both.

Otherwise I hold....


What is your selling strategy?  (I admit mine is poor - I rely on buying well not selling well)


----------



## cuttlefish (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I'll always sell stocks when they become overvalued.  I just sold CDO at $4.35. My first sale in years.  Time will tell if that was a good sale.
> 
> And yes I will sell stocks if I wanna buy a car, or for tax reasons - in this case both.
> 
> ...




For the value investing I tend not to be in a hurry to sell even if some of the stocks end up a bit overvalued - so I usually only sell something if my research has found a better value buy and I want to free up some money to allocate towards that. I've also sold my whole share portfolio a couple of times to buy property.

Its surprising how often a stock I've bought has ended up a takeover target at some point - when that occurs if there is the choice of cash or shares I'll make an assessment of the value of the company carrying out the takeover and if it matches my criteria for a value buy (which is rare) I'll take the shares instead of cash. (an example of a situation where I did take the shares instead of cash was Downer's takeover of EDI).


----------



## It's Snake Pliskin (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I'll always sell stocks when they become overvalued.  I just sold CDO at $4.35. My first sale in years.  Time will tell if that was a good sale.
> 
> And yes I will sell stocks if I wanna buy a car, or for tax reasons - in this case both.
> 
> ...





I thought you were going to hold for 30 years, as posted before in this thread.


----------



## Realist (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> I thought you were going to hold for 30 years, as posted before in this thread.




30 years, 30 days what's the difference.    :dunno: 

The answer is tax of course.

Colorado is not a bluechip, it probably aint worth holding for 30 years, (some) bluechips are..  

Had it not been the end of the financial year I would have held - I changed my plan for this stock, and I'll sell a couple of my losers to fix up my portfolio.

I'll sell a couple of losers to offset the tax and maybe buy them back next year at the lower price. tis the smart thing to do I think.

Buy and hold is my basic principal - I of course adjust accordingly. If a company starts to make losses or becomes too overvalued I review accordingly.


----------



## It's Snake Pliskin (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> 30 years, 30 days what's the difference.    :dunno:
> 
> The answer is tax of course.
> 
> ...




Woop dee doo as you say.  

Read your posts and look how you have changed in a week.   The icon says it all.


----------



## Realist (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Woop dee doo as you say.
> 
> Read your posts and look how you have changed in a week.  The icon says it all




My policy on that share has changed, sure I got a quick windfall - I'll take it any day.

My overall policy will always be the same though. Avoid tax (which I am doing now), buy undervalued shares - hold for yield - sell if they become too overvalued.

Simple.

It is not as if I would ever not sell shares, I avoid it though for one main reason - tax!


----------



## cuttlefish (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

c'mon you're all over the place - you either don't have any real plan or you don't know how to stick to it.  Why did you sell CDO at 4.35 instead of 4.30 or 4.40?  

What is it about CDO that makes it a stock that you wouldn't hold forever. 

Also I thought your investment plan is to buy and hold for 30 years, so if CDO isn't a stock you would hold, then why on earth did you buy it in the first place?


----------



## Realist (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> What is it about CDO that makes it a stock that you wouldn't hold forever.




Too small, ****ty products - I don't like Colorado, Diana Ferrari or Jag at all. Brands are average.



> Also I thought your investment plan is to buy and hold for 30 years, so if CDO isn't a stock you would hold, then why on earth did you buy it in the first place?




Cause it was undervalued!!    

I buy one of 2 types of companies:

I'll buy a small company ( even if I don't like it), if it makes a profit year after year, is not in debt and pays dividends and is quite underpriced at the time - if it is on sale!!!

I own (CDO), CMI, GHG, FUN, RIC etc.

I'll buy a large monopoly like BHP, Fosters and Westfield, a company that is a world leader, a company with a competitive advantage, excellent brands, and has a fantastic past and future ahead of it - and hold forever!! I must like the company, And I'll buy it as long as it is not overvalued. (you don't get these on sale very often)

I own BHP, RIO, FGL, WDC, etc.

You need a great company to hold forever.  CDO was never to hold forever.


----------



## cuttlefish (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

So what will be your criterion for selling GHG - i.e. at what price will you consider it to be overvalued?  

Did you decide at the time of buying CDO that 3.45 was going to be the price you would sell at?  If not, at what stage did you decide that 3.45 was an overvalued price for this stock?


----------



## Staybaker (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Why all the grilling of Realist on his buys and sells? I don't see others being subjected to this in-depth questioning ...   

Cheers, Staybaker.


----------



## cuttlefish (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Because realist has said, in the past week or two, that his strategy is buying and not selling for 30 years.   So when he then say's ( a few days later) that he's sold something I'm curious as what drove that decision at that point in time.


----------



## Julia (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Staybaker said:
			
		

> Why all the grilling of Realist on his buys and sells? I don't see others being subjected to this in-depth questioning ...
> 
> Cheers, Staybaker.




Hello Staybaker

Probably because Realist has been rash enough to make really emphatic statements about his philosophies and then completely contradict them.
e.g.  A few pages ago I described myself as basically a buy and hold investor from preference.  However, this is qualified by my readiness to sell something which is just not performing or if the fundamentals have changed.  Perhaps I bought a stock on what appeared to be great fundamentals but for all that, the market hasn't agreed, and in the end I am going to be governed by the price action.

Realist contended that this made me a "trader" and repeated that he believed in holding on to stocks pretty much for ever (or words to that effect).

But then, he states he has sold Colorado.  So it's not altogether unreasonable for other members to suggest that he's changing his mind all the time.  That's fine.  We all change our minds.  I think the difference is the way Realist has "rubbished" approaches other than his own, which in the event appears to be subject to significant change anyway.

That's just how I see it.  Others may have better answers to your query.

Cheers
Julia


----------



## Realist (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Realist contended that this made me a "trader" and repeated that he believed in holding on to stocks pretty much for ever (or words to that effect).
> 
> But then, he states he has sold Colorado. So it's not altogether unreasonable for other members to suggest that he's changing his mind all the time. That's fine. We all change our minds. I think the difference is the way Realist has "rubbished" approaches other than his own, which in the event appears to be subject to significant change anyway.




There's a big difference!!

Traders sell shares because they've gone down.  They move onto other "better performing" shares in their eyes.

Investors sell because they've gone up. They bought undervalued shares, the value has been realised - they cash out.

If you buy a nice house in a nice street for a good price and some hotshot billionaire offers you twice what you paid for it, hell yeah I'd sell to him. And if he moved out a year later and sold it cheap I'd buy it back off him.

That's all I did.  If he hadn't offered I'd have lived in it. I got an offer I couldn't refuse - I took it. What is wrong with that?

If I want CDO I can probably buy it back cheaper next month.

If it goes down to $3.40 again I will!!


----------



## Realist (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Because realist has said, in the past week or two, that his strategy is buying and not selling for 30 years.




I did say that - but only for great companies. I mentioned Fosters and Westfield. And I have no intention of selling them possibly ever. But of course if they got to be tremendously overvalued I'd sell them - I've said that as well. The chances of that are slim though obviously.

I have in the past also mentioned I've bought undervalued small caps - I could hold them for a long time, but if they become overvalued I'd sell them.

Simple as that.

Only an idiot would buy and hold forever regardless of price - if a share is clearly overvalued you sell. If it is not you hold. If in doubt hold. Patience.


----------



## BSD (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

You have bagged a cracker - why not wait to see the offer?

Or a trumping offer?

Why leave early?


----------



## cuttlefish (23 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Only an idiot would buy and hold forever regardless of price - if a share is clearly overvalued you sell.




At the risk of sounding repetitive - on what criteria did you decide that 3.45 was the magic number at which CDO was overvalued?  

Let me guess - you didn't decide it based on any logical criteria at all, you just decided to sell it because you felt like it at the time.



> Traders sell shares because they've gone down. They move onto other "better performing" shares in their eyes.
> 
> Investors sell because they've gone up. They bought undervalued shares, the value has been realised - they cash out.




ahh, thanks for explaining that - so the problem with trading is that traders advocate buying shares at a high price and when they fall then selling them - no wonder they all do so badly compared to your brilliant strategy of buying shares when they are undervalued and selling them when they go up in price, which is entirely different in philosophy.


----------



## Realist (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> You have bagged a cracker - why not wait to see the offer?
> 
> Or a trumping offer?
> 
> Why leave early?




My guess is this takeover company wants to take a 14% share and wait. Nothing more.

When they do nothing for a while the price will go down again, then when it is cheap again they can pounce if they want. Why buy some ramp the price up and buy some more? doesn't seem right to me.

Cuttlefish, that answers your question. I sold today because I thought it was very close to the best price I could get.

If it goes much higher I'll be surprised, if it drops down I wont.

What would you have done in this situation oh wise one?


----------



## cuttlefish (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Cuttlefish, that answers your question. I sold today because I thought it was very close to the best price I could get.




But on what did you base your decision that it was the best price you could get? How did you arrive at that decision?


----------



## Realist (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> But on what did you base your decision that it was the best price you could get? How did you arrive at that decision?




To buy the stock I did some basic research, some maths about previous NPAT results compared to the current Market Cap. looked at debt, P/B and NTA, I deemed the stock was "cheap" for the yield and average EPS you get for the price.

It went up 25% from where I bought it, I figured out why, it was a 14% buyout but mainly rumours & speculation. And I deemed it wont go up much more cause now it is fairly valued, but could drop down again if rumours prove to be unfounded, as all the maths I did changed and the margin of safety I had was no longer there. I suspected the takeover company will bide its time and wait for the price to fall again - why buy when the price is up. I watched for a bit, put in a sell bid and took the profits for what was only 1% off the recent high. The fact we are 1 week from financial year end and I had only owned it about 3 weeks helped make the decision for me.

We'll see if I was right.  I was about the buy, as for the sell?  Only time will tell.

I appreciate your feedback....

I'm sure this is not perfect value investing, but I am very happy to learn from it. And hear others opinions.

I'm sure others may hold.


----------



## cuttlefish (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Ok realist, contrast the following selected quotes out of this thread by your's truly with the final one.



> I worry about brokerage fees and tax more than most here, and *I never aim to own any share less than 1 year because of this*.






> *I've got 30 years to wait * and thousands of dollars to spend - that's enough for me to wait.






> Exactly, he buys them when they are on sale. And *holds onto them forever.*
> *Tax*, brokerage, effort, time, slippage and stress *are 6 reasons why I don't trade*.






> People like to make easy things difficult. People will not accept that weightloss is that easy, and they will not accept *investing is as easy as buying shares in a great company and mostly forgetting about them*. If they want to make more pay less initially, wait for a sale.
> 
> I have no doubt that anyone who just bought some Woolworths, Fosters, Westfield and BHP shares today and reinvested the dividends and *forgot about them for 30 years * would end up richer than most, if not all of you on this board.
> *Your tax is nothing*, brokerage nothing, stress nothing, effort and time involved nothing, Price slippage on trades nothing. You don't actually have to do anything. *But I have no doubt that none on you will do this *






> Okay my shares are FGL ($5.55) and WDC ($17.20) - and *I recommend you hold them for 30 years minimum and reinvest dividends*.






> Why buy them? Great companies, great brands, they pay dividends, worldwide market leaders, property and wine is a bit out of fashion at the moment but will surely be back in fashion sooner or later. They are fairly valued. And I firmly believe people (mainly Aussies but worldwide as well) will shop at Westfield and buy beer and wine *in 30 years * time.






> It'll be interesting to see what you recommend.
> 
> We'll meet *back here on June 17th 2036 to compare*. (just kidding  )







> An investor buys a good company and waits, A trader buys a stock price and watches. There is no in between in my opinion. *You can't be a short term investor, you either invest with longterm goals or you trade/speculate - simple as that*.






> Bear in mind *I only buy companies that I see as having an excellent longterm future. No specs whatsoever*.
> I could not watch the market for a year and be safe my companies arew performing adequately.






> *I'm not interested in short term income or returns anyway, I've still got 30 odd years of working to do unfortunately*.





And then we have:



> _*It went up 25% from where I bought it * .... *The fact we are 1 week from financial year end * and *I had only owned it about 3 weeks * helped make the decision for me._





can you see the inconsistency here?


----------



## Realist (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Cuttlefish, thanks for spending hours searching through my posts.    

As I've said and I will always say : I try and buy undervalued stocks and hold them as long as possible.

Bluechips I'll try and hold forever, small caps not forever but at least a year and in most cases longer.

However, it would be naieve of anyone to hold everything forever always.

I have recently sold just 4% of my portfolio because I got a windfall and it is one week from year end. Some people sell 1000% of what they buy each year - they buy and sell everything 10 times over - I sold just 4%. is there anyone here who's sold less this whole year?

Do you not think someone selling 4% of their portfolio is living up to the buy and hold mentality?  Especially considering they are a "value investor" and the one stock they sold rocketed 25% in 2 days? And it was just 1 week before Financial year end?

Who are you kidding trying to interogate me?  I could easily not have mentioned I sold the stock if I was worried about coming across as inconsistent.

I have and will continue to buy and hold. But things change, I may get married and have to buy a house, I may lose my job, or my stocks soar and become overvalued. I will of course sell if it suits me, but my policy is buy undervalued, hold, avoid tax and brokerage.

It is bizzare that you are so fixated on this....   

I will probably be selling some Nasdaq shares next financial year as well (they've doubled and I have far too much money in them)- so please prepare yourself so the shock to your system is not too great.


----------



## bunyip (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> Ok realist, contrast the following selected quotes out of this thread by your's truly with the final one.




Nice one Cuttefish. As you say, the lad is all over the place. Trader one minute, investor the next. Not that there's anything wrong with him taking profits (and to the best of my knowledge, nobody on this thread ever suggested there was), and there's nothing wrong with him bailing out if his view of a stock changes, either. 
But he's definitely contradicting his original assertion of 'buy and hold for 30 years, don't be a trader, etc etc)

He'll need to be real careful.....if he keeps taking profits and dumping the dogs, he could find himself doing what he and a few pals claim is impossible.....outperforming the market!


----------



## cuttlefish (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Cuttlefish, thanks for spending hours searching through my posts.





haha -  it didn't take hours they're all from this one thread   

Anyway - I can't talk I make all sorts of decisions that I can't explain - but then again I don't put 10 posts saying one thing then do the exact opposite    

anyway I've said my bit now.


----------



## Realist (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> He'll need to be real careful.....if he keeps taking profits and dumping the dogs, he could find himself doing what he and a few pals claim is impossible.....outperforming the market!




 

God forbid.



> Anyway - I can't talk I make all sorts of decisions that I can't explain - but then again I don't put 10 posts saying one thing then do the exact opposite
> 
> anyway I've said my bit now.




Fair enough, at least I put my thoughts and my "trades" on here for all to see - warts and all.  I could easily log on, and harp on about how great I am and tell everyone I bought PDN 3 years ago, ZFX last year and BHP 2 years ago and I know it all.

Maybe CDO will go up further or come up with some fantastic offer to its holders and I'll look and feel quite stupid, hopefully it'll drop back down - I'll look smart and maybe buy them again. Time will tell...


----------



## bunyip (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Well I'll say one thing for you Realist...at least you have some sort of plan about how you'll go about creating your wealth. You change your mind to some extent, (don't we all at times) and your 'buy and hold for 30 years' philosophy is not quite as set in concrete as you were telling us a week ago. You've given us some good laughs but you're having a go, and that's more than a lot of people ever do in life.

I believe that the plan of buying quality companies, holding them for the long term, reinvesting the dividends, adding to the portfolio every year, is quite a sound wealth creation strategy, and one that will enable a person to build considerable wealth if he starts young enough, and has sufficient surplus income to allow him to constantly increase the size of his portfolio.

In fact I started out doing the same thing myself for the first couple of years, until Stan Weinstein put me wise to the advantages of finding the strongest sectors, and focusing on the outperforming stocks in those sectors.
After I started putting Stan's methodology into practice I found that outperforming the market, although not easy, is not as hard as everyone seems to think.

Every trader and investor needs to settle on a strategy/s that fits in with his life, suits his personality, and accommodates his long term objectives.
If your trading methodology achieves all of that, then all the best with it. I hope you achieve everything you aspire to.

Buyip


----------



## BSD (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Out of interest Bunyip, on how many years outperformance are you basing your assumption that you can outperform the market?

2 years, 5 years, 20 years?

Also, what is the extent of the outperformance?
2%, 5%, 20% 

What is the annualised volatility of your returns?
5%, 10%, 20%


I am not being critical. 

I am making the point that you need to have such data to be able to have a level of confidence that it is your strategy and not the effect of randomness creating the outperformance.


----------



## tech/a (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

BSD

I would suspect that very few traders would have the sort of information you ask for beyond 10 yrs. If at all.
Even that small % that do are subject to Statistical Significance in their testing. Indeed their testing in itself. Particularly Fundamental theories.

If even a minority of people did have the evidence which you are asking for there wouldnt be threads like this one.

Discussion would be on an entirely different level.

P.S 
With regard to the last question you asked me on this thread.
The answer is obvious which you knew anyway--hence my silence.


----------



## BSD (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Well if we dont have such information, we are talking rubbish when we say we are beating the market. 

Wasting our time...

I figured people running such mechanised systems based on statisical advantage would have spreadsheet showing their monthly balance? Or would at least be able to quantify their returns and risk. I dont want to see the data (i couldnt care less), I just would like to understand the basis for their claims. 

Managing money for a living, I am always interested in new strategies. I get paid to do so - but I also need to understand where the performance is coming from. 


My critisism throughout this thread started from and relates to the outlandish claims of people saying that beating the market relates to XYZ theory. 

Whether it relates to a pretty chart or buying dog stocks and not selling, I don't think any of this stuff is actually significant enough to 'beat the market'. 

Let alone easily. 

As for this comment:

*On the other hand young in experienced people are chest beating --look at me look at me I'm clever.
Experience---zippo it shows in the posting.
Again of no value.

As I will with kids who are simply wanna be's.*


If I was one to be critical, I would say it is pretty funny coming from someone running a **** ************* through a four year bull market. 

But I am not one to be critical.


----------



## tech/a (24 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> But I am not one to be critical.




Clearly a diplomat.



> Managing money for a living, I am always interested in new strategies.




Nor am I one to comment on the pretentious arrogance of most *professional* Pundits who by majority can only dream of the successes of those who's money they are entrusted to manage.

Normally very well in a Bullmarket and poorly in most other conditions.

But Diplomacy is also one of my forte's


----------



## saichuen (25 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

i use both. i think it will probably be hard pressed to find anyone thay uses either one exclusively. that's just my guess. 

that said, i tend to rely on fundamentals for selecting any potential stock and uses technical to trade it. however, this may not always be true and sometimes it is hard to keep one from the other when looking at a particular stock. 

at the end of the day, what ever you have decided to use (likely both together), the end result you will be trying to achieve is almost certainly the same like anyone else. this is to make a profitable investment/trade.


----------



## bunyip (25 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> Out of interest Bunyip, on how many years outperformance are you basing your assumption that you can outperform the market?
> 
> 2 years, 5 years, 20 years?
> 
> ...




Another barrage of questions eh....the underlying message of your post is that you want me to supply facts and figures to convince you of the validity of my approach.
I'll tell you the same as I told you in a previous post....I have no interest in trying to convince you. I don't really care what you think, in fact I hope you go on doing exactly what you're already doing.
To supply you with figures would be meaningless. You many never achieve the same figures yourself, even if you made a conscientious effort to learn and implement my approach. You might perform a lot better than me, or a lot worse.
When I sent in my original post to this thread and outlined my approach, you replied with a post that was scornfully dismissive. That one post showed me that you're one of those people with a closed mind who has difficulty thinking outside the square. You dismiss other people's ideas even though you've never tried them. You want others to supply you with answers but I doubt if you have what it takes to put in the hard yards and discover the answers for yourself.
You regard something as impossible to achieve, simply on the basis that you've never managed to achieve it yourself. If you can't outperform the market, then in your mind nobody else can do it either. You stick with the outdated theory that if it could be done, everyone would be doing it. Your attitude is very naive, to say the least.
No offence intended, but I really don't feel inclined to lift a finger to help someone like you.

But maybe I'm wrong - maybe you really do have what it takes. Maybe you really are prepared to put in the hard yards to learn a different way of investment that could boost your returns. Maybe you really are worth helping. If so, then I suggest you start with Weinstein's book which does an excellent job of explaining in clear language how to apply the concept of relative strength to find the outperforming sectors and the outperforming stocks in those sectors. Then you could read Frank Watkins book - he's another educator with the ability to explain simple, effective concepts and setups and show you how to incorporate them in your trading.
After that, you could spend a few quid and buy yourself some decent technical analysis software that can scan for the setups outlined by Weinstein and Watkins. Then you can spend the next 18 months looking at thousands of charts of stocks, futures and currencies going back 15 or 20 years, or preferably longer, and learning how to reconnise the setups, just like I did. Then you can spend another 6 to 12 months paper trading to see if you can make these concepts work for you. 
And after you've done all that, then and only then might you be qualified to comment on whether or not the market can be beaten by using the approach I've outlined.

Do you have enough 'get up and go' to do all that? Most people don't. Judging from your attitude so far, I doubt if you're any exception.

Bunyip


----------



## BSD (25 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> .
> I'll tell you the same as I told you in a previous post....I have no interest in trying to convince you. I don't really care what you think, in fact I hope you go on doing exactly what you're already doing.
> 
> You regard something as impossible to achieve, simply on the basis that you've never managed to achieve it yourself. If you can't outperform the market, then in your mind nobody else can do it either.
> ...




Forget it mate, we are not on the same page.

You don't understand what I am getting at and seem to take personal offence.

I am personally chuffed with the performance of portfolios this year, but I am not stupid enough to believe the massive outperformance of my trading portfolio in the last year is anything but the result of randomness and taking a heap of risk.

Please dont insinuate you are in a distinctly learned position because you have read a couple of books off Amazon. You have no idea regarding how much I study, how much time i devote to markets/risk management and how many various strategies I have tested and monitored. 

You will actually find the more you study, the more you realise you don't know.

But heck, ignorance is certainly helping you at this point, why change?


----------



## tech/a (25 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> is anything but the result of randomness and taking a heap of risk.
> 
> how much time I devote to markets/risk management




Ill take a guess---Not a lot.

Seriously though Bunyip its good to know the stats.
I honestly think BSD was passing comment rather than demanding proof.
Which *in general * I agree with most traders have no stats!


----------



## BSD (25 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

It isn't a contradiction, Tech, when you only apply 10%-20% of your investments to trading/punting. 

It does become a problem, however, when the allocation does so-well it becomes 80% of your portfolio. 

A quandary for both the fundie (it is still cheap), the techo (its going up), the portfolio manager (it is getting too risky) and the wifie (lets pay-off the house)!


----------



## tech/a (25 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

If you consider your trading results to be tantamount to Gambling then 
I'll go with 



> the portfolio manager (it is getting too risky)



as 


> the wifie (lets pay-off the house)!



implies you could be within the majority when I refered to 


> can only dream of the successes of those who's money they are entrusted to manage.



Id go with 


> the wifie (lets pay-off the house)!



Absolutely no question

Theres also the availability of a drawdown facility once your gambling has been controlled.


----------



## Realist (26 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Realist
> 
> Outlook is more important than historical performance
> 
> ...





Nizar, Bluescope is absolutely roaring along since I bought in March. Up alot today thanks to OneSteel taking over Smorgon.

I'll get a huge dividend in October as well.


----------



## ghotib (26 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Realist,

This is my stab at a summary of Graham investing:

At the heart of Ben Graham's philosophy is the unarguable fact that a stock represents a part share in a business. He then argues that the value of a share is directly linked to the value of the business, but that the price of a share when it's traded on the stock market is not necessarily the same as the value because many of the people who buy and sell stocks do assess the value on some other basis. He also argues that the value of a business is determined by assessing its probable future return on shareholder's equity, based on returns over past years and on opinions and projections about economic and other operating conditions. 

At any given moment, the price of a share in a business might be less or more than it would be based on the value of the whole business, but over time (i.e. years) they tend to run together. Therefore a safe and profitable way to invest through the stock market is to buy shares in sound businesses when the price of a share is substantially below the value it represents for the entire business. The size of "substantial" is a margin of safety, because if the business continues to trade profitably for years its share price will return to and trend similarly to value. 

Fair enough? Then here's where I'm confused:

When I read back through your posts, the only numbers I see are share prices. You've mentioned receiving dividends, but I don't recall anything about return on capital or return on equity. You've talked about price movements, but not about value movements (they tend to be slower and I don't know how long you've been at this; maybe they haven't changed in your investing lifetime, but you haven't said anything about looking at them). You've talked about buying undervalued stocks and selling stocks that are over value. What about companies that lose value as well as price after you buy them? Have you had any? (I have. HLD was one of my first buys and the only thing I did right with it was to take the loss) How did you identify them?

Remember the bit where Graham talks about giving the investor something to do? I laughed at loud at that: very sound psychology. It's really hard to stick with a plan when you can watch share price movements by the minute (even tho they're only a small part of the data for your investing system) and read Other People's Opinions 24 hours a day. 

Anyway, I guess I'm asking you about the I Got It Wrong side of your investment plan. How often do you test your portfolio? If you find something wrong, how do you decide what to do? When prices go below what you paid, how confident are you in your assessment of value? 

I'm certain sure that Ben Graham had answers for those questions. I'm getting towards them for some companies (small companies BTW; I find them much easier to understand than big Blue Chips). From this thread, I don't see that you've given them much thought at all. 

Cheers,

Ghoti


----------



## bunyip (26 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> Forget it mate, we are not on the same page.
> 
> You don't understand what I am getting at and seem to take personal offence.
> 
> ...




That's right...........mate. We're not even on the same page. And unless you change pages you'll continue to believe that outperforming the market is impossible. Meanwhile, there'll be traders who'll keep doing it anyway.

For the record, I understand perfectly well what you're getting at. It's just that I don't feel obliged to supply you with details of my private business, for the purpose of answering your questions and providing the figures you're looking for. My business is private, not for disclosure on an internet forum. My choice. If you disagree with my choice, tough luck.

As for the rest of your post.....mostly claptrap and baseless assumptions.


----------



## tech/a (26 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Sorry missed this



> I figured people running such mechanised systems based on statisical advantage would have spreadsheet showing their monthly balance? Or would at least be able to quantify their returns and risk.




Bunyip may not choose to post his but some of mine has been public knowledge for 4 yrs on a weekly updated basis.

Knock yourself out.

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000029


----------



## BSD (26 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Thanks Tech, I look forward to doing some numbers! I hope we all learn something. 

From Reefcap:

*Although you have registered, your registration has not yet been approved by our administrators. Thus, we can not give you access to the forums at this time. You will be notified by email as soon as your registration has been either approved or declined. 
Thank you for your patience!*

As for this:

*If you consider your trading results to be tantamount to Gambling then * 
and 
*Theres also the availability of a drawdown facility once your gambling has been controlled*

Maybe we should define what I determine punting?

Remember, I am a stats nerd.

From my figures (garnered from a very limited 3 years of stats) when I bet on League, Test Match Cricket and Poker (limit) - I have a positive expectancy of around 4% of turnover. This is good considering you can turn over a punting book multiple times per year if you have enough opportunities. (Sadly I dont)

I do not touch any games in which I am guaranteed to lose like poker machines, lotto or roulette. I stopped betting on horses after two years because my stats showed a loss in the vicinity of 6% of turnover. I have no interest in losing money for fun and I obviously didnt have enough time and contacts to succeed on the ponies. 

You should see the daily graphs of my book - you might even be able to predict the success of my next five bets by drawing a few lines and proclaiming I have reached a "double chock-top with reverse pennant flags set to become a bull reversal" - but I fail to see how this will effect the Cowboys performance on the weekend. 

The 'trading' portion of my share portfolio displays far greater volatility than my gambling book. 

Do I still have a gambling problem in your view?


Despite this analysis, I still do not feel I have enough data to declare a statistical advantage in these pursuits. 

Last year's League results stank and the Ashes punched a 15% hole in my book, but I prevail when viewed over a three year timeframe 

You guys (I assume) have beaten the stockmarket over a couple of years and proclaim dominance.  

I someone backs black on a roulette wheel five times in a row, are they smart? 

Or did they just land a 32-1 shot?

My point remains a point of statistical proof and has nothing to do with tech versus fundamentals.

Please stop assuming things about my personal and professional life. You are very wrong on most accounts. 

Then again, some think it is claptrap and baseless assumptions - but some people didnt finish high school, let alone study statistics


----------



## Hopeful (27 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Back to the OP's oringinal Qn: As for myself, it's tech anal all the way. Looking at the funny mentals drives me nuts, there just too much to be considered for it to be viable. But I can look at a chart for less than a minute and determine if I should buy, short, or hold. 

"The chart, ma'am, Just the chart".


----------



## mit (27 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

BSD,

I fell onto the Punting Ace forum a little while back. It was interesting a mirror of what goes on here. A POT of 4% is pretty good from what I was reading. I downloaded a heap of racing data and when I get a chance I am going to analyze it. Anything to smooth out the equity curve.

MIT


----------



## tech/a (27 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hmm say you have a $10,000 account your bet each week.
Over 52 weeks thats $520k.
 4% of turnover for a year is $20,800 or over a 200% loss on initial capital.

Perspective---


----------



## NettAssets (27 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> Hmm say you have a $10,000 account your bet each week.
> Over 52 weeks thats $520k.
> 4% of turnover for a year is $20,800 or over a 200% loss on initial capital.
> 
> Perspective---



Can you run that by me again
initial capital is 10000
turning it over every week 
TO is 520K
4% profit on turnover for year is $20,800
108% gain on capital isn't it ?
John


----------



## tech/a (27 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> I stopped betting on horses after two years because my stats showed a loss in the vicinity of 6% of turnover.




Actually was taking the example from this quote. Didnt flick back to have a look but in a positive case yes your correct.


----------



## mit (27 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> Hmm say you have a $10,000 account your bet each week.
> Over 52 weeks thats $520k.
> 4% of turnover for a year is $20,800 or over a 200% loss on initial capital.
> 
> Perspective---




It's 4% profit each time you turn over your capital. So if you have a $50,000 in capital you should make $2k every time you bet the $50,000. Turn it over 100 times you make $200k or 400% on you original money. Which means if you have a low POT you are glued to a computer betting on almost everything to get your turnover happening.

Now the question is why don't they just bet 5 times at $10k each to up the turnover rate, well they are caught in the same stats that traders are. Each bet has to be small enough so that a series of losses doesn't make too big a dent in your capital.

Another big problem is liquidity as some of the meets don't have a very big betting pool so if you bet too large you can distort the odds.

There also seems (like on share forums there is a lot of c**p going on so it is hard to know what's real) to be a TA - Fundamentals divide. Some people (the fundies) get a higher rate by studying the form of all the horses and bet accordingly. They bet less often but have a bigger POT.

Others (The T/A) might find a bunch of rules such as 
  - bet on the second favourite if the track is wet and his odds are greater than 6:1 (Totally made up of course).

MIT


----------



## chennyleeeee (27 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*

A bit off track from the original thread. lol

CHEN


----------



## bunyip (27 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> Then again, some think it is claptrap and baseless assumptions - but some people didnt finish high school, let alone study statistics




If you're suggesting that people who didn't finish high school and didn't study statistics are in some way inferior to or less capable than those who did, then once again you're showing just how naive you are.

Some of our highest achievers are high school dropouts, but have gone on to build vast financial fortunes.

I have met in person a man who recently gave six million dollars to cancer research, and is one of Australias richest men with a net worth of 290 million dollars. He left school at the age of 14 and got a job in a sawmill.

Take off your blindfold, get in touch with reality.


----------



## NettAssets (27 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> well they are caught in the same stats that traders are. Each bet has to be small enough so that a series of losses doesn't make too big a dent in your capital.MIT



Actually its quite a bit worse than traders - the bookie doesn't let you jump off for half price at the last turn if you see the nag headed for heavy going.
John


----------



## wayneL (27 June 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				NettAssets said:
			
		

> Actually its quite a bit worse than traders - the bookie doesn't let you jump off for half price at the last turn if you see the nag headed for heavy going.
> John




Indeed!! LOL


----------



## It's Snake Pliskin (2 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Getting back to the original question: I don`t use _sentimental_ analysis


----------



## cuttlefish (2 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

having done a bit of a random walk through various small cap stocks being discussed under the 'asf stock talk' part of these forums I reckon there are plenty of people out there that could benefit from applying a bit of fundamental analysis.   

Personally I'm amazed that people would even contemplate taking a long position in a stock without at least taking a cursory look at the fundamentals, and if taking a large long position then a detailed look at the fundamentals would certainly be warranted to my mind - unless that large long position is only a small part of one's total capital and an amount that someone would feel comfortable about losing altogether.


----------



## cuttlefish (2 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

and when I say a cursory look at fundamentals that doesn't just mean a subjective overview, it means looking at a stocks market cap, its current earnings, its current NTA and how much both of those would have to change to justify the current market cap or speculated future market caps, and then maybe trying to put some real metrics around the likelihood of those changes occurring.


----------



## It's Snake Pliskin (2 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hey Cuttlefish,



> having done a bit of a random walk through various small cap stocks being discussed under the 'asf stock talk' part of these forums I reckon there are plenty of people out there that could benefit from applying a bit of fundamental analysis.




That may be true for some holding stocks fundamentally suspect.



> Personally I'm amazed that people would even contemplate taking a long position in a stock without at least taking a cursory look at the fundamentals, and if taking a large long position then a detailed look at the fundamentals would certainly be warranted to my mind - unless that large long position is only a small part of one's total capital and and amount that someone would feel comfortable about losing altogether.




I guess it depends on the time frame one wants to hold for. 
Re: Fundamental reports; I don`t care for inexactitude. :hammer: 

Cheers


----------



## cuttlefish (2 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> I guess it depends on the time frame one wants to hold for.




Nobody (surely?) would day trade a stock that had a chance of getting delisted during that day due to solvency problems - so surely at least a cursory look at the fundamentals would be relevant.  It only takes about 15 minutes to scan the last annual or half yearly report and last 6 months worth of announcements (for most stocks - large caps its a bit more) to get at least an idea of the fundamental situation.


----------



## It's Snake Pliskin (2 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Nobody (surely?) would day trade a stock that had a chance of getting delisted during that day due to solvency problems




An extreme case, and yes no one in their right mind would.

A day trade of Macquarie bank or BHP would require fundamental analysis?


----------



## cuttlefish (2 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> An extreme case, and yes no one in their right mind would.
> 
> A day trade of Macquarie bank or BHP would require fundamental analysis?




Ok, so both of those stocks have such a high media and analyst profile that any financial cracks that could be picked up by a layman would probably have been dissected a thousand times over in the media as soon as they arose anyway.

But that aside - why not? If hypothetically BHP was trading on a PE ratio of 400 would that impact decisions about how to trade it? Surely you'd be looking for fairly significant trading returns in exchange for the risk of trading a stock so over valued?


----------



## It's Snake Pliskin (2 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Ok, so both of those stocks have such a high media and analyst profile that any financial cracks that could be picked up by a layman would probably have been dissected a thousand times over in the media as soon as they arose anyway.




I`m not trying to play one upmanship, but the above refutes what you said in your first statment on the issue today.



> But that aside - why not? If hypothetically BHP was trading on a PE ratio of 400 would that impact decisions about how to trade it? Surely you'd be looking for fairly significant trading returns in exchange for the risk of trading a stock so over valued?




Technical traders don`t look at the PE, so once again the holding time would be off concern. For fundies obviously it is unrealistic....

Maybe the feeling of self assurdness comes from the extra analysis; a discussion in itself and maybe a new thread.


----------



## Bobby (2 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> Ok, so both of those stocks have such a high media and analyst profile that any financial cracks that could be picked up by a layman would probably have been dissected a thousand times over in the media as soon as they arose anyway.
> 
> But that aside - why not? If hypothetically BHP was trading on a PE ratio of 400 would that impact decisions about how to trade it? Surely you'd be looking for fairly significant trading returns in exchange for the risk of trading a stock so over valued?



Cuttlefish with respect to your thoughts, can you tell us a stock that has traded  T/A going up on chart, that got delisted ( broke ) ?   

Bob.


----------



## cuttlefish (2 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> I`m not trying to play one upmanship, but the above refutes what you said in your first statment on the issue today.




I don't really see how? e.g. why did you raise those two particular stocks as examples? My impression was because you felt they are rock solid companies that can be safely traded without fundamental analysis. My response to that is the reason you believe they are rock solid is due to an implicit level of fundamental analysis thats out there in the public domain as a result of the high level of scrutiny they receive.

What I will concede is that I can understand that a trader trading to a system that defines entries and exits and is combining that with money management doesn't necessarily need to be looking at fundamentals when deciding to trade a stock. 

As I've said in this and other threads - whether fundamental, or technical, or a combination of both; - the key is following a plan and having the discipline to stick to the plan.

I also still don't see why it has to be an either/or situation - I'm more than happy to concede that technical analysis can complement a fundamental investment strategy.


----------



## It's Snake Pliskin (3 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> I don't really see how? e.g. why did you raise those two particular stocks as examples? My impression was because you felt they are rock solid companies that can be safely traded without fundamental analysis. My response to that is the reason you believe they are rock solid is due to an implicit level of fundamental analysis thats out there in the public domain as a result of the high level of scrutiny they receive.
> 
> What I will concede is that I can understand that a trader trading to a system that defines entries and exits and is combining that with money management doesn't necessarily need to be looking at fundamentals when deciding to trade a stock.
> 
> ...




Cuttlefish,

It isn`t a big issue and I have posted before that they are both relevant. You have covered some important points above which I agree with. 

My two examples are as you say implicitly known by anyone with interest in the market. My point being that not all people need to do fundamental analysis because of this. Sure those nasty illiquid stocks may need some further understanding, maybe in a hybrid strategy using both.

Anyway enjoy.
Snake


----------



## bunyip (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> What I will concede is that I can understand that a trader trading to a system that defines entries and exits and is combining that with money management doesn't necessarily need to be looking at fundamentals when deciding to trade a stock.
> 
> As I've said in this and other threads - whether fundamental, or technical, or a combination of both; - the key is following a plan and having the discipline to stick to the plan.
> 
> I also still don't see why it has to be an either/or situation - I'm more than happy to concede that technical analysis can complement a fundamental investment strategy.




It doesn't have to be either/or......there's no reason that both types of analysis can't be combined.
However, what most fundamentalists can't seem to comprehend is that technical analysis is actually a form of fundamental analysis.

Technical analysts believe 'THE TREND IS YOUR FRIEND'. Accordingly, they begin their analysis by identifying the trend of the stock or financial instrument in question.

Look at charts of big uptrenders of the past, e.g. GUD, BHP, WPL. 
You could have comprehensively researched these companies to find out that their fundamentals were positive.
Alternatively you could have applied the most basic concept in technical analysis - TREND IDENTIFICATION - by simply looking at their charts and recognising that they'd recently begun a powerful new uptrend. And having recognised this powerful new uptrend, you could have put two and two together and realised that new uptrends are caused by the collective positive views of thousands of traders and investors, most of whom will have based their opinions on fundamental research. 
A stock powering upward on the chart is a visual representation of investors and traders scrambling over each other to get a piece of the action, even if it means paying increasingly higher prices.
They do this because they believe the fundamentals to be positive.

Conversely, if a chart shows that a stock is sinking like the Titanic, it's a visual representation of investors and traders dumping the stock because they know something negative about the fundamentals.
Pull up charts of companies that went broke....PAS, HIH, SGW, ION. Their charts were heading south with a vengeance long before they went out of business. 
Did you really need to fundamentally research those companies to find out they were in trouble? 
Or could you have got that information simply by looking at their charts for five seconds? I'm sure you know the answer.

Regarding your comment about the risks of investing in a company that's on the brink of insolvency, consider this.....
If a company is in dire straits and is close to insolvency, do you think that maybe, just maybe, the research analysts might be well aware of this? 
And that this information just might be known to the investment community?
And that investors, knowing this information, might be dumping the stock en masse, causing its price chart to be strongly downtrending?
No technical analyst worth his salt is going to buy a stock whose chart is strongly downtrending.
Technical analysts believe 'the trend is your friend'. Accordingly, they trade with the trend, not against it.

Finally, let me give you a couple of quotes.
The first comes from John Murphy, author of 'The Visual Investor', resident technical analyst on stockcharts.com, and considered one of the worlds foremost technical analysts................

"Chartists are cheaters. Why? Because charting is a shortcut form of fundamental analysis. It enables a chartist to analyse a stock or industry without doing all the work of the fundamental analyst. How does it do that? Simply by telling the analyst whether a stocks fundamentals are bullish or bearish by the direction its price is moving.
If the market perceives the fundamentals are bullish, the stock will be rewaded with higher prices."

The second quote is from Marty Schwartz, a man who made squillions on Wall Street and is featured in the book 'Pit Bull'..........................

"I always laugh at people who say they've never met a rich technician.
I love that! It's such an arrogant, nonsensical approach. I used fundamentals for nine years but got rich as a technical analyst".

I guess Marty Schwartz would have got a good laugh at the expense of Renee Rivkin, who was fond of saying "I've never met a rich chartist".
Rivkin, an avowed fundamentalist, was recommending PAS as a buy while one of my mates who owned PAS was dumping the stock as soon as it began downtrending.
Rivkin continued recommending PAS as a buy while it plunged towards oblivion.


Bunyip


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Bunyip,

There is no doubting that charting or Technical analysis works.  We know it can work.

However the stress, brokerage fees, tax, subscriptions, slippage, lack of dividends, and the number of small losses because of stops incurred means that most peeople make bugger all from it.  Infact most people lose doing it.

Tech analysts themselves admit 90% of those that try it get washed out of the market fairly quickly. (Leon what's his name said it himself, Darryl Guppy as well)

Yet with fundamental investing the compounding, low tax, low brokerage, and regular dividends with diversification as a safety net means it is just about impossible to lose longterm.

The difference between fundamental buy and hold investing and trading is that most people win doing the first and most people lose doing the later.


----------



## cuttlefish (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I can see the technical argument, but a fundamentals based approach is so strongly built into my psyche that I can't imagine entering a stock without doing a fundamentals based assessment. But I'm exploring the use of technical to help time entries better and also to add a trading component to stocks that meet my fundamentals criteria.

The comments about the trends in stocks that fail is interesting, and worthy of a separate discussion - I think it'd be interesting to look at the charts of all of the stocks that have been delisted over the years and see what they looked like technically in the period leading up to the de-listing. Its a pity the charts are so hard to get hold of because they've been deleted from the various databases.


----------



## bunyip (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Bunyip,
> 
> There is no doubting that charting or Technical analysis works.  We know it can work.
> 
> ...




The figures arrived at from broker research are that almost 90% of stock market players lose money. No doubt there are both fundamentalists and technicians among them.
By far the majority of market players are fundamentalists. Therefore it seems highly unlikely that most fundamentalists win.

There are very few capable technical analysts. Most of them try to over-complicate it by having half a dozen technical indicators on their charts. The way to implement technical analysis is to keep it simple. Identify the strong trenders, have one or two simple setups to signal and entry into a trend, get out before serious loss if the trade goes goes haywire, ride the winners as long as the trend keeps going your way.

Do it this way and it's difficult NOT to make money from the technical approach.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				bunyip said:
			
		

> The figures arrived at from broker research are that almost 90% of stock market players lose money. No doubt there are both fundamentalists and technicians among them.
> By far the majority of market players are fundamentalists. Therefore it seems highly unlikely that most fundamentalists win.




I disagree that most people are fundamentalists!!

I'd suggest most "Mum and Dads" do neither Fundamental nor Technical.  They just buy a share in a company they like. Or get offered Telstra or NRMA or TAB shares and take them without doing any fundamental or technical analysis at all.

I also disagree that 90% of people lose on the sharemarket. I do agree that 90% of traders do lose though.

I still state that it is very very difficult to profit to any significance doing Technical analysis and very very hard to lose if you do fundamental analysis, hold for long periods and diversify widely.




			
				Cuttlefish said:
			
		

> But I'm exploring the use of technical to help time entries better and also to add a trading component to stocks that meet my fundamentals criteia.




Fundamentalists should ignore charts completely.

A stock that is in a downtrend is what Fundamentalists like.  Turn a chart upside down first if you want to use them for Technical analysis!!    

Have a look at CMI Cuttlefish....        it came right..


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Cuttlefish said:
			
		

> The comments about the trends in stocks that fail is interesting, and worthy of a separate discussion




It is the one and only argument techs have.   

"Only buy and 'hope' investors lost on HIH and Enron so there, nah nah nah"   

Yeah well I can't imagine many traders did lose on those 2 so they are right to some point.

BUT...

Like the recent Westpoint collapse where 'Mums and Dads' lost their all life savings one thing saves Fundamentalists - DIVERSIFICATION.

If you own at least 20 widely diversed shares, diversified across sectors and even markets and countries, and even have money in cash and (deposits)bonds as you should do, and all your companies make profits year after year and pay good dividends, and not too much money is in any one company or sector it would be basically impossible to lose your life savings, infact just about impossible not to make a profit longterm.

Diversification rules out any chance of buy and 'hope' investors going bankrupt.

And it rules out the one and only argument traders have against investors!


----------



## tech/a (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> I still state that it is very very difficult to profit to any significance doing Technical analysis and very very hard to lose if you do fundamental analysis, hold for long periods and diversify widely.




Hmm

$30000 to $310000 in 4 yrs purely technical.
Pretty damned easy I thought.

There is one Fundamental method currently running for 6 mths 
certainly not in profit--but hey in 3 yrs it may well be.



> A stock that is in a downtrend is what Fundamentalists like.




And why most make a loss or get caught holding "Bottom Draw stock"
Whey the hell dont fundamentalists wait for the "Undervalued" stock to show *significant * reason to be purchased before they buy the thing!!

Seriously if people think they can value a Company from its published Balance sheet they are DREAMING.

What is it with trying to pick a bottom!

*Buy high sell higher*


----------



## lesm (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist,

With all due respect, I think that you appear to have an extremely biased view and it wouldn't matter what any TA said you will always take the negative.

As there does not appear to be any discussion, except for you expounding your views.

You appear to fail to acknowledge that trading is being conducted from both a fundamental and technical perspective. Any reference to the statistics related to the success or failure in the markets takes both camps into account.

Don't confuse investing with trading, as you apppear to have a naive and ill- informed view of the market place, trading in general and the methods used.

If you take into account the entire range of markets worldwide, who do you think the players are and what methods do you think they are using?

To have a meaningful discussion/argument as to the merits of each approach is one thing, but this constant one-sided diatribe is really a waste of bandwidth and provides no real value.

Trading from the technical side is a lot less stressful than you may think. Why don't you try asking some meaningful questions and try getting yourself more fully informed than you currently appear to be.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> Hmm
> 
> $30000 to $310000 in 4 yrs purely technical.
> Pretty damned easy I thought.




so a 1033% return!!  

Before all taxes and brokerage and fees in a fantastic bullmarket of course.

(Traders love to leave out real expenses when quoting their success)


Tech/a - what are the chances of another 1033% return on your $310K over the next 4 years?

(I'll give you a clue - NONE)




> Why the hell dont fundamentalists wait for the "Undervalued" stock to show significant reason to be purchased before they buy the thing!!




Cause they love sales. They buy their designer sunglasses in winter and ski jackets in summer, before the trend followers start looking at prices rise.



> Seriously if people think they can value a Company from its published Balance sheet they are DREAMING.




So if you were buying a business for your family to own outright and run for your livliehood what would you look at it?    

I sure as hell would look at the balance sheet!!

Your statement is one of the most laugahble statements I've ever seen. What sort of businessman would buy a business without looking at the balance sheet?


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				lesm said:
			
		

> Realist,
> 
> With all due respect, I think that you appear to have an extremely biased view and it wouldn't matter what any TA said you will always take the negative.
> 
> ...





Thanks for your rant Les.

Please in future remember to argue the point and not the person.

What points have I made exactly that you disagree with?

What points do you have to add?

Please no more personal attacks, argue the point, or not at all. There's a good boy.


----------



## tech/a (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

When youve actually been involved in serious investment and can make serious comment,you may gain the respect you obviously seek.

Your comments belie the total novice you obviously are.

If you spent nearly as much time learning from those who are in the position to add to discussion you may actually one day be in the position to pass on some wisdom.

You are doing yourself justice with uninformed rehetoric,but as you can see it is not of the quality you desire.

You need to learn only one thing.
*"There is a time to be silent"*


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				lesm said:
			
		

> Trading from the technical side is a lot less stressful than you may think. Why don't you try asking some meaningful questions and try getting yourself more fully informed than you currently appear to be.




lesm,

I wouldn't worry about Realist. Some people want to learn others don't. I know I would rather make money every year and not just rely on bull markets (Rosella has made over 30% a year every year since before 2001 if I remember rightly). I  know that if the 1970s style market returns again while the fundamentalist only people are repeating the two mantras:

"The market is wrong and I am right"
"It's not a loss unless I sell"

While the technical traders will quietly make money on the swings.

Did you know that if you bought the DOW index at the bottom of the market ofter the 29 crash until now you would have only made an average of 1% over the cash rate. If however you used a simple EMA cross system you would have averaged 17% a year (absolute not over the cash rate).

MIT


----------



## professor_frink (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Did you know that if you bought the DOW index at the bottom of the market ofter the 29 crash until now you would have only made an average of 1% over the cash rate. If however you used a simple EMA cross system you would have averaged 17% a year (absolute not over the cash rate).




How did you come to that figure mit? what cash rate are you talking about.
I just did a quick test on amibroker

enter 8/7/1932 @ 41
exit yesterday @ 11225

annual return of 16.59%.

Or did I do the test wrong?


----------



## Julia (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist

You are beginning to sound rather shrill and hysterical by being so defensive about your approach.  

No one is suggesting you relinquish your preference for fundamental investing.
Bunyip has repeated the essence of a post he made some time ago which changed my attitude towards stock selection and timing.  As a result, I am considerably more profitable.

All the others have made reasonable and eminently helpful comments also.
I'm honestly puzzled by your determination to resist learning something which could genuinely improve your profitability.

Even if you were just the hottest fundamental investor to ever grace the ASX with his presence, and frankly I doubt this, I think its arrogant in the extreme for you to attempt to rubbish the opinions of people who are experienced and very profitable, and moreover, are good enough to attempt to share some of their experience with you.

Julia


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> When youve actually been involved in serious investment and can make serious comment,you may gain the respect you obviously seek.
> 
> Your comments belie the total novice you obviously are.
> 
> ...




I think that it is a bullmarket thing. I started lurking around forums in 2002 (you were there) and there was nary a FA to be seen. I think some got so scared with the paper loss that they stuck their shares in the bottom draw and forgot about them.

Rivkin made his famous statement about giving up pure FA after a particularly bad market call. There were no end of articles in magazines telling people to watch price action as well as fundamentals because people had such large paper losses.

MIT


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> How did you come to that figure mit? what cash rate are you talking about.
> I just did a quick test on amibroker
> 
> enter 8/7/1932 @ 41
> ...




I'll have to try and find the original source of the statement as you are right based on 41 it wouldn't make sense.

MIT


----------



## lesm (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> lesm,
> 
> I wouldn't worry about Realist. Some people want to learn others don't.
> MIT




Hi Mit,

I'm not.

Yes, that's true, you can't help some people.


----------



## professor_frink (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> I'll have to try and find the original source of the statement as you are right based on 41 it wouldn't make sense.
> 
> MIT




If the calculation starts at the peak in sep 29 before the crash the return drops to under 10% so that may be what they were referring to. From an investing point of view, that makes an interesting case for not starting your investing career during a raging bullmarket!


----------



## tech/a (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Its sound trading business to design methods of taking advantage of Bullmarkets as thats the direction of the market the majority of the time.

Just as its sound business to identify and take advantage of housing Bullmarkets.

You dont have to be a hero and trade stocks in every direction.
However if your a Futures/Commodities trader then Trading fluctuations would/could be sound practice.

*Go where the Money is and go there OFTEN*


----------



## ghotib (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist darling, 

Why on earth should you care that everyone else is wrong? 

If all the world did value investing, there wouldn't be any undervalued stocks for value investors to buy. Are you being just a little over-generous in trying so hard to turn all those misguided techies from their road to profi... I mean ruin. 

Personally, I think there are as many ways to apply fundamental analysis as technical, and it doesn't matter what you call them as long you know what you don't know. 

Where's the Moet,

Ghoti


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Julia said:
			
		

> Bunyip has repeated the essence of a post he made some time ago which changed my attitude towards stock selection and timing.  As a result, I am considerably more profitable.




Please explain what you did differently Julia?

I know you sold WDC which has gone up nearly 10% in the past month and will pay large dividends next month.

How does your tax bill go seeing as though you sell and buy more often than investors?

What have you sold and since bought that has made you so much more profitable?


Everyone here seems to be arguing me and not arguing the point.    

I have read a couple of books on trading, Darryl Guppy and Leon someone, I've tried and tried to comprehend it but I can not see past my views I agree, I am blinded by Ben Grahams theories I admit it. I am not hiding it at all, I am biased, but I am open to others views - I do not instantly dismiss them. I listen to them then usually dismiss them.   

Those trading books themselves even admit 90% of traders lose.

Some of you need to admit you are blinded by trading theories and can't see the bigger "investing" picture as well.

And some of you are confused as to whether you are a trader, and fundamental investor or neither. There is no middle ground, either you believe in Fundamentals or you believe in charts or you are confused. You can not be half pregnant or half a Fundamental investor.


----------



## Sean K (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist, I read Leon Someone's book as well. Great read.


----------



## eddievanhalen (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> And some of you are confused as to whether you are a trader, and fundamental investor or neither. There is no middle ground, either you believe in Fundamentals or you believe in charts or you are confused. You can not be half pregnant or half a Fundamental investor.





Plenty of ridiculous statements in this thread but that's a doozy.  I agree that investing is best when you're undercapitalised as you need to have a higher % win rate and a GOOD fundamentalist will get a higher win/loss than a TA trader.  A TA trader doesn't require a high win/loss as  ,if they're any good, their $won/$lost is very high.  You really need a decent kitty though as you'll need a decent spread of stocks to make the stats work for you.

I mentioned earlier in this thread that 10 years ago I was a devout Buffettologist and read everything about Buffett I could get my hands on and ONLY used fundamental analysis.  That's before the days of the internet being so full of info - I used to ring the companies and get them to send me 5 years of annual reports in the post.  Fortunately I decided to try my hand at futures and learned a lot about what could be accomplished by trading sentiment/trends in combo with strict risk management.

I have 2 distinct portfolios Realist - I spend just as much time reading balance sheets and announcements as I do analysing charts. So I should be some sort of reference for you.  I made 3 TIMES the % return in my trading portfolio last FY as I did in my investment portfolio and I consider myself a better than average fundamentalist.

Why don't I just trade TA if it's so good??  Well all my investments/FA stuff need to have decent charts (so there's some cross over) - "cheap" stocks often get cheaper until all the skeletons are out of the closet- and I can only trade and watch so much money actively.

It's almost pointless trying to get in and change a closed mind - you can only try. To repeat myself - all the better traders I know have a good grasp of FA and TA.  Fortunately for those people most others are firmly in one camp or the other and won't be told otherwise.

Ed


----------



## Sean K (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I'm with you eddie, it's a combination for me. I think the 1/2 pregnant analogy doesn't quite fit with investing. Sorry Blondie.


----------



## cuttlefish (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

a couple of points made in the previous posts that I'd comment from a fundamentalists point of view



			
				tech/a said:
			
		

> Seriously if people think they can value a Company from its published Balance sheet they are DREAMING.




Looking at historical P&L and Balance sheet, in combination with announcements to date can be used to identify significantly undervalued companies with very good yields and take a safe profitable position in them, often with a succesful capital gain resulting out of it as well.




			
				realist said:
			
		

> A stock that is in a downtrend is what Fundamentalists like. Turn a chart upside down first if you want to use them for Technical analysis!!




Fundamentalists don't look for stocks that are falling in price - they look for companies that are undervalued.  A companies stock price can be rising and it can be undervalued, and a company can have a rising stock price and still go from being overvalued to undervalued even while the price is rising.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> I have 2 distinct portfolios Realist - I spend just as much time reading balance sheets and announcements as I do analysing charts. So I should be some sort of reference for you.  I made 3 TIMES the % return in my trading portfolio last FY as I did in my investment portfolio and I consider myself a better than average fundamentalist.
> 
> Why don't I just trade TA if it's so good??  Well all my investments/FA stuff need to have decent charts (so there's some cross over) - "cheap" stocks often get cheaper until all the skeletons are out of the closet- and I can only trade and watch so much money actively.




Ridiculous.  You are confused what you are.  And I suspect your results did not take into account all expenses.

Please advise what stocks you'd tip I buy now using your theory??

The half pregnant argument is a bit unfair agreed, in cricketing terms you are a fast spin bowler who bats a bit - not fast enough to scare anyone and you don't turn the ball enough to worry anyone.  And your batting os no betting than any of the other bowlers.

You can't be both and truly succeed. No-one ever has - examples please???

Charts and Fundamental analysis have no overlap.  Warren Buffet would not read charts, Leon whatshisname does not read balance sheets.

First of all Traders make more money in a short period of time. No argument.

My argument is tax and brokerage water that down so much, and compouding and dividends increase "investing" so much that ultimately the investor wins!

Anyone argue with that?


----------



## eddievanhalen (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

How would you know that nobody ever has?? You win mate - I give up


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> Fundamentalists don't look for stocks that are falling in price - they look for companies that are undervalued.  A companies stock price can be rising and it can be undervalued, and a company can have a rising stock price and still go from being overvalued to undervalued even while the price is rising.




I know. I know.    

You still obviously need to do the fundamental analysis.

BUT A company that has doubled in price is less likely to be undervalued than one that has just halved. Obviously.

CDO is a good example!!     It went down - too much and came back up.  

Fundamentalists do look for companies that have gone down in value.  Look where Buffet bought Coke!!  He bought it when it went down.

Fundamentalists do buy stocks cause they go down.  I bought BHP and RIO cause they went down!

If a company is worth $1.00 and is selling for $1.10 but then drops 35% overnight because the world trade centre got bombed I would buy it, purely cause it dropped!


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> How would you know that nobody ever has?? You win mate - I give up





Examples please.....

I'm not saying I know no-one has. 

I am saying I do not know of anyone who has?

Big difference - please advise who has?


----------



## cuttlefish (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

realist I think you're mixing up comparing trading and investing,   vs fundamental and technical.

A trader is running a business buying and selling stock.

An investor is looking for a place to put their wealth so that it will continue to grow.

A trader is active, an investor is passive.

A trader can use fundamental, technical or both as triggers for entry and exit criteria.

An investor probably can use both as well but would typically focus on fundamentals.


----------



## eddievanhalen (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*




			
				Realist said:
			
		

> Examples please.....
> 
> I'm not saying I know no-one has.
> 
> ...






			
				Realist said:
			
		

> You can't be both and truly succeed. No-one ever has




Haha

I'll PM you.

Ed


----------



## wayneL (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Anyone argue with that?




Would love to! But it ain't worth it! You will spin whatever anyone says to satisfy your psychology, to convince yourself you are doing it the right way.

In the end it wouldn't alter my bottom line one iota, so it would be an exercize in futulity.

Realist, if you like the way you do it, be happy dude! 

Cheers


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> realist I think you're mixing up comparing trading and investing,  vs fundamental and technical.




Yes you are right. I am generalising.

I am assuming all traders use charts and all "investors" use fundamental analysis which is incorrect.

As I said before most "investors" use neither. They buy companies they like without doing any analysis.  

The definition of an investor is very tricky, not as simple as you stated - is someone who puts money in a term deposit an investor?  

Semantics though - I'm sure you get what I am saying Fundies v Techs - I'll remember to use the correct terminology.

Hey Cuttlefish - see CMI has rocketed up (30%).  Eventually its value is being recognised??

the last share I bought is PRG - what do you think?


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Would love to! But it ain't worth it! You will spin whatever anyone says to satisfy your psychology, to convince yourself you are doing it the right way.
> 
> In the end it wouldn't alter my bottom line one iota, so it would be an exercize in futulity.
> 
> ...





C'mon Wayne.  You've got to admit this thread is very popular.

No one is going to win this argument outright. It is the fun of the fight they're enjoying!!


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

One of the reasons Im T/A. This is the 70's. Most charts we see start from 1980 which shows the market doing nothing but go up. Here you see for a decade that the market went nowhere. To me however, I think that there is enough swing to make at least 30% a year on an EOD system (More if you are like Wayne and want to stay awake all night). Also before Realist asks this is after Brokerage and Interest.

For a pure fundamental investor you would end up losing money in real terms.

MIT


----------



## cuttlefish (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Hey Cuttlefish - see CMI has rocketed up (30%).  Eventually its value is being recognised??




Realist - with CMI I didn't dispute it was undervalued - just pointed out some things about the capital structure that you hadn't necessarily taken into account in doing your assessment of it. 

The reason I checked it out was because on the surface it looked like it might match my criteria for making a fundamental investment, but on closer examination it didn't quite meet it. That doesn't mean it isn't a good buy and won't continue to go up - I've just got a set of criteria it didn't quite meet.

What price did you buy CMI at?


----------



## cuttlefish (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> .
> 
> For a pure fundamental investor you would end up losing money in real terms.
> 
> MIT




I'd dispute that - often in sideways or bear markets fundamental investing comes to the fore.  Just because the market went nowhere, doesn't mean individual stocks went nowhere.  Also an investment can do very well without the price of the stock rising.


----------



## ghotib (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> Just because the market went nowhere, doesn't mean individual stocks went nowhere.



:iagree:  

One of the most useful remarks I've read on any forum was that every property investment decision is a microeconomic decision. Same applies to stocks, and any other investment vehicle for that matter. It's a great relief to get free of market crystal balling.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> For a pure fundamental investor you would end up losing money in real terms.




Maybe, but you are forgetting about divdends....

You double your money (before tax, fees and inflation indexed) buying a share that pays 7% dividends over 10 years if the share price does not go up in value at all!!!


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Maybe, but you are forgetting about divdends....
> 
> You double your money (before tax, fees and inflation indexed) buying a share that pays 7% dividends over 10 years if the share price does not go up in value at all!!!




Not much of a return on risk after inflation. Also, the You'd do better to invest in investment grade bonds. I'll take the 30% thanks.

Think how much even a fundamental investor would make who timed his buys and sells using a simple index filter.

MIT


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> I'd dispute that - often in sideways or bear markets fundamental investing comes to the fore.  Just because the market went nowhere, doesn't mean individual stocks went nowhere.  Also an investment can do very well without the price of the stock rising.




Realist said he has a portfolio of around 20 stocks. With that many stocks it is difficult to outperform the market. If your idea of value was "screamingly cheap" you could make money as you would end up buying in those dips and selling at the peaks, but I would say there has been nothing "screamingly cheap" for a couple of years and those kinds of investors have probably been in cash since 2005.

MIT


----------



## tech/a (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Think how much even a fundamental investor would make who timed his buys and sells using a simple index filter.




Quality response.



> share price does not go up in value at all!!!




Terrible response.
A 7% move down and your snaffelled.

Investing for Dividends---Unless you're on a *Free* trade that too is a Phurphy.

Realist I'm sure will explain a *Free* trade for us.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> Realist said he has a portfolio of around 20 stocks. With that many stocks it is difficult to outperform the market. If your idea of value was "screamingly cheap" you could make money as you would end up buying in those dips and selling at the peaks, but I would say there has been nothing "screamingly cheap" for a couple of years and those kinds of investors have probably been in cash since 2005.
> 
> MIT




I do not try and beat the market. I am happy to match it


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> A 7% move down and your snaffelled.
> 
> Investing for Dividends---Unless you're on a *Free* trade that too is a Phurphy.
> 
> Realist I'm sure will explain a *Free* trade for us.




 

I invest for dividends, absolutely!!!   and proud of it!!    

A free trade is a trade that does not cost you anything..      

In the 1970's I'd have stocked up in the dip in 1975. I'd have been well ahead that decade.


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> In the 1970's I'd have stocked up in the dip in 1975. I'd have been well ahead that decade.




Not by what you have said about your investing style. If you aren't in cash now,
I can't see why you would be fully invested at the peak of the market and still fully invested at the bottom of the market (probably worse as market precedes the economy by 6 months you would get buy/sell signals at the worst possible times). What would you use to buy the extra shares?

MIT


----------



## tech/a (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> A free trade is a trade that does not cost you anything..




Brilliant!!!!

So how does anyone achieve that?

You know why most people trade fundamentally?
Its because they wont spend the time and effort required to learn how to apply analysis of charts to their trading/investing.
Then they and MOST fundamental traders stop far short buy trading without a BUSINESS plan--which has been discussed at length---our Fundamental guru appears to have no interest in anything other than the Analysis itself.

Common.

Elliot Pundits picked months before the top 5300 pretty impressive.
At the same time they picked the end of the correction to be 4800
Hell thats bloody impressive.

*Lucky guess??*


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> Not by what you have said about your investing style. If you aren't in cash now,
> I can't see why you would be fully invested at the peak of the market and still fully invested at the bottom of the market (probably worse as market precedes the economy by 6 months you would get buy/sell signals at the worst possible times). What would you use to buy the extra shares?
> 
> MIT





No way would I ever have 100% of my money in the market ever.

75% at most, 25% as a minimum. Cause you never know.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> You know why most people trade fundamentally?
> Its because they wont spend the time and effort required to learn how to apply analysis of charts to their trading/investing.
> [/B]




Bollocks...

Most people do not trade fundamentally. 

And secondly those that do get excellent results.

Finally. Most traders lose money.


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> No way would I ever have 100% of my money in the market ever.
> 
> 75% at most, 25% as a minimum. Cause you never know.




So you have 25% of your money doing nothing all of the time? That doesn't make sense. 

MIT


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> So you have 25% of your money doing nothing all of the time? That doesn't make sense.
> 
> MIT





Yep, it is in a CBA 5.4% internet banking account.

To me it makes sense now, to you it will make sense when the market crashes next.

No margin loans either!!


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Bollocks...
> 
> Most people do not trade fundamentally.
> 
> ...





ooh I can do this ... 

Most people do not trade technically

And secondly those that do get excellent results.

Finally. Most fundamental investors lose money.


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Yep, it is in a CBA 5.4% internet banking account.




So why count it?    I have more money in cash and property too but I only include this money allocated to shares. 



> To me it makes sense now, to you it will make sense when the market crashes next.
> 
> No margin loans either!!




No, Ill be in cash well before it get serious and keep most of my capital until buy signals come again. You'll have your 75% cash reduced to half, without the benefit of using your spare 25% cash to make money during the proceeding bull market. People who use T/A will get definite buy signals when it is safe to buy back. How will you know you are at the bottom? You might buy your bargains and the market falls another 25%.

Even with a Margin Loan you can be out of the market without too much damage with the advantage of maximizing returns during the bull run.

MIT


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> So why count it?




You asked "What would you use to buy the extra shares?"

I just told you cause I have cash - I always have money to buy shares.



> How will you know you are at the bottom? You might buy your bargains and the market falls another 25%




If I buy bargains and the market (and my bargains) fall another 25% I would buy more!!





> ooh I can do this ...
> 
> Most people do not trade technically
> 
> ...




Ridiculous. Traders (Darryl Guppy, Leon from Tasmania etc.) all admit in their books most traders lose!

Explain how someone can buy 20 widely diversified "bargain" shares, in well known companies that make excellent profits and have done so for the past 10 years, pay good dividends, hold them for 30 years, reinvest dividends, buy more when they become very cheap during dips, and sell if they become far too overvalued or start making losses? Explain how they can lose??

It aint possible!! It just aint possible to lose doing that. Even if you tried to you couldn't.


----------



## It's Snake Pliskin (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

By Realist:


> Ridiculous. Traders (Darryl Guppy, Leon from Tasmania etc.) all admit in their books most traders lose!




and he`s found the _guppy code_, and the holy grail


----------



## BSD (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> Elliot Pundits picked months before the top 5300 pretty impressive.
> At the same time they picked the end of the correction to be 4800
> Hell thats bloody impressive.
> 
> *Lucky guess??*




I certainly dont want to be in the same camp as Realist, we have very divergent views. 

But my answer to 'lucky guess' is YES

I had some 5350 June Puts also bought at the money and closed out a couple of weeks later at 4900. 

Personally, I think EW analysis is some of the most laughable quack stuff going. 

I put the short on because I had seen the banks (40% of the index) run 15% in a couple  of weeks and we had a few days where on a strong lead from the states the market was up 50+ at lunch and down or flat at the close. 

It is complete luck though and anybody who sold their entire portfolio and went short in such situations would be a broke person after a while. 

The last two shorts on the XJO blew up as the market pushed higher. 

I state my case again, one trade or one year or one manager over 5 years does not make a proven record. 

Anyone who has the bulk of their wealth in one strategy/country/asset class/strategy/direction is a gambler.


----------



## wayneL (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> Personally, I think EW analysis is some of the most laughable quack stuff going.




I wouldn't be quite so harsh. EW used deterministically can certainly smack of quackery. But on the other hand it does provide a useful "map" of the market...particularly in trend corrections. ABC patterns are usually quite clear.

Used as a management tool to define risk/reward and all those trader type things, is quite useful. (note: I'm not an EW purist by any stretch)



			
				BSD said:
			
		

> I state my case again, one trade or one year or one manager over 5 years does not make a proven record.
> 
> Anyone who has the bulk of their wealth in one strategy/country/asset class/strategy/direction is a gambler.




Don't necessarily agree they are gamblers, but they are certainly leaving there fate up to the market to decide.

Cheers


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> You asked "What would you use to buy the extra shares?"
> 
> I just told you cause I have cash - I always have money to buy shares.



 
So you are sometimes 100% invested. So you could be 100% invested at the left hand side as I originally said




> If I buy bargains and the market (and my bargains) fall another 25% I would buy more!!



 
with what. You have already spent your 25% earlier





> Ridiculous. Traders (Darryl Guppy, Leon from Tasmania etc.) all admit in their books most traders lose!



 
But the original study was based on reports from brokers so there was no differentiation between investors or traders. Darryl is talking to potential traders so he uses the word trader.



> Explain how someone can buy 20 widely diversified "bargain" shares, in well known companies that make excellent profits and have done so for the past 10 years, pay good dividends, hold them for 30 years, reinvest dividends, buy more when they become very cheap during dips, and sell if they become far too overvalued or start making losses? Explain how they can lose??
> 
> It aint possible!! It just aint possible to lose doing that. Even if you tried to you couldn't.




1. Past earnings is a poor predictor of future earnings. *
2. The reason that a share is cheap could be because of something you don't know about.
3. It may take years before the market recognises that you were right all the time about the company   .

Quote your friend Graham before his death in 1976 ....

"I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when Graham and Dodd was first published but the situation has changed ... [Today] I doubt whether such extensive efforts will generate sufficient superior selections to justify their cost"
from pg 198 A Random Walk Down Wall Street by Malkiel.

* From chapter 8 in the same book above, actual quantitative studies were done on most fundamental measures and the result found to be no more than random.

So whatever might seem to you to be sensible and logical, the facts don't line up with what you are saying.

On the other hand Malkiel very grudgingly admits that momentum is real. 


MIT


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Originally Posted by tech/a
> Elliot Pundits picked months before the top 5300 pretty impressive.
> At the same time they picked the end of the correction to be 4800
> Hell thats bloody impressive.
> ...




Dunno.

But please tell me the next high or low so I can judge myself.

So I can see that you have foresight, not just 20/20 hindsight, everyone has that.

I'm not interested in people predicting the past, I can do that myself.    


Tell me the next high or low?


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Dunno.
> 
> But please tell me the next high or low so I can judge myself.
> 
> ...




*um* Actually they did make the calls in advance.

MIT


----------



## wayneL (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Dunno.
> 
> But please tell me the next high or low so I can judge myself.
> 
> ...




Radge called it WELL BEFORE the high  

Cheers


----------



## swingstar (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Would love to! But it ain't worth it! You will spin whatever anyone says to satisfy your psychology, to convince yourself you are doing it the right way.




That is close to the definition of a troll I believe.



> In the end it wouldn't alter my bottom line one iota, so it would be an exercize in futulity.




Arguing with a troll always is.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> with what. You have already spent your 25% earlier




If I start with $100,000 and $75,000 is in shares. Then the sharemarket drops 33%.

I then have $75,000 with $50,000 in shares. I now have 1/3 of my money in cash.

If it then drops another 25% I have $25,000 in cash and $37,500 in shares.

I will never run out of money to buy shares obviously...



> 1. Past earnings is a poor predictor of future earnings. *
> 2. The reason that a share is cheap could be because of something you don't know about.
> 3. It may take years before the market recognises that you were right all the time about the company




1.  I disagree. A company that has made a profit and paid dividends every year for the past 20 years is more likely to make a profit and pay dividends than one that has made losses and never paid dividends. Business is not random. People will shop in Westfield and drink VB in 10 years time. 

2. Agreed, it is still cheap though so most probably the problem is factored in to the price already. And I doubt it is a problem that can not be fixed eventually.

3. It is possible it could take decades, and it is possible it may never happen. The likelihood is it will happen though. And if I buy a stock that consistently makes profits and pays good dividends and its share price does not ever go up (impossible?) I am still slightly ahead of inflation. No great loss - I have many other shares in my diversified portfolio that will be going up.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Radge called it WELL BEFORE the high
> 
> Cheers





Nice, but the next high or low, what is it?

I bought BHP and RIO near their May/June low - I pretty much called the low - woop-de-do, it aint rocket science.

What does Radge think the next  high or low is??


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> If I start with $100,000 and $75,000 is in shares. Then the sharemarket drops 33%.
> 
> I then have $75,000 with $50,000 in shares. I now have 1/3 of my money in cash.
> 
> ...




*Um* you said yourself that you might spend the $25 grand on shares and this could be at anytime. So it will disappear right or are you changing your mind again. 



> 1.  I disagree. A company that has made a profit and paid dividends every year for the past 20 years is more likely to make a profit and pay dividends than one that has made losses and never paid dividends. Business is not random. People will shop in Westfield and drink VB in 10 years time.




Disagree all you like but even Graham changed his mind about this and qualitative studies have shown you to be wrong. 



> 2. Agreed, it is still cheap though so most probably the problem is factored in to the price already. And I doubt it is a problem that can not be fixed eventually.
> 
> 3. It is possible it could take decades, and it is possible it may never happen. The likelihood is it will happen though. And if I buy a stock that consistently makes profits and pays good dividends and its share price does not ever go up (impossible?) I am still slightly ahead of inflation. No great loss - I have many other shares in my diversified portfolio that will be going up.




So some of your shares will go up and some may not for years and some will go bad -- which sounds like the whole index to me.


... and of course the rest of my message was ignored. Enough entertainment for one night time to stop feeding the troll. 

MIT


----------



## BSD (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Business is not random. People will shop in Westfield and drink VB in 10 years time.




I dont agree. I cannot think of many things more random than business. 

How many people smoke Rothmans or Camel now?

How much TAB or Creaming Soda do you see in the fridges?

I remember the afternoon paper had good distribution too. 




			
				wayneL said:
			
		

> Don't necessarily agree they are gamblers, but they are certainly leaving there fate up to the market to decide




Agreed, Gambler is a harsh word for some.

To be more precise, by leaving one market/style to decide, they typically take more 'uncompensated risk' than a more diversified strategy.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

This beats RADGE....



			
				Realist said:
			
		

> Re: What will the ASX All Ords be come year end?
> 
> --------------------------------------------------------------------------------
> 
> ...




I was pretty much exact, the close was 5034!     

I didn't even look at any charts.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> *Um* you said yourself that you might spend the $25 grand on shares and this could be at anytime. So it will disappear right or are you changing your mind again.




FFS   

$25K and 25% are different once the market has dropped 33%.  $25K suddenly becomes 33%.

I would not just plummet all of my money into the market if it dropped 33% - I would buy more shares though. It is pretty simple!!

I earn money as well, my cash level grows monthly.


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				BSD said:
			
		

> I dont agree. I cannot think of many things more random than business.
> 
> How many people smoke Rothmans or Camel now?
> 
> ...





Oh dear oh dear.   You think business is random? That quite frankly is ridiculous.

People will drink Coke, shave with Gillette, shop at Westfield and get pissed on VB in 20 years time.  I have no doubt about that whatsoever.  You do??

These companies may get taken over or may change, Coke sells water, Procter and Gamble own Gilette, they will still be around in a similar form though.  Maybe there will be Diet VB and Westfield carparks but no malls, but I have utmost confidence they'll all be around in one form or another in 20 years time.

I may be wrong with one or two, but again diversification will save me if so.


----------



## wayneL (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Nice, but the next high or low, what is it?
> 
> I bought BHP and RIO near their May/June low - I pretty much called the low - woop-de-do, it aint rocket science.
> 
> What does Radge think the next  high or low is??




Ask him yourself! Like I said before, discussing anything with you is futile.

Ciao


----------



## mit (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Ask him yourself! Like I said before, discussing anything with you is futile.
> 
> Ciao





... though entertaining for awhile


----------



## MichaelD (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

An observation about stop losses;

Why don't technical traders apply them to anything other than the market?


----------



## Realist (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> though entertaining for a while




I do my best...      :


----------



## Porper (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> What does Radge think the next  high or low is??




If you join the Chartist you will get Nick's analysis and teachings daily on many shares / markets etc. Best thing I ever did in my quest for knowledge.

I was like you Realist, thought fundamentals were the way, but there is definitely credibility in T.A.Most people disbelieve because they fear the learning process and think it is beyond them.It is actually enjoyable learning, and basically common sense.

That isn't to say that investors can't make money, far from it.


----------



## Sean K (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I've just skirted this thread and I have no idea what the hell is going on.   

GO BOMBERS!!!!

Anyone in Melbs, please meet me at the Black Cat, Fitzroy. X! 

I have a green baby alpaka jumpa on, and drinking red! I maybe unconscious!


----------



## swingstar (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> An observation about stop losses;
> 
> Why don't technical traders apply them to anything other than the market?




Hmm what else is there?


----------



## wayneL (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> An observation about stop losses;
> 
> Why don't technical traders apply them to anything other than the market?




They do.

Stop losses apply to:

relationships
cars
businesses
arguments
...almost anything


----------



## MichaelD (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> Why don't technical traders apply them to anything other than the market?





			
				wayneL said:
			
		

> They do.
> 
> Stop losses apply to:
> 
> ...almost anything



Except forums methinks. (No finger pointing intended, just the observation that there seems to be quite an interesting psychological phenomenon on display here from those that DO actually know what they're talking about.)


----------



## Julia (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Please explain what you did differently Julia?
> 
> I know you sold WDC which has gone up nearly 10% in the past month and will pay large dividends next month.
> 
> ...




Why can there be no middle ground?  You are obsessed with labels to no apparent purpose.

Re WDC:  I have not sold it.  I pointed out that for a stock which is widely considered to be part of a core fundamental portfolio it had wallowed about in sideways trading for the past year.  It is currently at less than the SP 12 months ago.  It has not risen "nearly 10% in the last month" as you suggest, rather about 5%".
What have I done differently?  For a start, I've stopped hanging on to doggies which I bought on the basis that they were "undervalued" or "out of favour".  
At the beginning of this year  I did a complete re-evaluation of my portfolio and sold the dogs as referred to above.  WDC, despite being highly recommended etc etc, is hanging in my portfolio for the dividend you mention.    You continually refer to the problems of tax.  The sale of the dogs provided me with the slight comfort of a capital loss which, combined with franking credits, brought me a very nice tax refund for that year.

I have little interest in whether anyone would classify me as a trader or an investor.  Don't see how I can possibly be a trader with probably about 30 trades a year.  Neither do I see how being an investor obliges me to hang on to stocks which are not making me money.  Frankly, what the *** does it matter and why do I need to have a label attached?

Presently, having sent the doggies off to wherever losing stocks go, I anticipate relatively little change in my present portfolio, but for sure, if any of them show clear signs of altering their current direction, they will be gone.

Julia


----------



## Julia (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist

Quotation from MIT as follows:

   It may take years before the market recognises that you were right all the time about the company  .


This is my main objection to your rigid approach.  While you are hanging on to this wonderful undervalued marvel, awaiting its recognition by the market and a conseqent rise in the SP, you could have had your money actually doing something more profitable than just passively accepting the dividends.

Julia


----------



## nelly (7 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Could someone please explain the term "sideways" to me....I'm getting a handle but the terminology is holding me back :1zhelp: ...[probably a stupid question, but what the heck]
Oh and I agree with the post "interesting psychological phenomenon occuring here"....and I ridicule my blister for watching the afternoon soaps......at least I'm learnin' sumthin'......and I'm not :drink: ing
Thanks...  :dance:


----------



## wayneL (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				nelly said:
			
		

> Could someone please explain the term "sideways" to me....I'm getting a handle but the terminology is holding me back :1zhelp: ...[probably a stupid question, but what the heck]
> Oh and I agree with the post "interesting psychological phenomenon occuring here"....and I ridicule my blister for watching the afternoon soaps......at least I'm learnin' sumthin'......and I'm not :drink: ing
> Thanks...  :dance:




Nelly,

Sideways simply means not going up and not going down, just chopping along at roughly the same price.

If you look at a chart of this you will see where the term sideways comes from.

Cheers


----------



## NettAssets (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				nelly said:
			
		

> Could someone please explain the term "sideways" to me....I'm getting a handle but the terminology is holding me back




Hi Nelly,

If you see the price bars on a price chart marching straight across the chart with little vertical movement this is a "sideways" move. Just means it is gaining or losing very little in the stock price.
This does not always mean the stock is not changing in value - sometimes there can be dilution or consolidation in the shares in the company (that is more shares issued or removed from the register )without a corresponding change in the share price or a change in the economic strength of the company without a change in the share price. This is what the fundamentalists are watching.


			
				nelly said:
			
		

> ...(probably a stupid question, but what the heck)



I think you have probably seen it said before - the only stoopid question is the unasked one that kills you in the market.
Regards
John


----------



## NettAssets (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Whoops 
Wayne beat me to it
John


----------



## Realist (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Julia said:
			
		

> Realist
> 
> Quotation from MIT as follows:
> 
> ...





So instead of buying into a fantastic company and waiting patiently for it's share price to rise to match its excellent business credentials and large and ever growing profits. All the while collecting good dividends and sleeping comfortably in the knowledge you are investing safely in a great company.

You instead suggest we buy a share that is currently rising, in the hope that it will continue to rise and hopefully wont fall. And if it does fall, jump off it to reduce losses and jump onto the next one that comes along and is currently rising?

I don't get it?     

Are you buying into companies or share prices? There is a huge difference.

Westfield is a company that owns shopping malls, if it continues to make good profits and pays good dividends its share price may go up or down a bit  purely because of people's emotions. Just because others don't currently like it does not mean it is not a great company.

Traders buy share prices, investors buy into companies.

It is irrelevant in the whole scheme of things if a share price of an excellent company goes up or down a bit over a 1 year period. The fluctuations are based on emotion not fundamental facts. History shows that in most cases the share price will eventually reflect the intrinsic value of a business. So if you bought it when it was cheap you'll get an excellent compounding return, ever growing dividends, your tax and brokerage will be minimal and your stress levels low. 

I can not see a downside - except possible short term frustration for those not patient enough or confident enough in their investments to look past market fluctuations and not expect instant profits.


----------



## tech/a (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Nice, but the next high or low, what is it?
> 
> I bought BHP and RIO near their May/June low - I pretty much called the low - woop-de-do, it aint rocket science.
> 
> What does Radge think the next  high or low is??




Your amazing never happy for what its worth a Wave 5 has been called at around 6400.
But if you dont understand the Dynamics of Elliot its meaningless.

Much like most of your posts.


----------



## tech/a (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Elliot/Radges Analysis--- Here.*

https://www.aussiestockforums.com/forums/showthread.php?t=3310&page=2&pp=20

From Post #22 down *note the date stamp.*
Way Way out of your league Unrealistic.

BSD
Took me many years but Ive seen it happen far to often to dismiss.
Personally I only use it to map.However as a Possible Portfolio exit trigger its at least worth a look.(If I went short it would be the index not the stocks individually).
Ever looked at Steidelmayer as your a statistical buff?


----------



## Realist (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> for what its worth a Wave 5 has been called at around 6400.




So, let me get this right you say the next correction (10% or greater fall) is at 6400?

Ridiculous.

The next correction will be way way sooner than that. If we get over 5500 before the next 10% drop I'll be surprised.

Hopefully it is 6400 - I highly doubt it though. The market wont rise 28% before it next takes a freefall.


----------



## tech/a (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> The next correction will be way way sooner than that.




Based upon? your guess? Your analysis--if so please share.
Your past track record is where? I supplied my references----yours are?



> Ridiculous.




Exactly my thoughts---then I took the time to investigate and *UNDERSTAND* the analysis.My veiw over many years has changed to Amazing,Uncanny,helpful.

Every now and then in life you find a gem---Radge is one of them.
Directly he has single handedly had by far the greatest impact on my trading.
Made me a lot of money----Following his wisdom and vast experience.
He's (I have found him to be) no nonsense,doesnt suffer fools easily, a true professional and HONEST.

Not to mention holding a Financial Investment licience granted by ASIC--a real one.

You know there is a very old and wise saying which I reckon fits you to a tee.

*"He with biggest mouth has smallest wallet".*

Wannabe's the world's full of 'em.


----------



## yogi-in-oz (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



Hi folks,

Now, those in the EW camp can claim whatever they wish,
but here's the facts about the Aussie market in 2006,
including a look ahead:

At the start of the Gann year, this was posted regarding XJO:

Thursday, March 23, 2006 - 07:29 pm:	

Happy New Year Gannsters,

Just for the record ... would like to see
XJO drop like a stone, from 5386 .....  

http://www.incrediblecharts.com/forums/messages/12/228584.html

-----

Then on the day of the high 10 May 2006, XJO made it 
to 5404, before closing below our 5386 target, at 5352.

..... and in the SPI thread, on ASF:

https://www.aussiestockforums.com/forums/showthread.php?p=44323#post44323

10th-May-2006, 01:32 PM                       Re: Trading the SPI

Hi folks,

As targetted, in our 23032006 and 07042006 posts:

XJO ... today, we reached out 5386 target
from 13 March 2003 lows.

Actual high today has been 5406, but it very
quickly pulled back to trade around our 5386
target ..... so, we have seen this market
DOUBLE in value in 1155 days.

=====

~~~~~~~~~~~~


Today 10052006, is also exactly 180 days ahead
of our target low, on 07 November 2006 ... ???

Let's see, how this lot unfolds.


. ..... more about the similarities,between 1987 and 2006, later.

end quote

=======================================
=======================================

So, our time target is 07 November 2006 for a significant
low, calculated from BOTH the March 2003 lows and the
recent high on 10 May 2006.

Other key dates to watch will be, around:

      24 August 2006

      23 September 2006

      07 November 2006 ..... low??? = 10 May 06 + 180 days.

      17 November  2006  ..... low???



( 7 November also marked lows, in 1978 and 1979 .....  

So, despite what the EW camp is saying, we have probably 
already seen XJO highs for 2006.

Looking at likely support levels for XJO in the months ahead:

                         4787 - 4598 - 4188 

Would like to see a bounce off 4188 and any break below
that level would have us look for further support, at:


                         3916 - 3876 - 3599

-----

After the anticipated lows around 07 November 2006, XJO
should give us a steady recovery in 2007 , with particularly
STRONG advances around, 15-21 February 2007.


Of course, ALL of the above may be TOTALLY wrong, but
we just have to call it, as we see it in our analysis ... 

-----

Now, if the EW crowd can just decide where/when to START 
their wave count, maybe they can post a forecast for the
rest of 2006 for a comparison ..... yes???

have a great weekend all

   yogi


----------



## tech/a (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

For those interested in the basics.
http://www.asx.com.au/research/charting/library/elliot_wave.htm




> Now, if the EW crowd can just decide where/when to START
> their wave count, maybe they can post a forecast for the
> rest of 2006 for a comparison ..... yes???




I know you know better than that.
But just incase I over estimate your competence----why would you say this about your own analysis---



> Of course, ALL of the above may be TOTALLY wrong, but
> we just have to call it, as we see it in our analysis




Both forms suffer from the same starting point vagueness.Which when you understand the analysis isnt vauge at all,the dynamic nature of price action means that the analysis is constantly being proven or disproven.

Fundamental analysis suffers the same fate. Proven or Disproven


----------



## Sean K (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Good promo for Nick R, Tech-A. 

Do you get commission?  he he

I might have to give him a try. I am a dear with no eyes in the market really.


----------



## wavepicker (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I agree with Tech/a,

My  is as follows:-

Basically in terms of Elliott Wave Theory, the way I see it, Cycle wave 3 completed in May if considering a wave count that originated in the early 80's. Nick Radge in my opinion quite accurately forecast a major pivot based on fibonacci ratios some months before this decline.  Nick showed an analysis that promoted a completd 5 wave sequence. This was perfectly within the guidelines, rules and framework of the wave principle. However when you take momentum considerations into account, it appears that we may have only finished a cycle wave 3 count. The reason? The Law of Alternation, which states that if wave 1 is a sharp deep correction (ala crash of 87) then wave 4 (which we have just commenced in this correction) more often than not will be a sideways move. Now remember this is not a rule just a guideline. In the end the market will do what it wants to do. But having observed hundreds of impulse waves in the last 8 years covering stocks, futures and foreign exchange, this is the sort of scenario I would be looking at.

A wave 4 sideways move can take various forms:-
-a contracing triangle
-a flat
-an irregular flat (which means a new higher unorthodox top, but that high would still be part of the correction and imply a sharp fall there after
-a combination of the above 

In the chart below( which I sent Richkid some time back)  I have placed a contracting triangle because that is what I have seen happen most. But it probably won't turn out that way. Just my opinion.

Irrespective of whether we have just finsihed a 3rd or 5th wave, makes no difference in the short to medium term as they both imply the same thing. The is the beatifull thing about Elliott Waves, you can have different counts which still point to the same conclusion.( as a trader you would like to stack the odds in your favour)  In this case a correction at least back to the 4000-4100pts zone, as I have mentioned on other threads, even though Realist thinks I am looney for making such suggestions in the past.

In my opinion this market will find support in this zone before making another significant rally upwards, but not make a new high. Personally I beleive this market will trade nett sideways, (but offer good opportunites to trade ) in the next 2-3 years. (We have  had a very strong 3rd wave upward and that rate of change of preice just cannot be sustained in the short term )Thereafter to blowoff into new highs to the 6000-6500 range in a 3 year rally to complete wave 5 and the impulse  that started back in the 1980's.

That is the way I am approaching it.

Cheers

*- I am not qualified to give financial advice- any comments stated regarding the probabilities of financial market movements are purely personal opinions and observations. Any charts posted are for educational purposes only for intersted parties. It should be recognized that error and uncertainty are part of any effort to assess future probabilities.


----------



## yogi-in-oz (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> Both forms suffer from the same starting point vagueness.Which when you understand the analysis isnt vauge at all,the dynamic nature of price action means that the analysis is constantly being proven or disproven.
> 
> Fundamental analysis suffers the same fate. Proven or Disproven




...... not so, <edited - abuse>
There's absolutely NO vagueness with the Gann stuff, 
that's why we can beat your stock picks to pulp, every time !!

We noticed, that you did not enter this month's contest ..... 
as a self-appointed guru, you could not bear to be seen losing badly 3 months in succession ..... eh???

... and there's nothing vague about that either !~! ... lol ... 

When the EW camp can come up with some firm dates and
price levels for market turns, instead of each trader having
a different wave count, as a result of different starting 
points, then it will be a whole lot more impressive .....

..... until then, Gannsters would seem to have the edge ... 

byeee

yogi

P.S .... and it seems the mouthy guru still can't distinguish 
between a genuine price move and a capital split, 
consolidation or reconstruction, either ..... lol


----------



## tech/a (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Thanks Wave.

The Duck will be in London This time next week and back end of August.
Enjoying the goodlife like all successful Ducks.

Dont worry too much Yogi perhaps you'll win the lottery one day and learn to enjoy life and not take yourself to seriously.
Those competitions dont pay that well---pity.


----------



## yogi-in-oz (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



<edited-abuse>

Those tipping competitions may not pay anything in monetary
terms, but they sure do help to demonstrate a consistent, 
tradable and profitable methodology, something that your 
picks have so far, failed to deliver ..... !~!

Second thoughts, maybe we CAN turn your picks into a 
tradeable system for short trading, as they always end
up in the red  ..... lol ..... !~!

bye <edited-abuse>

 yogi


----------



## wavepicker (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Yogi,

If the Gann astro stuff works for you, then great. I have seen some of the dates and forecasts you have posted. Some are good and some not so good. How do you know the good from the garbage? As far as I am concerned they are just dates.  Like fibonacci ratios, if you used in isolation sometimes they work and sometimes they don't. Way too inconsistant to trade. The market will do what it wants to do simple as that.

There is no holy grail. I have looked at the work of all the so called Gann Gurus: Ferrera, Cowan, Michael S Jenkins just to name a few. There is some useful material there, as someone always has something to offer. But most of it is trash.

I attended a seminar once of a famous Gann trader whom I will not name.  I wanted to learn more about Gann. He actually convinced me to stick to Elliott. For him it made no difference. First and foremost he stated was to get a firm foundation of how markets and prices move. You should be able trade from bar chart and volume first. He claimed in order to use the Gann and Elliott stuff succesfully then you needed to be really good at it. His approach to Gann did not utilize the astrology hocus pocus. In fact he stated that he had personally viewed 95% of Ganns original work and that there was no evidence that Gann used astrology as the major basis for his trading. His approach is actually quite simplified and the way he uses it has a reasonable track record. He used an integrated Gann/Elliott approach. Magdoran has shown some great examples of this. Now I understand as an Elliott wave practioner that theory has some shortcomings especially with regard to time analysis. I have since integrated my own Cycle analysis from my work as a noise and vibration engineer into my elliott studies. These cycle studies are nothing like what Gann promoted but I feel much more comortable with them.

Let me ask you now. What is your Gann guru forecast for this market between now and years end? We want some firm dates here, not maybe or ??? dates. Which direction will this market trend and what level will we see a pivot. YOU CANNOT HAVE MORE THAN ONE ANSWER!! I will hold you to these levels and dates. See if you can make us beleivers of Gann Astrology!!


I will finish by saying this: Every methodology can have something to offer. Personally I use bits and pieces of many methodologies. If it works for you it may not work for others and vice versa. *Do what works for you instead of condeming something you don't understand*

Cheers


----------



## It's Snake Pliskin (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> 1.  I disagree. A company that has made a profit and paid dividends every year for the past 20 years is more likely to make a profit and pay dividends than one that has made losses and never paid dividends. Business is not random. People will shop in Westfield and drink VB in 10 years time.




However, what makes an investor or trader money is the stock price. The stock price and company performance are not always correlated the way one is hoping for. 30 years of hoping to realise the company was and still is a dog seems a waste. A tad exagerated, but you get the point. 



> Are you buying into companies or share prices? There is a huge difference.




And this is where the ideology diverges.


----------



## mit (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> Except forums methinks. (No finger pointing intended, just the observation that there seems to be quite an interesting psychological phenomenon on display here from those that DO actually know what they're talking about.)




I think that it depends on whether you know the everybodies drivers. I don't usually get involved in these but my other great interest is science and I have seen plenty of "debates" between creationists and scientists on forums and see how they develop. Realist was showing the same psychology as psuedoscience people. I wanted to see as the the debate would develop. Notice I moved it from his usual attack on T/A to make him try and defend his F/A and as I thought it turned into almost the same style of debate as a  YEC. That is keep on stating the same premise over and over. When somebody brings up an objection ignore it or nitpick some minor point. Then go back to parroting the same premise over and over again.


MIT


----------



## wayneL (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Yogi,

Tone down the personal insults mate. 

Thanks


----------



## yogi-in-oz (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				yogi-in-oz said:
			
		

> Hi folks,
> 
> ~~~~~
> 
> ...








Sure glad Wavepicker asked for some firm dates and figures,
as there were some mistakes in the figures above.

All the dates are the same, but here's the corrected figures:

07 November 2006 ..... low = 10 May 06 + 180 days ..... 
and shooting for XJO at 4040 ..... nothing vague about that
Wavepicker.

As per post above, there's nothing vague about this either.

"After the anticipated lows around 07 November 2006, XJO
should give us a steady recovery in 2007 , with particularly
STRONG advances from 15-21 February 2007."

=====

On the way down to expected support at 4040, we will
be alert for intermediate support at:

                           4787 - 4489 - 4357 -  4040 

Also on the way down, we will be also alert for significant
news/moves on these key dates:

       24 August 2006

      23 September 2006

      07 November 2006 ..... low = 10 May 06 + 180 days.

      17 November  2006  ..... double-bottom low


=====

So now, if the EW camp with be just as explicit about 
their forecast for XJO, then we will all benefit.

happy days

  yogi

P.S.   ..... again ... XJO low 07 November 2006, at 4040.

( 7 November also marked lows, in 1978 and 1979 ..... )


----------



## tech/a (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Yogi,
> 
> Tone down the personal insults mate.
> 
> Thanks




Abuse-------you call that abuse!!!!!!!!!!

Haaaaa


----------



## wavepicker (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				yogi-in-oz said:
			
		

> Sure glad Wavepicker asked for some firm dates and figures,
> as there were some mistakes in the figures above.
> 
> All the dates are the same, but here's the corrected figures:
> ...






Ok Yogi,

I don't have a crystal ball so I cannot match the finesse of the target and date of the low you gave.  
From an Elliott and my own cyclic analysis I am expecting the larger trend to be down between now and years end. My target is 4009 pts, but it would be pretty silly of me to say that the market will reverse at 4009 pts. Rather I can say that my analysis is showing  a probable pivot zone of 4000-4100 pts. A close above 5195pts would hold the bullish case intact. From the 4000-4100 zone forward refer to post # 432 in this thread.  You don't need to be perfect to trade the market successfully. As long as your methodology keeps you on the right side of the trend is what is important. My analysis is more adaptive to market movements. In other words I go with the flow, and take it move by move.


If you are using 180 day calendar counts to forecast future dates then I find these pretty inconsistant. Why? Because from what I have seen cycle periods both expand and contract as well as change amplitude in the market. There is no one fixed cycle that governs market movements, rather it is a combination of cycles. So it will be interesting to see if your projections work out OK. By the way, how do you apply your counts on charts that are less than 1 day ie 1 hr or 4 Hr charts? 


Cheers


----------



## yogi-in-oz (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



Hi wavepicker,

"Do what works for you instead of condeming something you don't understand"

Maybe, it's because we really DO understand EXACTLY why
EW is so subjective, that we can very confidently say that 
the so-called Fibo sequence has been in existence, since 
Creation and it was known to to exist for more than 2000
years ..... Pythagoras being one who demonstrated such 
knowledge, in his Harmony of the Spheres.

Fact is ..... if you learned some basic astronomy/astrology,
it would soon become apparent EXACTLY why EW fails at
expected markets turns, especially in individual stocks.

.....

"Every methodology can have something to offer. Personally
I use bits and pieces of many methodologies. If it works for 
you it may not work for others and vice versa. "

No argument with that, in fact whether its Gann's astrostuff
(and whether your guru knows it or not - it DOES exist) or if
it's EW or simply regular TA ... NOBODY get's them right
EVERY time.

However, if we use our specialised tools, like astroanalysis 
or EW, as CONFIRMATION of our regular TA, then our trading
signals are strengthened and by acting on THOSE signals,
our win/loss ratio should improve, significantly.

happy days

 yogi

P.S. ..... eagerly awating some specific forward XJO dates
            and prices from the EW camp, too  ..... 

P.P.S ... Fibonacci was an impostor ... a bit like the mouth,
            promoting himself as a trading guru, but cannot
            pick a profitable stock, from one month to the next.



=====


----------



## yogi-in-oz (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



Ah yes,

Demand a standard from others, that you cannot meet
yourself .... next EW practioner, with some specific dates
and price levels please .... 

..... who really cares, if you are wrong anyway???

-----

"By the way, how do you apply your counts on charts that are less than 1 day ie 1 hr or 4 Hr charts? "

That's easy ..... it called TIME and  there's only 24 hours 
or 1440 minutes in any day and on modern astrocharts,
we can see dynamic planetary moves on our charts, in
ONE SECOND increments, if necessary .....  

In fact, it is quite easy to analyze each day (far in advance)
and project intraday market swing times for daytrading ... 

Have a great weekend

       yogi


----------



## wavepicker (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi Yogi,

"Fact is ..... if you learned some basic astronomy/astrology,
it would soon become apparent EXACTLY why EW fails at
expected markets turns, especially in individual stocks."

The devil is in the details. Fails for who? For you?  As you say, Elliott Wave Analysis is subjective. But a lot of the the Gann stuff is even more subjective.
In fact I don't know of any TA sytem that is not subjective, unless it is 100% mechanical!! Elliott wave practioners like others who practice TA make mistakes, they also make stunning trades. making mistakes is part of the game, unless we are like you a GOD who knows every market move!!

I have been following your previous calls on other threads Yogi. There have been plenty of mistakes there, so please stop playing the guru. Always going back and explaining why the market didn't something on a specific date. No doubt there will be more errors. 
You are the one claiming "precision time and price level " with your forecasting on this site, not me or others. All I have asked you to do is prove it. Well lets see if you can do it. 

I have stuck my neck out before on ASF and given my opinion with charts etc on probable maket moves and I have been wrong on  occasions too. Notice I said the word "probable"  The system or service that does not make errors does exist.
 I will post my opinion on the market again If I see anything significant. For now I have posted more than enough and it's basically a repeat from previous posts on other threads.

Bill McLaren who teaches Gann and in my opinion is one of the best. He says 

"More money has been made teaching Gann than has been made trading Gann principles" 


Goodnight and go and read some more "Tunnel Through The Air"


----------



## wavepicker (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				yogi-in-oz said:
			
		

> Ah yes,
> 
> Demand a standard from others, that you cannot meet
> yourself .... next EW practioner, with some specific dates
> ...






If it was that easy Yogi, you would have made more money than Gann. 

In “Trading for a living” Elders wrote; 
“They claim that Gann was one of the best traders who ever lived, that he left a $50milion estate, and so on. I interviewed W.D. Ganns son, an analyst for Boston bank. He told me that his famous father could not support his family by trading but earned his living by writing and selling instructional courses.” 
When Gann died his estate was valued over $100.000. 
Page 23. 

I will let people make their own minds up about that one

Also with such profitable Gann techniques why on earth would you want to publish this book: Gann Signs? 

Maybe Mclaren was right, their is more $$$ made in selling Gann books and courses than in actual trading huh?

good trading


----------



## yogi-in-oz (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wavepicker said:
			
		

> In “Trading for a living” Elders wrote;
> “They claim that Gann was one of the best traders who ever lived, that he left a $50milion estate, and so on. I interviewed W.D. Ganns son, an analyst for Boston bank. He told me that his famous father could not support his family by trading but earned his living by writing and selling instructional courses.”
> When Gann died his estate was valued over $100.000.
> Page 23.
> ...




Hi wavepicker,

You have never and will never see any posts from this end
claiming to be correct EVERY time, as it would be plain 
LUNACY for anybody to make such a claim.


..... what you have repeated above is nothing new and it's 
all just hearsay and we will probably NEVER know the TRUTH 
about Gann's personal wealth (and it matters not).

What Gann did leave us was the foundation stones of many
trading tools, some technical, some astrostuff, that will be
developed further in the years to come and it is that legacy
that has  served to make him a legend in trading circles,
despite anything that  Elder may have written.

Suffice to say, if you were wealthy enough to own TWO
airplanes during that period, you were probably doing 
something right with your trading.

-----

..... as for the rest, suffice to say Gann himself did not 
keep his methods to himself, instead choosing to SELL
them for more than the equivalent of $50,000 in today's
currency.

So, in the spirit of sharing such knowledge around and not
"casting pearls to swine" (in both Tunnel and the Bible), a
price tag is the obvious way to sort out those dedicated 
enough to study and APPLY such methods ..... no different
to the Tate, Radge, Guppy, Prechter, McLaren, Nison or any 
other author, with something to say in print ..... yes???

happy days

 yogi


----------



## MichaelD (8 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				yogi-in-oz said:
			
		

> Suffice to say, if you were wealthy enough to own TWO
> airplanes during that period, you were probably doing
> something right with your trading.
> 
> ...



Hmmm, seems to be two oddly juxtaposed claims there.

My personal bias is that no entry/prediction methodology is of much use in building a successful trading business, so I am not specifically anti-Gann (or anti-anything for that matter), however, it strikes me that if I was able to successfully sell my methodology at $50,000 a pop it wouldn't be all that long before I'd be parking a Learjet or two in my driveway.


----------



## Realist (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> Based upon? your guess? Your analysis--if so please share.
> Your past track record is where? I supplied my references----yours are?




I, unlike you, realise the stock market is somewhat random. 

I have no references and have never professed to have any.

I'm guessing mid October for the next downturn - but I admit it is random. And my opinion is nothing but a guess - much like yours will be if you present one.

If you know for a fact when the next downturn is exactly please enlighten us now?




> Exactly my thoughts---then I took the time to investigate and *UNDERSTAND* the analysis.My veiw over many years has changed to Amazing,Uncanny,helpful.
> 
> Every now and then in life you find a gem---Radge is one of them.
> Directly he has single handedly had by far the greatest impact on my trading.
> ...




Brown nosing...  yawn.



> You know there is a very old and wise saying which I reckon fits you to a tee.
> 
> *"He with biggest mouth has smallest wallet".*




I suspect you are 30 years older than me. I know you live in Adelaide, the cheapest of Aus's cities. I suspect you are not that much wealthier than me now (4 houses in Adealide = 1 in my suburb) and each year I earn more than you.

I do not know though, and I do not care either.  I do not make exceptional returns from the market and have never professed to.  I work fulltime.  And am happy averaging around 12% year on year for the rest of my life. And I have achieved far better than that recently.  However I do not make losses, pay no tax, and tiny brokerage fees, and my returns including dividends are quite satisfactory.

Comparing your so called "success" with others is not only childish, futile, irrelevant and petty, but you are also comparing apples with pears.

Had we started with $10,000 each and "invested" for 40 years we'd have a fair comparison.  But to compare and old man in Australia's cheapest city with a young man in Australias most expensive city is tantamount to lunacy.

You aint no Warren Buffett mate, you sound like a builder in Adelaide who punts on the markets - fair enough I have no problem with that. But please stop big noting yourself and trying to put down others.


----------



## It's Snake Pliskin (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hullo Realist,


> And am happy averaging around 12% year on year for the rest of my life. And I have achieved far better than that recently.  However I do not make losses, pay no tax, and tiny brokerage fees, and my returns including dividends are quite satisfactory.




Tax is necessary - learn to live with it.


----------



## tech/a (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Brown nosing...  yawn.




Respect.



> I suspect you are 30 years older than me.




This now explains your posts,Your no different to any kid looking to express his individuality and veiws,My apologies you know no better.



> I know you live in Adelaide, the cheapest of Aus's cities. I suspect you are not that much wealthier than me now (4 houses in Adealide = 1 in my suburb) and each year I earn more than you.




Hmm also an expert in the Building Industry.Hobart is Australias cheapest city. 4 house could = 1 in comparison with some suburbs,Where is it that I have my holdings?
Using your own words--'But please stop big noting yourself and trying to put down others.'



> I do not know though, and I do not care either.  I do not make exceptional returns from the market and have never professed to.  I work fulltime.  And am happy averaging around 12% year on year for the rest of my life. And I have achieved far better than that recently.  However I do not make losses, pay no tax, and tiny brokerage fees, and my returns including dividends are quite satisfactory.




You dont make losses---Pure genius.
But dont make exceptional returns---strange?
Pay no tax---Strange if you work fulltime,youll pay PAYE tax at least.
Tiny Brokerage fees---Online brokerage excellent for small parcels.



> Comparing your so called "success" with others is not only childish, futile, irrelevant and petty, but you are also comparing apples with pears
> 
> Had we started with $10,000 each and "invested" for 40 years we'd have a fair comparison.  But to compare and old man in Australia's cheapest city with a young man in Australias most expensive city is tantamount to lunacy.




Strange-----I cant see where I have done this it is you making a comparison.
When statements like "Ive never seen a rich technical analyst before" I present T/T as an example of one technical method that can be verified.It serves its purpose well.Those expousing such statements fail to produce any working fundamental methodology to support their arguement.



> You aint no Warren Buffett mate, you sound like a builder in Adelaide who punts on the markets - fair enough I have no problem with that.




Hahaha Yes I guess thats pretty right.



> But please stop big noting yourself and trying to put down others.




Pull your head in and realise that you actually dont know everything.

YOGI



> ..... as for the rest, suffice to say Gann himself did not
> keep his methods to himself, instead choosing to SELL
> them for more than the equivalent of $50,000 in today's
> currency.




Ganns writtings were found stored in boxes in his very modest home garage.
They were nearly thrown out but rescued by a friend.They had no structure and have been bastardised in interpretation over many years.

The only person who ever knew how to apply Gann Correctly was Gann himself. He never owned planes--they were new technology!!!!

Think about it if he was that successful he would be immortalised like Rockefeller's and the likes of Buffet in years to come.

Here is an extract which may throw an alternate light on GANN and support the arguement that THEN like NOW more is made from teaching the most COMPLEX analysis around than actually trading it.



> *W D Gann's only son John Gann is alleged to have said that Gann never did actually make the sum that was claimed and actually lived off the proceeds of the books and courses that he sold*. It is on the record, however, that John Gann worked with his father but that they went separate ways, either because they did not agree on how to analyse the markets or because Gann, Jr. was unable to apply his father's astrological ideas, or simply did not approve of them. Gann, Jr. went on to become a successful broker and analyst and trader in his own right, so whatever the truth of their falling-out, the possibility of a simple father-and-son rivalry should not be ignored. Not only this, but John Gann seemed to change his tune:
> 
> "Foster indicated to us that Gann's son was not happy about his father. The elder Gann apparently was a task master and from other sources, a womanizer too. Gann's son told Foster, somewhat to this effect, 'Everything you need to know to make money in the markets are found in my father's books and writing.' Then there was a click. We now know that Gann's son died several years ago and his remote family is scattered throughout the country. What we also know was that Gann's son was a member of the New York Stock Exchange, trading for his own account. Now, concerning William D's estate. From sources I know to be relatively accurate, his Florida estate records showed an estate back at the time of his death in 1955 to be worth about $250,000. This was a nice piece of change back then, probably equivalent to maybe $4-$5 million today."
> 
> The relatively modest fortune he left behind is difficult to correlate to his reputation as a trader, but then again he may have disposed of or hidden his real fortune. This controversy has only heightened the myth and legend of Gann, leading several generations to pour over his books, courses and ephemera *in search of clues as which techniques he actually employed*. His prophetic novel Tunnel Thru The Air *certainly contains many encoded messages,* for Gann went on record to say as much, but whether even these messages revealed *his true methods will probably never be known.* *A whole industry has sprung up, with many claiming to have "deciphered" or "figured out" Gann* and a second layer of controversy now surrounds these claims. As it stands in 2006, it seems that the legend of Gann aids the sale of many books and courses but, if anyone has indeed got to the bottom of the Gann mystery and discovered his key to near-limitless riches, cynics say that they would be unlikely to sell their wares in public. Certainly Gann's charts look complex and alluring, *but the student should remember that visual allure is quite independent from practical worth*.





Its simply a form of analysis.As is Elliot,Steidelmayer,Edwards and Magee.


----------



## blinkybill (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

theres merit in both so i like to use both ta and fa


----------



## professor_frink (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> Quote your friend Graham before his death in 1976 ....
> 
> "I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when Graham and Dodd was first published but the situation has changed ... [Today] I doubt whether such extensive efforts will generate sufficient superior selections to justify their cost"
> from pg 198 A Random Walk Down Wall Street by Malkiel.




Realist, I'm curious to hear a response to this comment, considering alot of your opinions on the financial markets come from graham's teachings.


----------



## yogi-in-oz (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> YOGI
> 
> Ganns writtings were found stored in boxes in his very modest home garage.
> They were nearly thrown out but rescued by a friend.They had no structure and have been bastardised in interpretation over many years.
> ...







tech/a opens his mouth to change feet, yet again.

It is quite obvious, that you know very little about Gann,
the man or his methods !~!

Nothing that you have posted about Gann is enlightening or 
even original ..... and when you use quotes, please 
acknowledge the source ... that's just common literary
courtesy.

As for the planes, just refer to the details below and then
we'll accept your apology anytime, <edited> !~!

Subject:  Gann notes

Les Clemens, biographer wrote in an Trader's World Magazine (93) that in an article (May 26, 1933) it was reported that Gann left NY in the first 1933 model Stinson Reliant piloted by Flinor Smith a woman aviator, to tour the country analyzing crops and business conditions. "During his trip he was a speaker to members of Kiwanis, Rotary, Chamber of Commerce, and other organizations throughout US"  "In 1935 Gann made an airplane trip to South America.  He logged 18,000 mi  by air and another 1000 by auto.  July 1936 he bought an all metal plane "The Silver Star" and also used it for crop surveys.  In 1939 he bought a new Fairchild plane and in 40's moved to Miami where he continued his advisory services, teaching and selling courses, & books."  Les writes that "he liked
Lincolns and in 1954 he bought a fast express cruising boat The Coffee Bean."  "His charts were in the thousands from 1900 to 1955 and spent 9 months in the British Museum researching stock and commodity prices." 

Complete article by Les Clemens is in Summer 1993 
magazine of Trader's World

...... and the attached pic is of Gann and his son John,
next to one of the planes !~!

-----

Gann's fascination for aircraft is quite evident in his 
1927 novel Tunnel thru the Air, where one of the main
themes was the development of warplanes to defend 
America and also included many details about Lindbergh's
flight across the Atlantic.

Even the cover of TTTTA, had 16 aircraft on the cover !~!

So, yet another statement by the self-annointed guru
has proven to be TOTALLY wrong ..... :

"He never owned planes--they were new technology!!!!"

 ..... what an egostistical goose !~!

tech/a, your lesson for today is ..... anytime you open your 
mouth, be sure that you have done your homework, otherwise 
somebody who HAS done the research, may show you up 
for the fraud that you really are ..... 

Now, there's no point on wasting any more time on you ... 

..... but, we know that your ego will demand that you have
the last say ..... you just can't help yourself ..... 

byeee

  yogi

P.S. ..... anybody that produced a detailed market forecast
            for 1929, in November 1928, with uncanny 
            accuracy, must have been doing something right !~!
            (See Gann's 1929 forecast, attached )

            ..... and even better, in 1909 Gann actually forecast
            the 1987 and 2006 crashes ... (see table attached.)


----------



## tech/a (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Ive noticed that without exception Gann Fanatics have an in ability to converse.
They appear to suffer from sub intelligence,convinced that complexity must hold secrets to which they could/can only decifer.

Gotya on the plane stuff just love to rev you up!
Couple more ramps and you'll blow a fuse.

Buffet surely has planes,Elliot---hell I hope so.Seems to be a pre requisite.

*Last word---You bet if I can rev you to red line thats EXACTLY what Ill do.*


----------



## wayneL (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Yogi

Please have your say, but please, no more name-calling. It's just not necessary.

Cheers


----------



## wavepicker (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hey Paul Yogi,

Go back and read "Tunnel Through Through The Air" again and keep on dreaming.

The following is what makes most people sick of studying and hearing about Gann:-

-there is no actual trading system, just a few esoteric myths
- Whether it's anyone who uses Gann principles or even Gann himself, you always are taunted with words to the effect of "I know something you don't hahaha" and in order to find out you are gonna have to pay big bucks and even then you have to read 100 of Ganns recommeded reading list in order to find those hidden cycles and true Gann secrets, and in addition:-

-You have to read the Bible to unlock the hidden codes
-You have to unlock the hidden secrets of the square Of 9
-You have to learn astrology
-You have to learn numerology
-you have to become a 3rd degree mason
-you have to be a womanizer

it goes on and on and on!!


All one has to do is a google search on Paul Yogi Nipperness and they will quickly find out that you yourself think you have become Gann!!

I mean you have written your own "Tunnel Through The Air" ebooks ala

Gann Signs 

Which you sell astronomical prices just like Gann sold his courses.
After all, since you have won all these stock picking contests one would think you could at least generate an income without asking people to pay big $$$ to buy those high priced books that claim to have cracked the Gann secrets.

Now why don't you really come clean and give us an example of how you use your methodology on this site, just like Radge and others have done. Or does one have to buy those high priced ebooks and then do all the above to work it out?

As far as I have seen, Bill Mclaren is the only Gann Trader that has put together some sort of methodolgy that incorporates some of the Gann stuff which may be usefull, similar to what Magdoran has posted.

Cheers


----------



## tech/a (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Wave hahahahahahahahaha

Is that right.Hahahahahaha

No wonder he hates the Duck HE wants to be head GURU.

*Bugger off I"M HEAD GURU.*


----------



## MichaelD (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				yogi-in-oz said:
			
		

> ..... and even better, in 1909 Gann actually forecast
> the 1987 and 2006 crashes ... (see table attached.)



Err, no your own presented evidence doesn't show what you are claiming at all. The tables you have presented show;

Gann: 1984H Very high stock prices, etc
Gann: 1985J Major panic-CRASH!
Gann: 1989K Extreme low, strikes, despair, unemployment, etc

Actual: Oz: 1984: Continuation of bull market from 1982 - 1987
Actual: US: 1984: Bull market from 1980 - 1987
Actual: Oz: 1985: Bull market until October 1987
Actual: US: 1985: Bull market until October 1987
Actual: Oz: 1989: End of post crash bull market, not extreme lows at all
Actual: US: 1989: Back up to pre-crash levels

Gann: 2004J Major panic-CRASH!
Actual: Oz: Greatest bull market in history.
Actual: US: Flat Bear Market at around all time highs

That's 0 from 4. Not so good methinks.


----------



## Bobby (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> Err, no your own presented evidence doesn't show what you are claiming at all. The tables you have presented show;
> 
> Gann: 1984H Very high stock prices, etc
> Gann: 1985J Major panic-CRASH!
> ...



Good one MichaelD,
You put it so sublety   

Bob.


----------



## BSD (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Only $650USD per book to learn how:

"go "beyond Gann" to explore how you can use the* cosmic clock* for better market timing." 

"Looking back, it is now easy to appreciate why* Gann chose not to reveal his findings in the Bible, * instead *he used the bible codes to hide his methods, until the world was ready for them*." (are we ready now?)

" bible codes that reveal exactly what Gann found in the bible and how to apply them to the decoding of TTTTA and other texts."

From a book that has:

"no claims to being the holy grail of trading, but it does present a *refreshing perspective about using the cosmic clock for better market timing*."

Do the stars only predict the DOW? 

What about copper, residential property or the ASX? 

What about markets that didnt exist when they wrote the bible? - oh, hang on. 

Can Gann and Astrology tell me which team will win the NRL in 2006 and by what margin will they win the final?

Are you willing to underwrite any losses - or do the stars let us down sometimes?

But then again:

"At last, the private investor now has the 
opportunity to use some *cutting edge* trading 
tools, before the funds and brokers"

Where do I sign?


----------



## Bobby (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> *Bugger off I"M HEAD GURU.*



 Yep Tech you still have my vote, there's is no subterfuge in your repertory of lecture themes   

Bob.


----------



## nelly (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hi y'all
Thanks,ta.... NettAssets and WayneL....
_quote_ I think you have probably seen it said before - the only stoopid question is the unasked one that kills you in the market.
Regards
John
Yes I know I have to ask.....and will, but reading these threads can be intimidating at times, only because I don't know what you are talking about half the time [terminology break down]....I have a basic understanding...and aren't doing too bad in the Share Cafe comp......and I'm sure learning a lot reading the threads and will stock up on the appropriate books.
I'm looking at investing some time next year  ...money I can afford to lose.  
Thanks again.....


----------



## Realist (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> "I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when Graham and Dodd was first published but the situation has changed ... [Today] I doubt whether such extensive efforts will generate sufficient superior selections to justify their cost"
> from pg 198 A Random Walk Down Wall Street by Malkiel. Realist, I'm curious to hear a response to this comment, considering alot of your opinions on the financial markets come from graham's teachings.





Well first of all most all of my financial opinons agree with Graham, I got them from Graham obviously and I follow him as much as I can. The only thing I do that he wouldn't is buy something that I believe is excellent even if I paid a bit much for it.

Secondly, I do not use elaborate techniques, neither did Graham so that sounds very fishy to me.  I look at profits and assets and ignore future prospects and analysts opinions instead looking at the past - that aint elaborate, infact it is as simple as you can get.

If Graham doubted himself later in life it does not mean he was necesarily wrong in the first place.  I know Warren Buffet does not now doubt Graham at all, and still says his methodology is 85% Graham, 15% Fischer (buying excellent companies even if you have to pay a little too much - Tesco, Gillete??)

So if he did say that exactly and does not believe his methodology would work now, then I personally disagree - I believe he was right, and still is right. And I will until I die follow his methodologies unless I come across something better. That I doubt, but I will not rule it out.

The great thing about Graham is most people did not and will not follow his methodology, they never will. Most people either do not agree with him or are not patient enough to value invest.

Finance professors, top analysts, top brokers, almost everyone in the market today does not totally agree with Graham. The only people I know of who do are Buffet and his mates and Jason Zweig, oh and me.

Is there anyone on this bored who agrees totally with Graham apart from me?   

Finally, he is not perfect, so some things he said must have been wrong, I do not know of any, but he may have been wrong about something. But there is no question his general theory is pretty watertight. And if followed you will at least make a profit and not a loss over the longterm.

Your thoughts Prof Frink - do you think his theories are wrong??


----------



## Realist (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Prof Frink, here's the Graham interview...

http://www.bylo.org/bgraham76.html


To me quite clearly he states that "elaborate techniques" are no longer required - because all the information is now presented clearly.

Do not forget in his day you had to work out PER's and P/B ratios yourself.

So all he is saying is the information is now available so the individual investor does not need to go fishing about through company books to elaborately work out all their ratios - they are given to you now for all to see.

In now way does he state value investing is not a practice one should do now.


----------



## Realist (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Julia, here is something for you, a quote from Ben Graham.

Maybe I was wrong..    



			
				Ben Graham said:
			
		

> The investor should have a definite selling policy for all his common stock commitments, corresponding to his buying techniques. Typically, he should set a reasonable profit objective on each purchase--say 50 to 100 per cent--and a maximum holding period for this objective to be realized--say, two to three years. Purchases not realizing the gain objective at the end of the holding period should be sold out at the market.




This is something I do not agree with, and can not believe Graham said it!!

Selling a great company because the market has not realised its success or potential yet (price not gone up) or it has realised its success (price gone up quite a bit) to me is not logical.   You're left with a tax bill for one.
And you now have money you need to reinvest in something else which is just as likely to not be recognised by the market if you are value investing.

The con argument is you get one life, what if you were wrong and waited 30 years for nothing?

But I say diversification prevents that. If 5% of your money is in one company that pays dividends but never goes up over 30 years it is no big loss and as safe as a bank deposit.  And the chances of you investing in several companies that last 30 years and never recognise their potential is zero.

Hmm food for thought.

He must have gone senile in his later years..


----------



## mit (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Prof Frink, here's the Graham interview...
> 
> http://www.bylo.org/bgraham76.html
> 
> ...




Ah, Malkiel is being misleading by quoting out of context. I'll write 100 lines not to trust third party sources. 

He is a must study for many in the "professional" market another reason not to bother with an applied finance degree.


----------



## yogi-in-oz (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> Err, no your own presented evidence doesn't show what you are claiming at all. The tables you have presented show;
> 
> Gann: 1984H Very high stock prices, etc
> Gann: 1985J Major panic-CRASH!
> ...




----



Hi Michael,

Just to clarify that table ..... you will notice that the 
years were split into  division  determined by the 
same depth as the explantion of the table legend.

Each letter was only shown on the top line but applies
to ALL years, in that section ..... and to verify that, you
can see, that under "J" he expected a crash within that
3-4 year period ... 1987 was a crash and 2006 is heading
that way ..... 

Text acompanying that table also verifies that stance.

It's still not a bad effort, given that forecast was made in  1909  !~!

happy days

  yogi


----------



## Staybaker (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Is there anyone on this *bored* who agrees totally with Graham apart from me?



Ha ha, was this an intentional pun or a Freudian slip?

Cheers, Staybaker.


----------



## MichaelD (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				yogi-in-oz said:
			
		

> Just to clarify that table ..... you will notice that the
> years were split into  division  determined by the
> same depth as the explantion of the table legend.
> 
> ...



Even looking at it this way, with J=crash and A=start of bull market, taking only the US market and only from 1910;

Gann's predictions:
1911-1913 crash - Nope, wrong. Flat market.
1915-1918 start of bull market - Nope, wrong. Flat market.
1930-1932 crash - yep, just but stretching it (crash Oct 1929)
1933-1936 start of bull market - yep, Bull market.
1948-1950 crash - Nope, wrong. Flat market.
1952-1955 start of bull market - Bull market, but started in 1949. Gann predicted falling prices 1949 - 1952, not bull market.
1967-1969 crash - Nope, wrong. Bull market.
1970-1973 start of bull market - Nope, flat market.
1985-1987 crash - yep, even though it now looks more like a correction in a longer term bull market, not a crash.
1989-1992 start of bull market - Bull market, but started after 1987 crash. Gann predicted falling prices 1988-1989.
2004-2006 crash - No crash yet. 10% correction in a bull market is nowhere near a crash. Won't count this either way as 2006 isn't over.

crashes: 2 out of 5 right.
start of bull markets: 1 out of 5 right.

Total: 3 out of 10 right.

Conclusions:
1. Far worse than random.
2. Yell "the sky is falling" enough and sooner or later you'll be right.


----------



## Julia (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Julia, here is something for you, a quote from Ben Graham.
> 
> Maybe I was wrong..
> 
> ...




Realist

Well, thank you for being generous enough to post the quote from Graham even though it goes against your argument.

Why doesn't this make sense to you?

Basically, I agree with the philosophy of buying quality companies and holding for the relatively long term.  Yes, it does make life simpler and avoids excessive tax and brokerage.  No argument there.

If you'd simply accept that even the "best" companies are at times just not going to make you money and therefore be prepared to put your funds into something else until you see FROM THE CHARTS that the market has recognised the value of your favourite company, then you'd make a lot more sense.

Just take the example for the past year of WDC (one of the companies whose benefits of share ownership you repeatedly extol) compared with BHP.
Even with the recent downturn, BHP will have produced for you a far better result than WDC even with WDC's greater yield.

Over the last year WDC is trading lower than 12 months ago, while BHP has gone from $18 to currently around $28, with a $32 high before the correction.


----------



## Julia (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Julia said:
			
		

> Realist
> 
> Well, thank you for being generous enough to post the quote from Graham even though it goes against your argument.
> 
> ...




Previous chart was obviously for WDC
Herewith chart for the same period for BHP

Julia


----------



## Bobby (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> Total: 3 out of 10 right.
> 
> Conclusions:
> 1. Far worse than random.
> 2. Yell "the sky is falling" enough and sooner or later you'll be right.




Keep up your posts MichaelD,

As your judicature of the above was prudent.

Bob.


----------



## Realist (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Julia said:
			
		

> Just take the example for the past year of WDC (one of the companies whose benefits of share ownership you repeatedly extol) compared with BHP.
> Even with the recent downturn, BHP will have produced for you a far better result than WDC even with WDC's greater yield.
> 
> Over the last year WDC is trading lower than 12 months ago, while BHP has gone from $18 to currently around $28, with a $32 high before the correction.




There is no question that BHP was a better buy than WDC a year ago. The results speak for themselves.

I own both, and I own more BHP than WDC.

But...

First of all an investor needs to be safe and avoid losing any money, therefore they need to diversify across sectors, so having both BHP and WDC is what I recommend. Having all your money in Resources and none in property is insanity.

The very fact that BHP has gone up more in the past year can make it a worse buy than WDC - because you are paying more now and getting less obviously. And because BHP has gone up more it makes it more likely to go down than WDC. Others will disagree, but when the resources bubble bursts and it will eventually, BHP (already the 15th largest company in the world and valued at over $100 Billion) will fall alot. WDC can not fall alot in my opinion, it is valued at $30 Billion, and just think of the rock solid assets it has, it has some debt but nothing abnormal. WDC is solid as a rock and well managed from what I can tell.

You will not ever get amazing growth from WDC, however you own the worlds leading retail property company, it is rock solid, and pays excellent dividends.

If BHP goes to $35 later this year I would not buy it, and probably even consider selling it.  If WDC goes down to $16 I will buy more.

We've had good bull runs for a few years now.  WDC will come into its own when a bear market comes, the resource bubble bursts and property booms. It is not a question of if, more when. All 3 will happen - everyone knows it.

So basically I am advocating 5% of your portfolio should be in WDC. You wont get amazing returns but you'll never regret it either.

I'd also advocate 5 to 10% of your portfolio now in both BHP and RIO - but on the understanding if the price goes up too much more it aint worth buying and is worth looking at selling. They do not pay great dividends and are certainly not as safe as houses. No company valued that high and reliant on commodity prices is.


----------



## Realist (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Staybaker said:
			
		

> Ha ha, was this an intentional pun or a Freudian slip?
> 
> Cheers, Staybaker.




I come here when I'm bored.  

Which is quite alot recently..    

Well it is winter, I like beaches, golf, bbqs, cricket, so you wont see me much in summer - if you are lucky.


----------



## Realist (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Julia said:
			
		

> If you'd simply accept that even the "best" companies are at times just not going to make you money and therefore be prepared to put your funds into something else until you see FROM THE CHARTS that the market has recognised the value of your favourite company, then you'd make a lot more sense.




I wouldn't be making sense, I'd merely be agreeing with you Julia.

I do not use charts to buy a company - pure and simple.

If I was to buy a business outright for myself, lets say a lawn mowing business for sale for $400,000 that makes $50,000 a year profit after all expenses including staff that run it. I would first look at the past 10 years profits, I'd look at the assets, debts, expenses, staff and customers it has, I'd look at competitors and the local business environment and residents in the area. I'd do some maths then maybe buy it.

I would not look at any graph whatsoever. Completly irrelevant to me.

How would you review that business before buying it??


----------



## cuttlefish (9 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Is there anyone on this bored who agrees totally with Graham apart from me?




I believe Graham's investing approach works - but I'm not sure that your investing approach and Grahams approach have that much in common.  You seem to be using a mix of approaches from everywhere with a bit of guesswork thrown into the mix, and advocating it as a Graham based methodology.


----------



## professor_frink (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Well first of all most all of my financial opinons agree with Graham, I got them from Graham obviously and I follow him as much as I can. The only thing I do that he wouldn't is buy something that I believe is excellent even if I paid a bit much for it.
> 
> Secondly, I do not use elaborate techniques, neither did Graham so that sounds very fishy to me.  I look at profits and assets and ignore future prospects and analysts opinions instead looking at the past - that aint elaborate, infact it is as simple as you can get.
> 
> ...




I've got graham's book, but haven't read all of it yet. Longer term investing is something that I'm looking at for a future wealth creation strategy(I'm 25 now), but will most probably be used alongside my trading, never in place of it. I'm not quite sure if I'd go down the fundamental investing path, or develop a longer term trading method(something similar to tech/a's approach). At this stage, I don't have a strong opinion either way of Graham's theories, as I haven't finished the book, or read much else on the fundamental approach.

From reading the first part of his book, I can see why you have the opinion you do about traders! This attitude may have been appropriate when the book was written, but times have changed alot. Computers, charting software with backtesting capabilities, and the internet have given traders the opportunity to be just as profitable as investors. So these kinds of theories that he has I don't necessarily agree with, but can understand, given how old the book is. Because of all the information that is out there today, I find your attitude about charting slightly odd, but it's a personal decision- I'm not going to try and get you to look at them! I think alot of investors could benefit greatly from longer term charts(weekly and monthly charts for example), and I'm sure alot of investors do.



> And I will until I die follow his methodologies unless I come across something better. That I doubt, but I will not rule it out.




This comment I find interesting. You state you would look at something if it was better, yet whenever people are talking about other methods of profiting from the market, you bring out the quotes from Graham to try and discount them  
You'll never know if there is something out there with the potential to improve your results if you discount it without really looking at it! And buying a book by Guppy isn't looking at trading(although you will get alot of waffle about guppies swimming with sharks and fishing).


----------



## Realist (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> This comment I find interesting. You state you would look at something if it was better, yet whenever people are talking about other methods of profiting from the market, you bring out the quotes from Graham to try and discount them
> You'll never know if there is something out there with the potential to improve your results if you discount it without really looking at it! And buying a book by Guppy isn't looking at trading(although you will get alot of waffle about guppies swimming with sharks and fishing).




I read Guppy's book, well most of it, and Leon someone from Tasmania's book - about a third of that. I noted both said most (90% even) traders lose money. I also laughed when they said "buy and hope" is the riskiest way to invest. Leon in particular had no understanding of Graham or Buffet's mentality at all.

I do not like the fact that traders would buy into a company because others like it currently and are buying it themselves so the price is rising.  But if for some reason it dips, sell quick in case it freefalls and move onto the next hot item.

That just is not me.

When pink shirts were in fashion I never bought one, if flares come into fashion and everyone wears them I wont.  I am not a follower of the crowd. I'll go against them if anything.

Most people invest in things when they are going up and sell when they are going down. I don't.

Show me a share in a good company that has gone down quite alot and I'd be keen to buy into it, show me a share that has rocketed up recently and I wont touch it.  

I open to any suggestions on trading books or investing books - I am willing to learn.  I am yet to see anything better than Graham's ideas though - maybe I will, I hope I will, that would be a life changing moment for sure.


----------



## Realist (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> I believe Graham's investing approach works - but I'm not sure that your investing approach and Grahams approach have that much in common.  You seem to be using a mix of approaches from everywhere with a bit of guesswork thrown into the mix, and advocating it as a Graham based methodology.




What does Graham do that I don't and vice versa??     

I wont sell easily - he would apparently, and I will pay slightly too much for somethign that is excellent, he wouldn't.  what else?


----------



## professor_frink (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I read Guppy's book, well most of it, and Leon someone from Tasmania's book - about a third of that. I noted both said most (90% even) traders lose money. I also laughed when they said "buy and hope" is the riskiest way to invest. Leon in particular had no understanding of Graham or Buffet's mentality at all.




I highly doubt that they do either. I'd also doubt that they are signalling out the Graham/buffett crowd with that comment.



			
				Realist said:
			
		

> I do not like the fact that traders would buy into a company because others like it currently and are buying it themselves so the price is rising.  But if for some reason it dips, sell quick in case it freefalls and move onto the next hot item.
> 
> That just is not me.




If you don't think it's for you, then it would be best to stay away from it, as you can go backwards pretty quickly trading if you aren't good at it.



			
				Realist said:
			
		

> When pink shirts were in fashion I never bought one, if flares come into fashion and everyone wears them I wont.  I am not a follower of the crowd. I'll go against them if anything.




This I agree with. Men shouldn't wear pink shirts. ever.



			
				Realist said:
			
		

> Most people invest in things when they are going up and sell when they are going down. I don't.




What, like investing in mining companies in the 2nd half of 2003 when they were going up? It's not always a bad idea! Sometimes yes, but not always. So you wouldn't have bought into bhp at the end of 2003 because it ran up nearly 50% from $8 to $12?



			
				Realist said:
			
		

> Show me a share in a good company that has gone down quite alot and I'd be keen to buy into it, show me a share that has rocketed up recently and I wont touch it.




You probably should think about how some of your statements come across. You say you won't buy a share that has had a run up, yet you were topping up on RIO recently when it's share price has more than doubled in recent times  





			
				Realist said:
			
		

> I open to any suggestions on trading books or investing books - I am willing to learn.  I am yet to see anything better than Graham's ideas though - maybe I will, I hope I will, that would be a life changing moment for sure.




Try Mark Douglas- Trading in the zone.


----------



## Magdoran (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I suppose I’ll have to reluctantly weigh in on this new Gann/Elliott wave debate since it’s getting into my esoteric field of technical analysis.  I’m in a really interesting position as wavepicker correctly states, since I use an integrated Gann-Elliott approach, I think there is merit in both approaches, and have found them quite compatible.  In fact I’d argue that vibration theory and wave theory are in fact two sides of a coin – they’re both looking at different facets of the same market movement.

wavepicker has cited Bill McLaren as the Gann trader of note, and it is primarily his works that form the core of my approach.  The problem with esoteric knowledge is that if you put 50 people in a room, you will get as many if not more perspectives, all subjective in nature, and many disputes will occur over interpretation of original documents.

Unfortunately since there are so many conflicting interpretations of “Gann” concepts, this can really muddy the water.  I actually feel embarrassed when so called “Gann” fanatics rave on with an almost religious ferocity, especially when it becomes arrogant in tone, or condescending. I must say that I cringed when I read some of Yogi’s comments that bordered on abusive and dismissive.  I do not subscribe to the idea that anyone has a monopoly on truth, and that all people should be extended common courtesy.  Let’s stick to the idea, and not play the person.

I subscribe to a lot of the concepts that Gann pioneered, but I’m not a Gann purist or a fanatic.  I really don’t care how successful or not an originator like Elliott or Gann were – I’m essentially interested in putting together an effective approach to trading and investing to make profits consistently.  The applicability of the concept is of core importance to me, all the other “fluff” is really irrelevant from a perspective of wether an individual adopting a body of knowledge can use a concept effectively or not.

I think Mark Douglas got it right when he coined the axioms “anything can happen” and “every moment in the market is unique”.  Being a great analyst alone is not sufficient to succeed.  Psychology, strategy and having a robust system are vital in addition to analysis.  There are many valid ways to succeed, and we see many in evidence here on this site.

I view trading and investing as an individual pursuit, and all any of us can do is to make our best shot judgement of how to approach the market by developing methods to make money.  It seems to me that consistency is a key element in the mix (I tend to concur with tech/a here – I think his concept of approaching financial markets as a business is critical, and salute his drive to attain consistent results).  Everyone must find what works for them, and that’s ok by me.  I try to keep an open mind, and actively research new ideas as they are formulated, hence my interest with some comments on this site.

Let’s look at what’s happening on this thread in regards to technical analysis approaches –we have tech/a, a primarily mechanical trader who seems to have moved to embracing EW having it out with Yogi, an “astrological” Gann practitioner, then add wavepicker an EW practitioner with some incorporated concepts from a non astrological Gann trader (Bill McLaren – whom I also draw from). 

Interestingly I stand in the intuitive (maybe “discretionary” depending on the definition) camp, subscribe to Prechter and Frost’s interpretation of Elliott Wave, subscribe to a pattern/time school of Gann that does NOT embrace the astrological approach.  

I do not think Gann or Elliott were gods (although I respect what they were able to develop in the pre computer age).  Just because one or other wrote something does not make it right or beyond dispute or revision.  Any body of knowledge that is set in concrete and is not able to be modified and adapted eventually becomes redundant in my view.  Once a body of knowledge becomes static like a rigid religious doctrine (like the flat earth orthodoxy perpetuated by various religions despite the works of people like Galileo), then it’s time to move on.

So what does this all mean?  Essentially I think everyone is on a personal journey of discovery, and that we should respect that each person is going to have a unique perspective. 

Now, what concerns me is when personal abuse takes the place of respectful argument, and I am quite surprised by the uncharacteristic outburst.  I do hope this abates since there is actually some very interesting ideas being put forward here that are in my opinion worth examining.

As a person who has embraced Gann approaches, I do hope that people reading some of the comments from one particular “school” of Gann do not taint those who are at the polar opposite end of the “Gann spectrum” with the same brush.  Astrological Gann practitioners are radically different from the school I subscribe to.  Also, McLaren based Gann practitioners are unique in the field of Gann – radically different from Cameron Mitchell, Ferrera, Brad Cohen, Michael S Jenkins, Jerome Baumring, David Burton, Constance Brown, and a host of other “Gann” schools.

In my view, anyone claiming they can project time and price accurately every time is highly suspect.  Sure, good forecasts can be made, but because the market is so complex, and forecasts are made with limited and imperfect knowledge, all anyone can do is to make their best shot assessment of probabilities.  In my view, there are no certainties in the market, and I defy anyone to successfully argue to the contrary.


Regards


Magdoran


----------



## cuttlefish (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> What does Graham do that I don't and vice versa??
> 
> I wont sell easily - he would apparently, and I will pay slightly too much for somethign that is excellent, he wouldn't.  what else?




They're pretty key differences - overall when it comes to buying and selling decisions there's only a few parameters to tweak and they make all the difference.   You seem to advocate buying on dips (recent RIO and BHP purchases) - don't recall that being part of Graham methodology.  Diversification to manage risk - thats pretty generic, again don't recall it being a key pillar of Graham or Buffet strategies.  Don't sell for 30 years - not Graham - maybe Buffet.  No metrics for entry or exit - pretty sure Graham had metrics.

I've got nothing against developing your own methodology, and nothing against fundamental investing either, but I think your methodology is fairly different to a strict Graham approach.


----------



## ducati916 (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Magdoran* 



> In my view, there are no certainties in the market, and I defy anyone to successfully argue to the contrary.





J.P.Morgan Sr.

*Prices will Fluctuate*

jog on
d998


----------



## It's Snake Pliskin (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Show me a share in a good company that has gone down quite alot and I'd be keen to buy into it,




Saw this couldn`t help.

What about VLL Realist? Would you buy it? It has gone down.


----------



## wavepicker (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Magdoran said:
			
		

> I’m essentially interested in putting together an effective approach to trading and investing to make profits consistently.  The applicability of the concept is of core importance to me, all the other “fluff” is really irrelevant from a perspective of wether an individual adopting a body of knowledge can use a concept effectively or not.
> 
> I think Mark Douglas got it right when he coined the axioms “anything can happen” and “every moment in the market is unique”.  Being a great analyst alone is not sufficient to succeed.  Psychology, strategy and having a robust system are vital in addition to analysis.  There are many valid ways to succeed, and we see many in evidence here on this site.
> 
> Magdoran




That was very well said Magdoran- at the end of the day whether it's Gann, Elliott or any other for of TA, the idea is to put together a system that works for you.

This is not a contest of who can pick the most winners or to say that "Gannsters" always cream Ellioticians when it comes to finding out what the market may do. Like you, I use an  integrated Gann-Elliott-and many other forms of TA approach. You do what works for you and what you are comfortable with. Although I, as many others find it very difficult to relate to the Astrological hoohah for predicting world events!!

Cheers


----------



## Realist (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> You probably should think about how some of your statements come across. You say you won't buy a share that has had a run up, yet you were topping up on RIO recently when it's share price has more than doubled in recent times




I said I wouldn't buy a share because it has run up, not I wont buy a share that has had a run up.  There is a subtle difference. 

Yes I bought RIO and BHP recently at about $26 and $73.

Great companies at a reasonable price I thought.    

Yes they've doubled/tripled in the past few years - I bought them after BHP went down 21% in about 2 weeks though. I bought when most were selling.

I wish I had bought them 3 years ago of course. I did buy at a dip though and have made money from it   

It is no major achievement but I got in at an okay price, I'm happy.

I regard these 2 as excellent so am prepared to pay slightly too much for them. 

I am waiting for others to dip like MBL, BIL and WOW to dip so I can get in on that as well.   That may take years though.  Maybe some ACCC threats about monopolies will help WOW go down?  




> What about VLL Realist? Would you buy it? It has gone down.




I said show me a share in a good company thats gone down.

VLL is over $60M in debt.  It aint a good company. If it had no debt then yeah I'd maybe buy it.


----------



## Magdoran (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*Yogi’s quote: you should read the original forecast:*


Now, Yogi, while I respect that you are a leading practitioner in the field of astrological Gann traders, I have to take issue with your rather selective, and I believe potentially misleading quoting of your forecasts.

The first quote is what you wanted people to see as a call of the high in the XJO, but when one reads the full unedited version below, the full nature of your forecast becomes apparent.

You seem to claim the ability to forecast key dates in advance, but the example you put up (while impressive) was a piece of price range projection just like Nick Rage did using a Fibonacci approach.  Sure you projected resistance in price, as did many others (including McLaren), but you did not as you claimed name the 10th of May as the high date in advance, or even on the day.

Let’s compare your quote on this thread which was referenced to the “Trading the SPI” thread which materially differ.






> Originally Posted by *yogi-in-oz*:  Post 429 Re: Which one do you use? Technical or fundamental analysis
> 
> *First Quote with key phrases edited out:*
> 
> ...







> Originally Posted by *yogi-in-oz*:  Post 1474 Re: Trading the SPI
> 
> *Actual Quote:*
> 
> ...





Your post on this thread gave the impression that you’d called the high that day.  You didn’t.  You certainly identified that a key target in price was attained, good call.  But I can’t condone the “convenient omission” of the comments which followed which actually gave the projection in that post which was as follows:



> Originally Posted by *yogi-in-oz*:  Post 1474 Re: Trading the SPI
> 
> *Next XJO high will likely be about 24-25052006
> and then, 26-29052006 will likely see our first taste
> ...





You did not specifically state the next high as a lower high, and I would have thought that the reference to a "first taste of a retreat from the highs" indicated you expected the may 10th high to be exceeded at the time.  Sure, you recognised this was a critical level, but I would argue that you didn’t have the precision you seem to be suggesting in your posts.

Also, I have an issue with anyone suggesting top or bottom picking strategies for newbies.  Surely the task at hand is not to try to pick tops and bottoms of markets, but as McLaren suggests, to locate a trend, and stick with it until it is at risk.

While I respect the use of Gann concepts for forecasting, to claim that you can forecast exact highs and lows both in time and price consistently would need to be demonstrated.  I accept that you can project probable areas of resistance and support in time and price, and that as the market moves that these forecasts will need to be modified.

Also, while I am certainly a user of Gann methods, and subscribe to the use of time forecasting and salute some of your approaches, I do have some reservations with some of your claims when they don’t bear out in fact. What I’d like to see is some of your methods outlined in simple language.  While I would love to research your works to evaluate them, frankly the high price tags are a disincentive.

Why don’t you as an act of good faith outline some of your methods, and give some clues as to what the “secrets” are in “Tunnel Thru the Air”?  - Now that would be interesting.


Regards


Magdoran


----------



## Realist (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> What, like investing in mining companies in the 2nd half of 2003 when they were going up? It's not always a bad idea! Sometimes yes, but not always. So you wouldn't have bought into bhp at the end of 2003 because it ran up nearly 50% from $8 to $12?




good question.   

Okay, yes I wish I had bought BHP at $8.    

Do you wish you had bought BHP when it went down to $5 in 1999 and was very much out of favour??  Or when it dipped to $16 last year?

Or finally when it dipped to $25.40 last month?


----------



## Realist (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> They're pretty key differences - overall when it comes to buying and selling decisions there's only a few parameters to tweak and they make all the difference.   You seem to advocate buying on dips (recent RIO and BHP purchases) - don't recall that being part of Graham methodology.  Diversification to manage risk - thats pretty generic, again don't recall it being a key pillar of Graham or Buffet strategies.  Don't sell for 30 years - not Graham - maybe Buffet.  No metrics for entry or exit - pretty sure Graham had metrics.
> 
> I've got nothing against developing your own methodology, and nothing against fundamental investing either, but I think your methodology is fairly different to a strict Graham approach.




Yeah I advocate buying on dips.  I think Graham does as well to some extent.

What do you mean I have no metrics??     

A low PER (15 is average)

A good record of profits over past 5 to 10 years.

A P/B ratio of around 2.5 or lower.

I would not buy WOW, BIL or MBL because of my metrics, but I have bought IAG, PRG, and FUN


----------



## Magdoran (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Originally Posted by *ducati916*
> 
> 
> *Magdoran *
> ...





Hahahahahahah....

You crack me up Duc.  Trust you to find a humourous angle to my sweeping comment!  Just can’t get away with anything with you around, now can I??!

So funny!


Magdoran
P.S. I spilt my drink when I read this I laughed so hard!


----------



## yogi-in-oz (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



Hi Magdoran,

Plainly, the high was called at 5386 ... there was no mention
of the date, because the market was clearly ahead of a 
point, where price and time would square ..... once that key
resistance was hit, it would fall until time caught up with
the price.

With regard to the next high, as 5386 was already 
considered as the extreme high from 2003 lows, any
subsequent highs would be naturally be considered as
lower, otherwise it would have been stated that
we were shooting for NEW highs.

------

You guys really expose your attitude as traders,
when you come out with comments like this:

'While I would love to research your works to evaluate them,
frankly the high price tags are a disincentive."

Any trader who thinks that US $654.30 is expensive, should 
not be trading, as really that figure should be the profit from
just ONE (very) average trade.

Or you could just spend $10,000 + on a blackbox system,
like gryphon or hometrader, etc ...

-----

"Why don’t you as an act of good faith outline some of your 
methods, and give some clues as to what the “secrets” are in 
“Tunnel Thru the Air”?  - Now that would be interesting."

..... and why don't you do the very considerable research and 
write the books, then we'll ask you the same question ... 

Do you REALLY think that anbody, who has done the 
work will GIVE it to you on a platter ..... ??? 

Again, Gann quoted the Bible, saying that "pearls should
not be cast before swine" and what better way to sort out
the real keen traders from the freeloaders, than put a SMALL
price on it ..... ???

-----

FWIW ..... straight out of TTTTA, our forecast XJO low is on 
07 November 2006 at 4040 ... it actually squares out at 4028,
but there will likely be an ambush, around 4040. 

So, where's your time and price forecast for XJO low ... ???

..... and it will be interesting to hear from the EW crowd,
if they can, too.

happy days

  yogi


----------



## Nick Radge (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Admitedly I missed by a day. Lucky I don't get asked to post my bad calls because Joe may need more server space


----------



## wavepicker (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				yogi-in-oz said:
			
		

> Do you REALLY think that anbody, who has done the
> work will GIVE it to you on a platter ..... ???




This is a Gannism. Gann never gave anything to his students on platter, they  had to pay big bucks first. In order to prove they were worthy traders they had to work out the code first. Sort of like an initiation ceremony. Probably passed down from his years as a Mason!!




			
				yogi-in-oz said:
			
		

> FWIW ..... straight out of TTTTA, our forecast XJO low is on
> 07 November 2006 at 4040 ... it actually squares out at 4028,
> but there will likely be an ambush, around 4040.
> 
> ...




Already done this in an earlier post with contingency plans in case I am wrong. Sometimes that happens, it's called trading. Will elaborate further as more market action progresses. What are your contingency plans if your crystal ball is wrong?
That's right!! The heavens don't make mistakes.

BTW trading is not about picking tops and bottoms. If that is your forte, then you are definately a loser, because this cannot be done with repeated consistancy. (Unless you think you are Gann of course)


----------



## yogi-in-oz (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



Hi wavepicker,

"BTW trading is not about picking tops and bottoms. If that is your forte, then you are definately a loser, because this cannot be done with repeated consistancy."

..... no, it is NOT about picking tops and bottoms, but it IS
about knowing, when there's been a change-in-trend, which
is marked by a high or low ..... and getting on a trend change
early means more profits, for most people.

-----

..... looking at the ASF competitions and many of those
posing as knowledgable traders here do not take part, but
they are more than willing to snipe at others ..... could it 
be, that they have a fear of being shown up as frauds ... ???

happy days

  yogi


----------



## tech/a (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Unlike you most who enter see competion here as a bit of fun.
To win a weekly comp like this you need to take risks that you wouldnt normally take to trade.
You also need a good dose of luck. AUM +100% is a good stroke of luck.

Trading is about consistent profit.
Its now clear your about consistant earnings,you've found the key to your business isnt trading but selling the dream.


Your also under the delusion that profit is the sole property of Gann Traders---the select few who "know".

So you pick a few winners.
Your not here to help others become better traders ---*your here to line your own pockets.*
As for the generous Duck!!

4 yrs $30k to $310k traded live and fully disclosed.
knock all you like---*the runs are on the board * and I dont have to sell "secrets" to exist.

I give away sound business knowledge from years of successful application.


This thread has revealed much about the motives of the cuddly lovable yogi with the potty mouth. Friend to all who worship honey pots.

*That should get your fuse well and truely burning.*


----------



## wavepicker (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				yogi-in-oz said:
			
		

> ----
> 
> ..... looking at the ASF competitions and many of those
> posing as knowledgable traders here do not take part, but
> ...




Yogi, It has not been much of an effort to pick winning stocks the last 3 years. Especially in the ASX200 and the materials sector.

I would go so far as to say quite a few traders/investors on this site have done quite well in the last 3 yrs. Some much better than others ofcourse. WITH REAL MONEY. How could you not, unless you have been on the wrong side. 

Personally I don't waste my time with competitions, prefer to do the real thing instead. Mainly in Foreign Exchange these days.
May I be so kind as to ask you for your projections of the US Dollar and foreign currencies in the next 12 months? Or does TTTA have only one crystal ball reserved for the stock market?


----------



## Realist (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*




			
				tech/a said:
			
		

> 4 yrs $30k to $310k traded live and fully disclosed.




 

FFS can you please take out taxes and brokerage and all expenses before quoting your grandeous achievements please?

It irks me no end to hear traders telling me they made such and such when really they made maybe 40% of that cause of taxes and fees.

You are not doing yourself any favours believing your own hype either.

It is like me telling you I made a million on the stock market last year. A Million yen


----------



## lesm (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> You also need a good dose of luck. AUM +100% is a good stroke of luck.




I would have said analysis, timing and luck! :   

Yes, the monthly comp is a good bit of fun and some friendly rivalry, we're not playing for sheep stations.

We now have the yearly comp that Realist has started up and those that are interested, are in it. They will probably have a bit of fun along the way.

Neither will actually prove one way or another who is or isn't a fraud or the gun TA/FA.


----------



## wayneL (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> FFS can you please take out taxes and brokerage and all expenses before quoting your grandeous achievements please?
> 
> It irks me no end to hear traders telling me they made such and such when really they made maybe 40% of that cause of taxes and fees.
> 
> ...




It is clear you obsession with taxes and fees is detrimental to your profitability. This is obvious.

I would love a $10 million tax bill.


----------



## yogi-in-oz (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



tech/a,

"To win a weekly comp like this you need to take risks  ..."

It's NOT a weekly competition here, it is MONTHLY, so
how come you can't enter some stocks, that finish with a
positive return???

Yes, trading IS about consistent profits  MONTH-on-MONTH
and it is something that you have failed to demonstrate
here ..... in fact you have failed, miserably.

-----

"4 yrs $30k to $310k traded live and fully disclosed."

... and you really think that's a big deal don't you???

So now you have changed the story too, a couple of days
ago your post said that you made that same figure in 3 years 

..... so again, you have been found to be mishandling 
the truth.

..... and just to dispel the rumours ... FULL disclosure would
have a clause about bankruptcy, would it not???

"Truely ... ??"

-----

 byeee

  yogi


----------



## Bobby (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> I would love a $10 million tax bill.




Wayne Thats *spot on !*  
Wish mine was also.

Bob.


----------



## MichaelD (10 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> I would love a $10 million tax bill.



No worries - I'll send you mine.     



(for humour impaired readers, no I am not fortunate enough to have such a bill...yet)


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I can`t understand the big deal wether Gann is better than Elliot or what. It doesn`t matter, just like Technical or Fundamental. They all work for some practitioners.

I hate fundamental analysis with a passion but recognise its effectiveness for those who use it with an open mind.  

And tax. I love paying it.

Realist if you hate tax so much, don`t lodge returns  - it`s the only answer, though I don`t advise you to do it.


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> I hate fundamental analysis with a passion but recognise its effectiveness for those who use it with an open mind.




Bravo!

I'm looking forward to the day when *some* FA's could say:

I hate technical analysis with a passion but recognise its effectiveness for those who use it with an open mind. 

Cheers


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> It is clear you obsession with taxes and fees is detrimental to your profitability. This is obvious.
> 
> I would love a $10 million tax bill.




Yes, so would I. But the alternative is to wait a year, halve the tax and keep $5 Million of that Wayne.

Do you want a $10M profit or a $15M profit?

Or my preferred option do you just want to leave $20M invested compounding year on year?


----------



## lesm (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> I can`t understand the big deal wether Gann is better than Elliot or what. It doesn`t matter, just like Technical or Fundamental. They all work for some practitioners.
> 
> I hate fundamental analysis with a passion but recognise its effectiveness for those who use it with an open mind.




Snake,

Well said.

Whatever the method, if it works for the person using it then that's what matters.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Bravo!
> 
> I'm looking forward to the day when *some* FA's could say:
> 
> ...





I do not hate technical analysis, infact I love it. The more people that do it the better for me.  

I wish everyone did it.

And before you ask - I post here for fun, I aint seriously trying to convert anyone to FA and I really don't care what others do, I am willing to learn from others though, and share my opinions, and have them shot down...

I'll put my balls onthe chopping block and if other people punch holes in my investments or theories it is great - it'll save me real money hopefully.


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Yes, so would I. But the alternative is to wait a year, halve the tax and keep $5 Million of that Wayne.
> 
> Do you want a $10M profit or a $15M profit?
> 
> Or my preferred option do you just want to leave $20M invested compounding year on year?




Yes but if he hadn`t made the money to pay the tax how could he keep the other half without making it, due to holding longer and missing serious plays, like you may have.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				lesm said:
			
		

> Snake,
> 
> Well said.
> 
> Whatever the method, if it works for the person using it then that's what matters.




No argument there.

If it aint broke don't fix it.

Maybe tweak it for better performance though...


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I do not hate technical analysis, infact I love it. The more people that do it the better for me.




But you stated you didn`t know anything about it so how could you love it?
Even if you think it makes you money how does it affect the market to make you money? You wouldn`t know because you don`t understand it. Think before you post, the eagerness to mouth off highlights your weaknesses.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Yes but if he hadn`t made the money to pay the tax how could he keep the other half without making it, due to holding longer and missing serious plays, like you may have.




I've missed many serious plays.  who hasn't?

Tis the tortoise versus the hare, I will be rich eventually doing what I am doing, many will be rich faster, but many wont be rich at all. My way is virtually guaranteed.   You guys need to be alot smarter, faster, more alert and wiser than me. I just set and forget mostly. Any dummy can do it - no question. Patience and self control is all it requires, no skill at all really.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> But you stated you didn`t know anything about it so how could you love it?
> Even if you think it makes you money how does it affect the market to make you money? You wouldn`t know because you don`t understand it. Think before you post, the eagerness to mouth off highlights your weaknesses.




What you do isn't anything anyone else can't learn fairly quickly and do adequately, it is not rocket science. 

I just can't comprehend why so many people buy into a company that has not even made a profit because others are buying it.

I don't follow crowds or trends in life in general, it's just me.


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I've missed many serious plays.  who hasn't?
> 
> Tis the tortoise versus the hare, I will be rich eventually doing what I am doing, many will be rich faster, but many wont be rich at all. My way is virtually guaranteed.   You guys need to be alot smarter, faster, more alert and wiser than me. I just set and forget mostly. Any dummy can do it - no question. Patience and self control is all it requires, no skill at all really.




Que?

We need to be smarter and faster? But, any dummy can do it? And, no skill required?

So you basically state a three toed sloth could do what you do, but, it needs to be smarter, faster (I agree here) and wiser (maybe the sloth has it on you here).

Where would ASF be without Realist? Thanks for the entertainment.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

How does it make me money?

Well everyone following a trend leaves the door open for others to go against the trend and get bargains.

If everyone is buying red shirts cause that is the trend, then market forces will dictate black shirts will be on sale, I'd buy an Armani black shirt at a discount to your red shirt!  You wouldn't - you'd pay too much for the red shirt and wear it till it went out of fashion.  Fair enough too, most people would, but when black shirts come back into fashion, years later - I've already got one, and I paid bugger all for it.  You'd rush off and buy a black shirt at a premium. My costs are lower. Your clothes bill would be higher than mine.


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Traders: Trade for income. Cash flow. Quick capital. 

Investors: A lump sum by the time they need a walking stick. Will have to work to support themselves in the meantime. Traders can invest too. 

Any objections? 

Why compare?


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> We need to be smarter and faster? But, any dummy can do it? And, no skill required?




Where did I say no skill required or a three toed sloth can trade succesfully?

All I said was someone could learn fairly quickly and do it adequately.

That is not putting it down whatsoever. I'd suggest to trade proficiently and truly successfully is quite a skill. Infact it would require alot more skill than "investing".

All I was saying is like anything to learn the basics aint tough. To master it is.


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> What you do isn't anything anyone else can't learn fairly quickly and do adequately, it is not rocket science.




Thankfully we don`t do it like Nth Korea if it was.



> I just can't comprehend why so many people buy into a company that has not even made a profit because others are buying it.




But most don`t view it as buying into the business; a differentiation of ideology. 



> I don't follow crowds or trends in life in general, it's just me.




Don`t be so prejudiced. 
Actually you do because if the companies weren`t good, then no crowds would buy their products etc.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				swingstar said:
			
		

> Traders: Trade for income. Cash flow. Quick capital.
> 
> Investors: A lump sum by the time they need a walking stick. Will have to work to support themselves in the meantime. Traders can invest too.
> 
> ...




It is like comparing religions or arguing politics - you are never going to convert anyone, it is the fun of the discussion and what you learn from it that matters.

Investors need to work, it is no profession. Agreed.



> Traders can invest too.




Why would a trader want to invest?


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> How does it make me money?
> 
> Well everyone following a trend leaves the door open for others to go against the trend and get bargains.
> 
> If everyone is buying red shirts cause that is the trend, then market forces will dictate black shirts will be on sale, I'd buy an Armani black shirt at a discount to your red shirt!  You wouldn't - you'd pay too much for the red shirt and wear it till it went out of fashion.  Fair enough too, most people would, but when black shirts come back into fashion, years later - I've already got one, and I paid bugger all for it.  You'd rush off and buy a black shirt at a premium. My costs are lower. Your clothes bill would be higher than mine.




LOL such an inappropriate illustration.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> LOL such an inappropriate illustration.




Fair enough.

What was I thinking...


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Where did I say no skill required or a three toed sloth can trade succesfully?
> 
> Actually you didn`t say that, but don`t twist it to look as though it was a manipulation of your post.
> 
> ...




But here it is in case you forgot what you wrote:



> You guys need to be alot smarter, faster, more alert and wiser than me. I just set and forget mostly. Any dummy can do it - no question. Patience and self control is all it requires, no skill at all really.




So the mentioning of a sloth is apt.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> What you do isn't anything anyone else can't learn fairly quickly and do adequately, it is not rocket science.




Here.....


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Here.....




Thanks.


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Why would a trader want to invest?




For the same reason anyone puts money into super etc. No one wants to work forever. A successful trader will usually be sitting on a lot of money anyway, so they might want to diversify into investments that produce passive income without the need to be trading all the time. It depends on goals really -- if you trade for the love of it or to be rich.


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> How does it make me money?
> 
> Well everyone following a trend leaves the door open for others to go against the trend and get bargains.
> 
> If everyone is buying red shirts cause that is the trend, then market forces will dictate black shirts will be on sale, I'd buy an Armani black shirt at a discount to your red shirt!  You wouldn't - you'd pay too much for the red shirt and wear it till it went out of fashion.  Fair enough too, most people would, but when black shirts come back into fashion, years later - I've already got one, and I paid bugger all for it.  You'd rush off and buy a black shirt at a premium. My costs are lower. Your clothes bill would be higher than mine.




Too funny Realist artyman: 

You just love the clothes analogies. 

Market forces will dictate black shirts will be on sale...Ha, ha, ha.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				swingstar said:
			
		

> For the same reason anyone puts money into super etc. No one wants to work forever. A successful trader will usually be sitting on a lot of money anyway, so they might want to diversify into investments that produce passive income without the need to be trading all the time. It depends on goals really -- if you trade for the love of it or to be rich.




So successful traders invest cause they don't want to work forever?


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Too funny Realist artyman:
> 
> You just love the clothes analogies.
> 
> Market forces will dictate black shirts will be on sale...Ha, ha, ha.




Also green shirts will be cheap, but green does not suit my skin colour.    

And pink shirts - well I don't wear pink so I don't care


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> So successful traders invest cause they don't want to work forever?




Trading can take time, and it makes sense for anyone to be diversified.


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				swingstar said:
			
		

> For the same reason anyone puts money into super etc. No one wants to work forever. A successful trader will usually be sitting on a lot of money anyway, so they might want to diversify into investments that produce passive income without the need to be trading all the time. It depends on goals really -- if you trade for the love of it or to be rich.




Active trading is a business for the serious.
Active investing is a business for the serious.
Passive income from property investments and business investments etc, allowing one to earn more than they are required to spend is the goal you are referring to Swingstar.


----------



## Magdoran (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Where would ASF be without Realist? Thanks for the entertainment.




I think we’ve finally got to the truth about Realist (who is clearly not very experienced or knowledgeable, but certainly fills a lot of space up on this site – but he’s kind of amusing, like an inexpensive circus act, isn’t he?). 



> Originally Posted by *Realist*
> I open to any suggestions on trading books or investing books - I am willing to learn. I am yet to see anything better than Graham's ideas though - maybe I will, I hope I will, that would be a life changing moment for sure.




Judging by the way he hangs off each day’s price action, I’d say he actually has the heart of a trader crying to get out.  He gives the appearance of being a clown squabbling to be the centre of attention, but the substance of what he says belies a lonely seeker (they say comedians are the most lonely people in the world).

I suspect he would like to be a seeker of knowledge of how to trade the markets, but is in denial.  I have seen this symptom before – some people attack what they really want to be (or are), and sometimes try to hide behind the mask of a clown and feign humour. 

His comments though have such limited intellectual rigour that it surprises me how many people have taken him seriously since he is obviously way outclassed by the heavyweights on this thread.  

Here’s my one and only comment of advice for people of his ilk – try asking questions and researching the ideas that are presented on this site.  Do the hard yards like everyone else has.  The sooner they do this, the sooner they will evolve in a direction closer to their hearts desire.


Now, I think it's time he sat in the "naughty corner"!


Regards



Magdoran


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Active trading is a business for the serious.
> Active investing is a business for the serious.
> Passive income from property investments and business investments etc, allowing one to earn more than they are required to spend is the goal you are referring to Swingstar.




What do you mean, more than you're required to spend? Undeserving? 

And when it becomes passive it becomes undeserving?


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Magdoran said:
			
		

> Judging by the way he hangs off each day’s price action, I’d say he actually has the heart of a trader crying to get out.




Good guess.    

As I said I just post here for fun, and I watch the days prices for fun, I'm changing jobs soon so got spare time a plenty. I probably wont buy or sell any shares over the next 12 months. Boredom kicks in so I post here.

Your insults are pretty pathetic, either get straight to the point or don't bother - you only make yourself look weak.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Is there such a thing as active investing??

Graham's definition of enterprising investing is one who spends more time and effort than most on trying to find the best bargains.  Not one who invests more enterprisingly or riskily than others.


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				swingstar said:
			
		

> What do you mean, more than you're required to spend? Undeserving?
> 
> And when it becomes passive it becomes undeserving?




Income that covers life`s expenses. Investments pay for themselves and provide income. That`s all.  Technically one is out of the rat race when they get to this point; no work.


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Good guess.
> 
> As I said I just post here for fun, and I watch the days prices for fun, I'm changing jobs soon so got spare time a plenty. I probably wont buy or sell any shares over the next 12 months. Boredom kicks in so I post here.
> 
> Your insults are pretty pathetic, either get straight to the point or don't bother - you only make yourself look weak.




So if you only post for fun, and insult, maybe we should collectively put you on ignore.


----------



## Magdoran (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				yogi-in-oz said:
			
		

> Hi Magdoran,
> 
> Plainly, the high was called at 5386 ... there was no mention
> of the date, because the market was clearly ahead of a
> ...





Hello Yogi,


Thanks for your comments, much appreciated.  

Yogi, I was not asking you for a free lunch, nor would I expect you to ask me for one.  I was merely asking you for a taste of how you trade to compare notes.  I did say a clue, not your entire methodology that has taken you years to develop, I would not expect you to give your IP away for nothing.  

If what you claim is true I’d be glad to buy your book(s) if it augmented my existing Gann knowledge in ways that I could not work out for myself.  This would be of great value.  But Yogi, I’ve seen so many Gann offerings around that promised much, and delivered little. What I would like is enough information to determine that what you have is of any value to me (and anybody else for that matter).  

I prefer not to contribute to someone’s income if the service they render is substandard.  Without you explaining a bit more, how can I evaluate that I’ll get value for money?  Look, I headed up business development/sale/marketing roles and managed companies for a range of organisations over 20+ years, and I’d have to say that your approach along with people like money tree’s to marketing and sales is amateurish to say the least.  Here is a perfect opportunity to ingratiate yourself with a range of potential clients, and you go all coy on us – why is that?

So, I don’t think it is too much to ask you directly to give a thumb nail sketch of your methods and compare styles – you may have something of interest, you may not.  I object to outlaying cash to people who don’t deliver, so effectively I’m raising buying signals in the way of objections… Just look at some of the “baby Gann” circuit seminar people who charge $25,000 US to do their course, and it’s all moving average based “shadows on the wall” stuff with a couple of Gann fans thrown in, and an adolescent view of the “Square of 9” added for good measure.  Maybe you get a useless stochastic as a bonus (instantly makes me walk away).

You know I have read Gann’s original works and charts, and researched a whole host of so called Gann masters, most of whom know less than most of the Gann practitioners I know.  None of us charges a fortune, sure we don’t give it all away, but we do give newer traders the nuts and bolts… that is our way.

I’m happy to outline the essential skill sets I have, and approaches, openly.  You never know, by briefly outlining the building blocks you may actually do yourself a favour and stimulate a lot of interest rather than turn people off with the notion Gann methods are either some sort of esoteric underground cult, or run by rip off merchants (unfortunately this is the image many people have currently - you and I know while there is some truth to this perspective, that in fact there are some very powerful aspects to Gann approaches). 

Now come on Yogi, you know that I have spent considerable time studying markets, and in particular an approach to Gann.  I do this daily day in day out like you, and of course have come up with quite different approaches.

I have certainly gone through TTTA in detail, and I don’t see the concepts you refer to.  I actually think areas like the master egg course, and the commodity courses and working charts and papers (particularly on time cycles) are the core of valuable approaches to Gann.  

I have studied the astrological approach, and really don’t see much to recommend it above using time and price squares (144, 90, 180, 360, 52, 104 etc) – and square of the range, square of the high, and square of the low, perhaps zero angles and true trend lines… Sure the Saturn cycle I think picks up valuable vibrations, but this is more incidental and is really just an alternative timing mechanism.

I have essentially invited you to open up a little to have an interesting dialogue – let’s set aside everyone trying to prove or disprove anything, and just discuss and compare notes, surely this would be much more constructive?

What do you say Yogi, are you game?  Come out to play, please…


Warm Regards


Magdoran


----------



## Magdoran (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> So if you only post for fun, and insult, maybe we should collectively put you on ignore.




Now that's the most sensible thing I've heard all day!


Mag


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Income that covers life`s expenses. Investments pay for themselves and provide income. That`s all.  Technically one is out of the rat race when they get to this point; no work.




Time for travel, study and philanthropy is precisely my goal.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> So if you only post for fun, and insult, maybe we should collectively put you on ignore.




If it makes you feel better Snake, do it..


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Magdoran said:
			
		

> Disclaimer: These comments are not financial advice, and readers are advised to seek appropriate professional financial advice for their personal circumstances. Personal views for discussion & educational purposes only.




interesting...


----------



## tech/a (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=forum;f=74

Read and weep----once you *play traders * have a real track record you wont mind the tax and you'll be in the position to trade for real.

In the meantime your contributions are helpful in many ways.


----------



## sails (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> How does it make me money?
> 
> Well everyone following a trend leaves the door open for others to go against the trend and get bargains.
> 
> If everyone is buying red shirts cause that is the trend, then market forces will dictate black shirts will be on sale, I'd buy an Armani black shirt at a discount to your red shirt!  You wouldn't - you'd pay too much for the red shirt and wear it till it went out of fashion.  Fair enough too, most people would, but when black shirts come back into fashion, years later - I've already got one, and I paid bugger all for it.  You'd rush off and buy a black shirt at a premium. My costs are lower. Your clothes bill would be higher than mine.



To follow through on this analogy, the trader also looks to buy the black shirts when they are on sale, but his goal is to sell them when they are expensive and then repeat the whole process when the next colour shirts are on sale.  More effort required, but the goal of the trader is to generate extra income over and above the increased fees.

Perhaps T/A vs. F/A has more to do with timeframe.  
F/A is far more necessary for long term investors but not much use to the short term trader.
Day traders would be predominately using T/A with perhaps a just enough F/A to reduce the risk of being caught in a bankruptcy.
Then there are those who trade medium term who can't see what all the fuss is about and use both


----------



## tech/a (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=forum;f=74
> 
> Read and weep----once you *play traders * have a real track record you wont mind the tax and you'll be in the position to trade for real.
> 
> In the meantime your contributions are helpful in many ways.





Just on this.
I'm sick to death of those people who keep belting out "I'm better than you are rubbish"
Everytime ANYONE puts up decient quantifiable arguement you get these morons who have nothing but "look at me look at me arguement".

Duc and I have discussion at length and we both question the merits of each others ideas,some accepted most not.

I spend a lot of time and thought into the work I post.
I want nothing from it.
I dont have to do it,but from the feedback from many I hear from both here and Reefcap,its appreciated and found helpful.

*Grow up people and become involved in making the challenge of trading an enjoyable journey by sharing experience with other with like objectives.*

Everyone has something to add even those who's ideas are percieved as flawed by others. In fact the lesson learnt from failures can be much greater than the winners.


----------



## Sean K (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Keep posting Teck, appreciate ALL the comments here. Just have to wade through some dirt for the diamonds sometimes.

I don't understand the link you posted to Nick's website though. A bit of cross promotion??


----------



## RichKid (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Magdoran said:
			
		

> Hello Yogi,
> 
> 
> Thanks for your comments, much appreciated.
> ...



Nice post Mag, I'm all for some transparent Gann discussion and critiques too; instead of the 'Emperor's New Clothes' type debates where 'non-believers' are condemned, I'm also glad to see you critically analyse Gann and sift through it instead of swallowing it whole. Even normal TA and EW people could just give price projections and estimates but without a clearly explained theoretical basis for it we have little clue as to what's occurring. I hope this leads to some fruitful discussion.


----------



## tech/a (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				kennas said:
			
		

> Keep posting Teck, appreciate ALL the comments here. Just have to wade through some dirt for the diamonds sometimes.
> 
> I don't understand the link you posted to Nick's website though. A bit of cross promotion??




Kenna's

The link is to Techtrader.

Techtrader is a longterm trading method developed in an attempt to help others find a mechanical methodology which could be proven to be profitable by trading it live. The exercise is fully disclosed and has over the years generated much discussion. It is traded continuously with weekly results posted by another member who has kept records since inception (Daryl or dl)
Nick found a seperate place for it on Reefcap as discussion was at the time disjointed.
Neither Nick or myself make anything from it,thats not its intended purpose.

I have no involvement with Reefcap and am simply a contributor.


----------



## Sean K (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Tech, I tried to register but my email address has been banned?? What the? I'm a nice person.    Must be because it's hotmail. Oh well.


----------



## lesm (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

tech/a,

I wouldn't worry about it too much.  T/T stands on its own and is available for public scrutiny, as well as the backgound to its develpment.

Those of us  tha have been around for a long time, including the early stock central days are aware of how much time you have contributed to a number of fora, as well as providing assistance and advice to people over the years.

People may not always agree with you, but it would be a boring if they did and non-constructive.

It's interesting that a number of its detractors do not put forward counter approaches, either by presenting alternative systems or running a trading journal.

Non-disclosed approaches should always be treated as circumspect and its interesting that some protaganists are actually seeking commercial gain. So, it is easy to understand why they may wish to attempt to discredit the system or its author. Some cheap shots in this thread, that's for sure.

Keep up the good work and treat it as water off the Duck's back.

Enjoy your holiday in the UK. We can all catch up with you when you return.

Kennas,

The information related to T/T is over 100 pages with a number of associated discussion threads, hence having it in a single location is an easier approach.

Cheers.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

It is amusing just how popular this thread is. 28 pages already.    

It is a great arguing point that is for sure.

Back to it...



			
				sails said:
			
		

> Perhaps T/A vs. F/A has more to do with timeframe.
> F/A is far more necessary for long term investors but not much use to the short term trader.
> Day traders would be predominately using T/A with perhaps a just enough F/A to reduce the risk of being caught in a bankruptcy.
> Then there are those who trade medium term who can't see what all the fuss is about and use both




I still say you can't use both. Trading works, investing works, but I don't believe you can combine both to get even better results. You're only gonna get worse results.

Because they contradict each other.  One looks at the true value of a company, one looks at the popularity.  I've never heard of a strategy to intersect them both. 

You can't have an undervalued popular company.   

All you'd end up doing is buying companies that are not too overvalued and are popular, just not too popular - which seems ridiculous. You're finding the middle ground which reduces any advantage you had.


----------



## RodC (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Because they contradict each other.  One looks at the true value of a company, one looks at the popularity.  I've never heard of a strategy to intersect them both.




Rubbish, used properly TA and FA can complement each other, if you think they only contradict then you really have no idea.

Rod.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				RodC said:
			
		

> Rubbish, used properly TA and FA can complement each other, if you think they only contradict then you really have no idea.
> 
> Rod.





Rod, please list 3 companies now which are good TA and FA purchases.

So I can learn from your expertise..   


I'll give you one myself - PRG....  do you agree it is??

Thanks..


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> I still say you can't use both. Trading works, investing works, but I don't believe you can combine both to get even better results. You're only gonna get worse results.




Why? How?



> Because they contradict each other.  One looks at the true value of a company, one looks at the popularity.  I've never heard of a strategy to intersect them both.




Actually, TA does not look at the popularity of a stock. 



> You can't have an undervalued popular company.




Popular as in stock prices or popular as in its products?   



> All you'd end up doing is buying companies that are not too overvalued and are popular, just not too popular - which seems ridiculous. You're finding the middle ground which reduces any advantage you had.




But if the price went up for the time frame you had in mind, that`s all that matters isn`t it?


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				kennas said:
			
		

> Tech, I tried to register but my email address has been banned?? What the? I'm a nice person.    Must be because it's hotmail. Oh well.




PM Nick it`s his site Kennas.


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Yep I'm afraid it's rubbish realist. Let's look at 2 examples where TA/sentiment analysis can be used to aid investing and then purely for trading.


 Let's assume for a minute you only have enough capital to buy 5 decent investment positions.  Let's also assume that there are 10 stocks on the market that meet your FA criteria.  And let's acknowledge at least that TA allows you to measure sentiment towards a particular stock at any given time.

Now......5 of the 10 stocks that meet your criteria look very good on paper with nice ratios ,strong growth etc...... , are in a strong sector and have a rising chart (which confirms their strength and potential for further gains).  Good examples in recent times include IMD and STS.  I *invested* in IMD in the mid 20's and STS below 50c and still hold.  I don't call that trading.

The other 5 of your 10 stocks are the ones you may prefer.........dirt cheap ratios , nice dividend yield but little/no growth and the sector they're in is on the nose.  They have poor sentiment and have just been getting cheaper and cheaper.........eg) PBB and CMI in the auto sector in recent years.

If you would honestly rather hold the 2nd group then you are doomed in terms of making superior returns in the long term IMHO.



OK - let's get onto another analogy other than shirts for describing TA.      On the markets we have companies that make a nice profit and those that don't.  I often "invest" in the profitable companies as they bear less watching and "trade" the speccies that move more on sentiment than anything else - hence the usefulness of TA is even greater in the speccies.

Now you may say that anyone who buys a loss making or speculative company with the intention of selling higher and using sentiment (trading) is an idiot - I say they are using the forces of supply and demand to their advantage.

Back in my previous occupation (as a pharmacist) we had a product hit the shelves in the late 90's called Cellasene.  It was one of the many bull$hit products on the market designed to fleece women on the basis of vanity.  In my professional opinion it was junk and I told my clients so - but did that stop women flocking to it for a magical cure to cellulite?..........so this is the equivalent of your speccy company (no fundamental basis for buying it as it's junk)

Very quickly Cellasene sold out and was all over the news............there was almost a black market in it for a while there.  Sentiment was very much bullish for Cellasene.

Now do you think the guy who came in and cleaned out my stock @$90 a box and later that week flogged this junk at the Vic market for $200 a box was an idiot ?? 

Cheers,

Ed


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Popular as in stock prices or popular as in its products?




Stock prices..


Trading = short term
Investing = long term
Both at the same time = middle term (how long is that?)  
Trading = stock price
Investing = buying into a company
Both = buying into a popular but cheap company?   
Trading = quick profits
Investing = compounding and tax reduction
Both = quick compounding   


Put it this way if you think you can invest short term you are dreaming. There is only one way to invest - LONGTERM.

Secondly if you think you can trade medium term (ie over a year to reduce tax) you are dreaming.  The stock price dictates how long you trade for, not you.

So how can you possibly intersect both, please explain what you buy and how long you hold it for, and when you sell it?

Do you use stop losses? or do you reduce tax by holding for 1 year? You sure as hell can't use both.

When do you sell, when the fundamentals change or when the stock price changes? or both?

Anyone who thinks you can trade and invest together is wrong  And anyone who thinks investors use charts to asses a companies value is clearly deluded.

You can trade or you can invest you can not do both at the same time with the same purchase.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> Now......5 of the 10 stocks that meet your criteria look very good on paper with nice ratios ,strong growth etc...... , are in a strong sector and have a rising chart (which confirms their strength and potential for further gains).  Good examples in recent times inclue IMD and STS.
> 
> The other 5 of your 10 stocks are the ones you may prefer.........dirt cheap ratios , nice dividend yield but little/no growth and the sector they're in is on the nose.  They have poor sentiment and have just been getting cheaper and cheaper.........eg) PBB and CMI in the auto sector in recent years.
> 
> If you would honestly rather hold the 2nd group then you are doomed in terms of making superior returns in the long term IMHO.




Well Ed, I think you are wrong.

You say CMI is a bad buy  because of poor sentiment.  As you may or may not know I bought CMI Ed.

It is up 30% in the past month!!     

Would you buy it now?? 


And look at PBB.  Good to.



IMD is not a good fuandamental investment.

SDS is close but I would not invest in it though.


What do you think of PRG?


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I realise I am never going to win an argument with you -I'm a Realist   :  but you're looking at things selectively.  If you want to try and pick bottoms in falling stocks as a profession then good luck - the point about CMI and PBB is that purely in PER terms they have looked cheap all the way down over the last few years.  I'm not talking the last few weeks - everything has bounced the last few weeks.

PRG looks a decent company to me and is certainly not on the nose in sentiment terms so I wouldn't try and convince you not to buy it.  It's not enough of a stand out for me though. I think overall you're a bit too focussed on ratios without looking at the growth potential though.

Ed


----------



## yogi-in-oz (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Magdoran said:
			
		

> Hello Yogi,
> 
> 
> Thanks for your comments, much appreciated.
> ...






Hi Magdoran,

...... a second invitation will not be required ... 

Let's take it to:

https://www.aussiestockforums.com/forums/showthread.php?t=3651

-----

Just for the record,  there's never been any promotion 
on this forum for the astrotradiing package and there 
probably will never be any such promotions .....

..... simply because this package is not available to
Aussie traders, so our target market is ALL export-
oriented (more than 20 countries to date, in fact).

So, what would be the point of pushing a sales 
barrow in here?

happy trading

  yogi


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist,
First there is this:



> Put it this way if you think you can invest short term you are dreaming. There is only one way to invest - LONGTERM.




Then:



> The stock price dictates how long you trade for, not you.




Then:



> It is up 30% in the past month!




So you are fundamental and believe investing is long term but seem to be influenced by the short term moves that theoretically you cannot realise until after 1 year to receive a tax benefit for the hassle of buying into the company.

Sorry I just don`t understand your logic.

My question for you:
If the stock dictates how long you hold for, and that may be less than 1 year so no tax benefit; how do you know it is time to get out?


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> I realise I am never going to win an argument with you Realist   :  but you're looking at things selectively.  If you want to try and pick bottoms in falling stocks as a profession then good luck - the point about CMI and PBB is that purely in PER terms they have looked cheap all the way down over the last year or so.  I'm not talking the last few weeks - everything has bounced the last few weeks.




Everything has bounced 30% recently?  

It paid out a half yearly 12% dividend in May as well.   



> PRG looks a decent company to me and is certainly not on the nose in sentiment terms so I wouldn't try and convince you not to buy it. It's not enough of a stand out for me though. I think overall you're a bit too focussed on ratios without looking at the growth potential though.




I agree totally. I am not interested in predicting growth potential - I purely look at the past.  I don't try and predict the future.

Is that wrong?  should I be trying to predict the future?


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Is that wrong?  should I be trying to predict the future?




You should have some interest in what the future may bring you. Call it prediction, projection, gambling, goal fullfillment, profit capturing.etc.


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Numerous stocks have bounced >30% and not necessarily because they're any good.  In many cases it's because they're junk and got hammered harder than most during the correction.  I wouldn't get too focussed on your 30%.

And yes.............all my best investments have involved reading between the lines in company announcements and getting a feel for the growth potential in the near term.  There's a big difference between buying cheap and buying cheap growth.

Anyway - I'm outta here for a while again LOL 

Ed


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Realist,
> So you are fundamental and believe investing is long term but seem to be influenced by the short term moves that theoretically you cannot realise until after 1 year to receive a tax benefit for the hassle of buying into the company.
> 
> Sorry I just don`t understand your logic.
> ...




Snake, I was just pointing out to Ed that the 'dog' he picked has paid out half a 12% dividend and risen 30% recently.

Snake, that is the same question I asked before about this theory you can do both TA and FA at once - when you are doing both FA and TA investing at once when do you sell??     what about stop losses? what about tax and compounding - you can;t ahev it all - when do you sell?


My answer in FA investing is hold for as long as possible, the main reasons to hold are compounding, dividends and tax.

You may want to sell if the companies fundamentals change (ie profits go down), if it becomes overvalued. If you need the money (family, house, lose job etc.) or if you have tax advantages in doing so ie. lost somewhere else so you pay no tax, or moved overseas where you can avoid it.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> Numerous stocks have bounced >30% and not necessarily because they're any good.  In many cases it's because they're junk and got hammered harder than most during the correction.  I wouldn't get too focussed on your 30%.
> 
> And yes.............all my best investments have involved reading between the lines in company announcements and getting a feel for the growth potential in the near term.  There's a big difference between buying cheap and buying cheap growth.
> 
> ...




Fair enough.  We'll see how you go in a bear market or a crash sooner or later.


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Just for clarity's sake CMI has paid a 10-12c dividend every year for the last five years , has been on PER's between 8-10 for the last 3 years and even after your 30% bounce is 43% lower than it was 2 years ago when the stock was also nice and cheap.  So much for ratios telling the story without some form of qualification. Eventually , given a positive outlook, it may well be genuinely cheap.  The way it has progressed in recent years does illustrate my point clearly whether you like it or not.   

As far as corrections go I will be more than happy to compare figures with you during the next correction and see how our respective approaches stack up.

Ciao

Ed


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Snake, that is the same question I asked before about this theory you can do both TA and FA at once - when you are doing both FA and TA investing at once when do you sell??     what about stop losses? what about tax and compounding - you can;t ahev it all - when do you sell?




Realist,

One`s exit strategy will determine when to sell. 

I can`t answer your question because I am not a TA/FA guy. Maybe Swingstar can answer it, or Mostafa.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> You should have some interest in what the future may bring you. Call it prediction, projection, gambling, goal fullfillment, profit capturing.etc.




The efficient market theory dictates companies with a poor outlook are priced cheaply.

The fact I try and buy cheap companies mean I focus on buying companies with a poor outlook.

I do not go looking for companies with great outlooks, if anything I go looking for companies with poor outlooks.

I know all too well analysts are wrong as often as they are right.

I own about 6 stocks that one analyst or another has recently said would be their worst buy of the year.    

You'll find some analysts worst buys outdo their best buys.


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I keep coming back but FFS - now you're quoting efficient market theory which Buffett believes is a load of rot and which effectively means that your "poor outlook" companies are fairly valued because the market is efficient. And.........that you and everyone else is wasting their time trying to outperform benchmark indices.

WTF  

This is clearly a waste of time

Ed


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> I keep coming back but FFS - now you're quoting efficient market theory which Buffett believes is a load of rot and which effectively means that your "poor outlook" companies are fairly valued because the market is efficient.
> :




Graham agrees with efficient market theory.

But you miss the point.  The poor outlook companies are sold currently at a discount. Obviously because analysts predict future earnings will not be as good.  Why buy them when you can buy a company with amazing prospects?

My point is analysts are often wrong.  Or right in the short term, but long term things change.

If you are planning to buy a share for 10 years it is largely irrelevant what analysts short term predictions for the stock are.


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Tell all that to the people who bought seemingly cheap companies like HIH and ION with a 10 year outlook.

What you say makes not one iota of sense as far as I'm concerned.

I really think the next bear market and/or recession will be good for you (sincerely) because that's the only way you're going to feel enough pain to learn some lessons. If you can then maintain your current stance after watching the value of your portfolio halve and see a few of your "cheap" companies go under then I really don't know.........I understand you're a long term investor and all but we're here to see if we can do better than that aren't we??

I agree with you about the importance of corrections/bear markets. Period such as 2002 are the best time to really see if you have what it takes and get in there and develop your systems/philosophies.  If you can come out the other end better off than you were before then you know you're on the right track.

Over and out........somebody else's turn  :


----------



## lesm (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Yes, it would be good if Joe or one of the moderators would step in here.

We are now seeing some serious allegations that could give rise to a potential breach of the regulations administered by ASIC.

Gentlemen and others, (as it applies), it might be a good time to get the egos under control, false accusations (in public) may also have repercussions for the accuser, as there is a requirement to produce facts and evidence.

This or any other forum is not necessarily the right place. There are proper avenues.


----------



## Joe Blow (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				lesm said:
			
		

> Yes, it would be good if Joe or one of the moderators would step in here.
> 
> We are now seeing some serious allegations that could give rise to a potential breach of the regulations administered by ASIC.
> 
> ...




Agreed Les,

I do not want to see innuendo or unfounded allegations on ASF and as a result some posts in this thread have been removed. This thread is getting increasingly personal and if it continues on in this fashion I will be forced to suspend some accounts.

I urge everyone involved in this nonsense to grow up, leave the puerile playground stuff for other forums and stick to the issues. If you can't then perhaps you will be happier posting at another forum.

I will be watching this thread closely from here on in so please, as Les suggested, get the egos under control gentlemen and stop the personal attacks and innuendo.


----------



## RodC (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Rod, please list 3 companies now which are good TA and FA purchases.
> 
> So I can learn from your expertise..
> 
> ...




Realist,

I don't know what would be a good FA purchase as I don't use FA for stock selection.  For my main portfolio I select stocks using a TA system then have a cursory glance at the fundamentals to make sure that the selection is something I'm comfortable with and is a reasonable "fit" with my existing holdings.

PRG looks reasonable both technically and fundamentally, but unless it got "triggered" I wouldn't even look further at it.

Rod.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> Tell all that to the people who bought seemingly cheap companies like HIH and ION with a 10 year outlook.




Ahhh yes the oldest criticism traders have of buy and "hope" investors.      Suggesting that we could have held and kept a large company that went under like HIH and lost "all" our money.

I'm sure some mums and dads did lose all their money on HIH.  They aint Fundamental investors that diversify though - that is for sure.

I did not hold HIH or ION so they are irrelevant to me.

And even if I did they would be at most 5% of my portfolio (I diversify) - so no great loss in the whole scheme of things.

Neither did I hold ANZ or BHP or CBA years ago when they were 1/4 of what they are now (and they paid good dividends all those years) you probably made 6 times what you invested in 10 years just buying and holding them.

So your argument that I could have bought some duds is right.  Just like you could buy some crappy exploration company that has a trading freeze before your stop loss is activated and it goes under overnight - it is not impossible, it could happen.



> If you can then maintain your current stance after watching the value of your portfolio halve and see a few of your "cheap" companies go under then I really don't know




It is impossible that my porfolio halved.  That is the beauty of it.  You can not possibly suggest that Westfield, Fosters, BHP, CBA, IAG, Bluescope, DB Reef all could halve.  That in all reality is not possible.  They are not overvalued, if anything they are on average undervalued they all make good profits.  They can go down - but to halve is just ridiculous.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				RodC said:
			
		

> For my main portfolio I select stocks using a TA system then have a cursory glance at the fundamentals to make sure that the selection is something I'm comfortable with and is a reasonable "fit" with my existing holdings.




That is pure trading to me.  No investment part whatsoever.

A cursory glance, to see what?  What have you seen that has ever stopped you buying?

What does a cursory glance at MTN's fundamentals tell you?  or BMN's?


----------



## RodC (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> That is pure trading to me.  No investment part whatsoever.




I never claimed it wasn't trading. But I'm not aware of any reason that says trading can't be part of an investment strategy.



> A cursory glance, to see what?  What have you seen that has ever stopped you buying?




I did say it was only cursory. 

It's mainly to check out the dividend yield and history (dividends pay the interest on the margin loan). A glance at recent announcements to see if there's been any obvious reason for recent price movements. And also a check of which sector the company is in just so the portfolio doesn't bceome too overweight in one area.



> What does a cursory glance at MTN's fundamentals tell you?  or BMN's?




I trade on margin, neither of these 2 have made it past the fundamentalists who determine the accepted shares on the margin list so I'm not interested in them. They also don't pay dividends, so I'm doubly not interested.

Rod.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Rod, first you said this...



			
				RodC said:
			
		

> Rubbish, used properly TA and FA can complement each other, if you think they only contradict then you really have no idea.
> 
> Rod.




Then you say this..



> I never claimed it wasn't trading.






> I did say it was only cursory.




Lets make one thing clear - You do not combine both technical and fundamental analysis.   You trade and take a cursory look at fundamentals.   

Your trading sounds highly weird as well. Not that there is anything wrong with that.

What have you bought recently. And why?


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Like I said Realist you've obviously never experienced real carnage on the markets.  BSL dropped 40% in five months only recently and that wasn't even a bear market..........it was nice and cheap on PER right at the top too   ,  BHP very nearly halved in 97-98.  FGL lost a lot of ground 2001-2003 and is only now back around its 2001 peak.I could go on.  If you're happy to experience paper losses like that and ride them out (or hold stocks that go nowhere for half a decade) then good for you.  Personally I'd rather be cashed up to buy them when they actually are cheap and on the up.  Add in a couple of CMI type "value" stocks from the last few years and you'll just have a ball when a fair dinkum bear market hits.  NOT.

It's pretty clear you haven't been investing long enough to suffer some real damage. Your time will come (just like it has for all of us) and maybe then you'll start to look and see if there's a better way.  Perhaps come back to this thread (forgetting me for a minute) and look at how some of the experienced traders/investor who do it for a living work.  

We've done this to death , gone around in circles and ended up right back where we started.  Given your strategy I'd recommend you invest in an index fund as I can't see you outperforming the index long term with your strategies. I sincerely wish you all the best but I really fear for your financial health.

I've officially 100% resigned from this thread until some sort of new tangent pops up. If I keep replying every time Realist says something illogical I'll be here fulltime


----------



## RodC (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Lets make one thing clear - You do not combine both technical and fundamental analysis.   You trade and take a cursory look at fundamentals.




Yep, that's what I said.



> Your trading sounds highly weird as well. Not that there is anything wrong with that.




If having a system that works is weird, then I can live with that.

Rod.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> Like I said Realist you've obviously never experienced real carnage on the markets.




Great guess.  BUT WRONG  again.

Mate, I work in IT. I have Nasdaq shares now.

I've had Nasdaq shares in 1999 through to now.


Has there been a bigger crash apart from 1929 to compare with what I went through?


Yourself? - please tell us your market carnage stories, I bet they do not compare to mine..   

My shares were in well established successfull IT companies as well - they made profits - they were not dotcoms disaters trust me. They "were" - were being the operative word, good companies.


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Great guess.  BUT WRONG  again.
> 
> Mate, I work in IT. I have Nasdaq shares now.
> 
> ...




I apologise then.  That says all anyone needs to see.



> Yourself? - please tell us your market carnage stories, I bet they do not compare to mine..




I'm sure they don't   

You just keep providing me with such great ammo.  If I didn't know better I'd think you were actually trying to prove my points for me.

All the pros I know have copped a belting similar to yourself and learned from it.  If you haven't learned anything about how important sentiment is to investing from your experience in profitable Nasdaq companies then you're beyond help.

Bye.  I'm actually going to ban myself from this thread now - you just keep pulling me back in with bigger and bigger clangers.

Ed


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> I've had Nasdaq shares in 1999* through to now. *
> 
> 
> I apologise then.  That says all anyone needs to see.




Well, if you think you would have got out of that Nasdaq crash and stayed out with your trading methodologies - think again.  Big wig Yanks that would eat you for breakfast got smashed.  You can't sell if no-one will buy.

Almost everyone got smashed overnight.

And if you think buying and holding did not work then check CTXS.

I held and held and held.  It worked!!  I'm still holding.

Everyone else sold, to get back what was left of their life before it went to zero.

I lost big time though, buy and hold doesn't work when your company worth $80 per share gets bought out at $8 when it's share price is $4 - RATL.


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Almost everyone got smashed overnight.




Absolute tosh. The pigs got slaughtered, fair dinkum traders with systems got out when appropriate.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Absolute tosh. The pigs got slaughtered, fair dinkum traders with systems got out when appropriate.




Got any facts to back this big call Wayne??

Warren Buffet did not get smashed.   Mums and Dads who diversify did not get smashed.  Pure fundamental investors who diversify did not get smashed.

Who do you think got smashed?

I did cause I did not diversify.  I did not invest fundamentally then.   I got given shares though - so really I lost alot of paper money.  

Many traders got smashed that is for sure.    

If you seriously think traders escape crashes better than anyone else you are dreaming.

when has Buffet ever been hammered from a crash??

Ben Graham was once in 1929 to 31  - as a young fella, he learnt from it like me.


----------



## professor_frink (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Got any facts to back this big call Wayne??
> 
> Warren Buffet did not get smashed.   Mums and Dads who diversify did not get smashed.  Pure fundamental investors who diversify did not get smashed.
> 
> ...





You are a funny man Realist! Funny, funny man


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> You are a funny man Realist! Funny, funny man




Indeed Professor!  

As a general rule, I always try to laugh *with* people. Sometimes though...

Realist, what you need to learn is: To get out of a hole, you have to stop digging.  

Cheers


----------



## Magdoran (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Indeed Professor!
> 
> As a general rule, I always try to laugh *with* people. Sometimes though...
> 
> ...





Now you've made me spill my drink... again!  The Duc did it to me yesterday, now you get me today!

Here I was pouring over various charts working away, and this comment comes through...  seriously, I nearly fell off my chair just imagining the "china syndrome"!!! Hahahahaha


Mag


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

My work is nearly done for today then....     

This thread is fast becoming the most popular ever.

Tomorrow we shall discuss why Warren Buffet is so rich, and why there is not one trader anywhere near the rich list.

We'll also discuss tax and why the government deliberately taxes the buggery out of traders.

And after lunch we'll go through the details of why brokers want traders to buy and sell so often.

You guys can then accuse me of possibly putting every cent I owned into HIH 10 years ago, then you can tell me I may be rich when I am 90 but you are rich now.  And you can bait me by telling me how boring investing is, how I need to work fulltime and much you made today and I much I made.   

Till tomorrow.


----------



## professor_frink (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> My work is nearly done for today then....
> 
> This thread is fast becoming the most popular ever.
> 
> ...





And tommorrow someone will explain  to you that the nasdaq didn't lose near on 80% of it's value in one trading day.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> And tommorrow someone will explain  to you that the nasdaq didn't lose near on 80% of it's value in one trading day.




Where did I say it did???     

Some speculative Nasdaq shares did though.   Such as KTTEQ

Any trader thinking a stop-loss will save their arss on that is dreaming.


_Kitty Hawk, Inc. (NASDAQ:KTTEQ):   When the truth about the Company was revealed, the price of the stock dropped over 80% in one day and 93% from a class period high of $13.50.  _ 

http://www.thetimesharebeat.com/archives/2000/fin/fnmay152.htm


----------



## professor_frink (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Where did I say it did???




Well what did you mean by this statement then-



			
				Realist said:
			
		

> Almost everyone got smashed overnight.







			
				Realist said:
			
		

> Any trader thinking a stop-loss will save their arss on that is dreaming.




If there were problems with the company that weren't disclosed, investors wouldn't have done any better.





			
				Realist said:
			
		

> If you seriously think traders escape crashes better than anyone else you are dreaming.




Do you have any facts to back this claim up?


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Prof Frink said:
			
		

> If there were problems with the company that weren't disclosed, investors wouldn't have done any better.




Traders use stop-losses, investors diversify....


A trader puts their money into one stock, (they have a 3% stop loss).

Overnight the stock plummets 80% - they are rooted.



An investor, puts 5% of their investments into 1 stock.

The stock plummets 80% overnight. The investor loses 4%.



Who is worse off by up to 76%??


----------



## professor_frink (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Traders use stop-losses, investors diversify....
> 
> 
> A trader puts their money into one stock, (they have a 3% stop loss).
> ...




Where on earth did you dig up this manure from?


----------



## RodC (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> A trader puts their money into one stock, (they have a 3% stop loss).





So by this criteria I can't be a trader as I have more than one stock?

More rubbish and generalisations.


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				RodC said:
			
		

> So by this criteria I can't be a trader as I have more than one stock?
> 
> More rubbish and generalisations.




Indeed, that on had me ROTFLMFAO.

That's what you call leaping to delusions


----------



## dallee (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Seeing as this is sitting in the beginners' thread, can I ask what if for argument's sake we say that technical analysis provides the greater returns, but the investor is not confident/competent enough to use it and is happy with the returns from some solid research and a more conservative buy-and-hold strategy that produces good dividends but a slower capital growth. Isn't it better to be in the market in this capacity than not at all? 

Would I, for example, be foolish to gear into some blue chip stocks, watch the market to the best of my ability, make a few mistakes along the way but hopefully come out on top in the end; or, if this is the limit of my current abilities, salary sacrifice into super with the knowledge someone else has the expertise to make it work? Although the second option doesn't sound as much fun.


----------



## Magdoran (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> Where on earth did you dig up this manure from?






			
				RodC said:
			
		

> More rubbish and generalisations.






			
				wayneL said:
			
		

> Indeed, that on had me ROTFLMFAO.
> 
> That's what you call leaping to delusions




Guys, Agggggg, stop it!  How can I get my work done when I keep #*%$ing myself laughing??? 

I think we have found our entry for the next comedy fest!  Where else could you go for a cheap nights farcical entertainment live?

Mag


----------



## Magdoran (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				yogi-in-oz said:
			
		

> Hi Magdoran,
> 
> ...... a second invitation will not be required ...
> 
> ...



Hello Yogi,


Point taken about promotions on bulletin boards, you are quite correct, and in hindsight I should have considered the potential for a conflict of interest and propriety.  I recognise that to think this way you must be a person of integrity.

Just out of interest, why is the package not available in Australia, I noted this when I was researching your posts over a month ago.

Re: your thread, actually I have been following it, and went to a variety of your pages, but I must say, although the astrology chart looks impressive, that still doesn’t tell me much about your T/A, and which Gann methods you are using… except that you did post something on natural squares from memory – was that essentially based on the square of the range by any chance?

Happy to move to a quieter thread, but here you’ll get much more exposure…


Regards


Magdoran


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				dallee said:
			
		

> Seeing as this is sitting in the beginners' thread, can I ask what if for argument's sake we say that technical analysis provides the greater returns, but the investor is not confident/competent enough to use it and is happy with the returns from some solid research and a more conservative buy-and-hold strategy that produces good dividends but a slower capital growth. Isn't it better to be in the market in this capacity than not at all?
> 
> Would I, for example, be foolish to gear into some blue chip stocks, watch the market to the best of my ability, make a few mistakes along the way but hopefully come out on top in the end; or, if this is the limit of my current abilities, salary sacrifice into super with the knowledge someone else has the expertise to make it work? Although the second option doesn't sound as much fun.




Nothing foolish there at all.  The keys are :

-like all of us you will constantly be learning and , if you're new to the game, you only trade/invest money that will not kill you if it's lost

-you have acknowledged that you are on L plates and that's half the battle

-you learn from your mistakes and look to develop new strategies to counter those mistakes as they occur


I agree entirely that it's better to be in the market than not. The worst you can do is lose some money and learn via these "tuition fees".  Just make sure you try and minimise your risk exposure for a while so that you're in a position to survive and make use of your developing skills later on.

If you are going to use fundamental analysis only (nothing wrong with that - I did it for years) just be aware that :

- stocks usually go into downtrends for a reason (a cursory glance at the price trend before buying could save you some money)

- stocks usually trade "cheap" for a reason. Look beyond simple price/earnings and price/book value analysis

- try to find "cheap stocks" with a chart that isn't disastrous (preferable) and with a decent short to medium term outlook for earnings growth (a must)

-cyclical stocks often trade cheap at their peak (ala BSL) and look expensive near the bottom

-income in the form of dividends (ala TLS) isn't good enough when you've lost half your capital.  By always trying to buy a business with the right outlook you should have some sort of shot at protecting your capital - then the dividends will mean something

- read what Realist says (other than diversifying which is smart , especially early on) and think carefully about doing the opposite.

Ed


----------



## cuttlefish (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				dallee said:
			
		

> Seeing as this is sitting in the beginners' thread, can I ask what if for argument's sake we say that technical analysis provides the greater returns, but the investor is not confident/competent enough to use it and is happy with the returns from some solid research and a more conservative buy-and-hold strategy that produces good dividends but a slower capital growth. Isn't it better to be in the market in this capacity than not at all?
> 
> Would I, for example, be foolish to gear into some blue chip stocks, watch the market to the best of my ability, make a few mistakes along the way but hopefully come out on top in the end; or, if this is the limit of my current abilities, salary sacrifice into super with the knowledge someone else has the expertise to make it work? Although the second option doesn't sound as much fun.




Although its copped a fair bit of criticism in this thread, a fundamentals based approach will teach you a lot. There's probably no clear safe option for a beginner entering the market, because the first thing to overcome in sharemarket investing is your emotions which will come into play regardless of your approach, but investing in companies with sound fundamentals is likely to lower your downside risk.  Its important to do your research thoroughly though.  

Even if you end up deciding trading is a more profitable way of working the market there is no harm in understandinging and interpreting the basic financial aspects of companies like P&L, cashflow, balance sheet, capital structure etc.


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> Although its copped a fair bit of criticism in this thread,




I dont think FA has copped it in this thread. What has copped it is the divergence of rhetoric and practice.

OF course FA is valid... essential for long term holdings.

What sets the TA's off is TA getting slagged off at unjustifiably. It is usually done without thought and merely parrots what a few people with vested interests have say, for the sake of sales. eg Rivkin, Fitzherbert and other such tosspots.

Or they read Graham or Buffet and have a religious epiphany! LOL


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				dallee said:
			
		

> what if for argument's sake we say that technical analysis provides the greater returns, but the investor is not confident/competent enough to use it and is happy with the returns from some solid research and a more conservative buy-and-hold strategy that produces good dividends but a slower capital growth. Isn't it better to be in the market in this capacity than not at all?




 

If TA gives you greater returns longterm how the hell did Warren Buffet make US$60,000,000,000 doing fundamental investing, buying undervalued companies on a downtrend and holding forever?



			
				WayneL said:
			
		

> Or they read Graham or Buffet and have a religious epiphany! LOL




Graham is the god of investing alright.  Warren Buffet recognised thsi and begged him to teach him. Buffet improved on it ever so slightly buy holding forever and not always looking for a good discount.


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> If TA gives you greater returns longterm how the hell did Warren Buffet make US$60,000,000,000 doing fundamental investing, buying undervalued companies on a downtrend and holding forever?




He didn't have the processing power available today.


----------



## Bobby (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I held and held and held.  It worked!!  I'm still holding.
> 
> .



 Better stop soon , you could go Blind


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				swingstar said:
			
		

> He didn't have the processing power available today.




My god, I daren't think how rich he'd be if he traded with a computer instead of invested.


----------



## cuttlefish (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> I dont think FA has copped it in this thread. What has copped it is the divergence of rhetoric and practice.




ok fair call, replace my first sentence

"Although realist, the main advocator of fundamental analysis in this thread, has copped a fair bit of criticism and done a fairly inconsistent job at defending it, a fundamentals based approach will teach you a lot"


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Bobby said:
			
		

> Better stop soon , you could go Blind


----------



## dallee (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hello Realist, I did wonder whether I'd get a proverbial slap from you for posing a question in my first week of reading this forum, and there it was. I must say that I did give you a couple of clues to my beginner status. Thank you Cuttlefish for the kinder response. Is beginner lounge misnamed perhaps?

dallee


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> If TA gives you greater returns longterm how the hell did Warren Buffet make US$60,000,000,000 doing fundamental investing, buying undervalued companies on a downtrend and holding forever?
> 
> 
> 
> Graham is the god of investing alright.  Warren Buffet recognised thsi and begged him to teach him. Buffet improved on it ever so slightly buy holding forever and not always looking for a good discount.




What is often glossed over is the fact that Buffet is not an individual investor. He didn't make all of that money "investing". Buffett is primarily a businessman and uses OPM... whopping great gobs of OPM. He is hugely leveraged with other people assuming most of the risk.

Any individual investor who thinks they are emulating buffett.... or even graham are seriously off with the pixies.... delusional.

I think that has been adequately demonstrated here.

Cheers


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> If TA gives you greater returns longterm how the hell did Warren Buffet make US$60,000,000,000 doing fundamental investing, buying undervalued companies on a downtrend and holding forever?
> 
> 
> 
> .




Hope you're reading dallee   

I believe we've covered this already.  You can only trade so much money using TA only and , if you're good at it , you should be able to get higher returns than "investing"  . Trading <$2m is not worth the trouble for Buffett but is for most of us.

Comparing Buffett with the general public is ridiculous. He formed a decent reputation amongst those close to him and then established the Buffett Partnership where his friends and family entrusted him with a fortune (for the time) and he invested it, took a nice old cut and used it to grow far faster than you or anyone else could using the same strategies.  He then got to a size and influence where he could either buy businesses outright (ala Berkshire - which was actually a dog of a textile company)or , at the very least, have a direct line to management.  This would again be something very few of us will ever achieve.

He then moved into insurance companies and used "the float" to further leverage his returns using OPM again.

What you need to learn is the difference between a simple downtrend for no apparent reason and buying good growing stocks that suddenly become "on sale" during a correction.  You may have bought CMI right at the bottom    but let's use it as an example again.

In the last 2 years CMI has moved from $2.30 to $1.30 and has been on "cheap" PER all the way down. It has a history of wildly fluctuating earnings and sells product into a highly competitive cyclical industry. If Buffett were dead he would turn in his grave at the suggestion of him investing long term in such a dog.

Ed


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> My god, I daren't think how rich he'd be if he traded with a computer instead of invested.




My point: You're short sighted. TAs and traders ARE making three figure returns now. Many have in the past, but dare I say not as many as today with the advent of more powerful computers and the Internet. Who's to say they/we won't over the longterm? 

Now I'm not discrediting FA, I'm merely making an observation. 

Despite what you say, you're not learning anything from this thread, from what I've seen. You are just holding onto your beliefs no matter what anyone has to say. Picking up a _decent_ book on trading will be more efficient use of your time.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> What is often glossed over is the fact that Buffet is not an individual investor. He didn't make all of that money "investing". Buffett is primarily a businessman and uses OPM... whopping great gobs of OPM. He is hugely leveraged with other people assuming most of the risk.




I don't care where he got the money from. He made it value investing in near monopolies and holding forever.



> Any individual investor who thinks they are emulating buffett.... or even graham are seriously off with the pixies.... delusional.




As Buffet said, and I quote verbatim from the Intelligent Investor page 548.

"You may wonder why I am writing this article. Adding many converts to the value approach will perforce narrow the spreads between price and value. I can only tell you the secret has been out for 50 years, ever since Graham and Dodd wrote 'Security Analysis' yet I've seen no trend towards value investing over the last 35 years that I've practiced it. There seems to be some perverse human characteristic that likes to make easy things difficult...There will continue to be wide discrepencies between price and value in the marketplace, and those who read their Graham and Dodd will prosper"


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				swingstar said:
			
		

> Picking up a _decent_ book on trading will be more efficient use of your time.




Like swingstar I have no beef with FA - as I keep saying I use it as much as I do TA.

This book looks like you'd benefit from it Realist.

http://www.moneybags.com.au/default.asp?d=0&t=1&id=5113&c=0&a=74

Cheers,

Ed


----------



## Nick Radge (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

What about the mathematical side of the argument - trade frequency?


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> Like swingstar I have no beef with FA - as I keep saying I use it as much as I do TA.
> 
> This book looks like you'd benefit from it Realist.
> 
> ...




Exploding the Myths: What Your Broker Doesn't Know or Won't Tell You
by Frank Watkins


Hmm, Frank Watkins (whoever he is??) or Warren Buffet - tough one. Let me think about it.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				dallee said:
			
		

> Hello Realist, I did wonder whether I'd get a proverbial slap from you for posing a question in my first week of reading this forum, and there it was. I must say that I did give you a couple of clues to my beginner status. Thank you Cuttlefish for the kinder response. Is beginner lounge misnamed perhaps?
> 
> dallee




If you swim with sharks expect to get bitten.    

Just kidding, welcome dallee - I hope you stay and join in the fun!


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Nick Radge said:
			
		

> What about the mathematical side of the argument - trade frequency?




Simple, the more you trade the less you make.


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Nick Radge said:
			
		

> What about the mathematical side of the argument - trade frequency?




If you can't find many opportunities for your great system then you will have some problems. If you use discretion, then you'll probably be able to make money in any market which I hope to achieve.


----------



## eddievanhalen (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

If I didn't believe you were serious Realist I would crown you one of the most hilarious people I've ever come across.

As it is I'm not sure whether to laugh or cry.

I'm going to send every beginner trader I know to this thread and read your wisdom (whilst looking into a mirror)

Ed


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Hmm, Frank Watkins (whoever he is??) or Warren Buffet - tough one. Let me think about it.




I thought you didn't swim with the tide. How many books has Buffet sold compared to Watkins I wonder? 

(I haven't read Watkins BTW)

Maybe check out some of the books in here.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> use it as an example again.
> 
> In the last 2 years CMI has moved from $2.30 to $1.30 and has been on "cheap" PER all the way down. It has a history of wildly fluctuating earnings and sells product into a highly competitive cyclical industry. If Buffett were dead he would turn in his grave at the suggestion of him investing long term in such a dog.




True, Buffet would never buy CMI. He specialises not diversifies.

Graham would though, I have no doubt whatsoever.

Graham "speculated" with a wide variety, sometimes up to 200 or 300, small cap stocks that were selling for less than their net-tangible assets.

And CMI pays 12% dividends and has gone up 30% in the past month.

It is like you dabbling in a resource company without a source.

In no way would I put much money into CMI - it was 2% of my holdings.  It was me speculating.

I put money into large dominant world leaders like Westfield and Fosters and BHP.  Not f'n CMI - gimme a break.  It was a punt.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				swingstar said:
			
		

> I thought you didn't swim with the tide. How many books has Buffet sold compared to Watkins I wonder?




I don't know of any Buffet has written?    

He's got nothing particualrly new to write - he recommend Graham simple as that.

Buffet learnt from Graham, Graham is the master, Buffet is the student that surpassed him financially.

Buffet breaks rules that Graham advocates like diversification and only buying at a good discount.  But Graham preaches to mere mortals, Buffet is no mere mortal.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				eddievanhalen said:
			
		

> I'm going to send every beginner trader I know to this thread and read your wisdom (whilst looking into a mirror)




Please...


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I don't know of any Buffet has written?
> 
> He's got nothing particualrly new to write - he recommend Graham simple as that.
> 
> ...




Nevertheless, maybe oneday Watkins, Tharp, Douglas, etc etc will be the Grahams of today.


----------



## Nick Radge (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Simple, the more you trade the less you make




Unfortunately that is up there with other market misconceptions.

I am happy to debate but I, and no doubt others, would like a sensible answer. There are 3 cornerstone attributes to profitability and I do say that *every* trader/investor on the planet does pocess them. I'll give you two, you give the the third, then we'll discuss.

1. Win %
2. Win / Loss ratio
3. ?


----------



## tech/a (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

For Gods sake everyone trade Fundamentally worship Buffettology,Buy and hold forever become fabulously rich, jump on a kite and meet me in London for a beer!!!

Why the hell are you all bothering with this absolute rubbish.
If this is fundamental analysis then there are a heap of academics who should have studied Buffettology to get their positions as reseach analysts for investment banks world wide!

What absolutely Nieve ,ill informed, pompous, opinionated, narrowminded, long winded, self serving, meaningless, hot air.

*Your indulging a TROLL*


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				swingstar said:
			
		

> Nevertheless, maybe oneday Watkins, Tharp, Douglas, etc etc will be the Grahams of today.




It is like bodybuilding or gymnastics or mountain climbing ( I know you guys love my analogies so I'll continue)

In the 1970's Arnold Schwarzenegger achieved the perfect reuslts in bodybuilding, and Nadia Comenechi achieved them in gymnastics. In the 1950's Sir Edmund Hillary climbed Everest.

Those 3 sports have never been as popular (media wise at least) because the peak has been reached.  People can reach that peak themselves but they can not surpass it.

No-one can surpass Arnold, Nadia or Edmund.   

Buffet's hit the peak. He learnt from Graham - there is no way to beat them.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> *Your indulging a TROLL*




So are you obviously.


----------



## Bobby (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> For Gods sake everyone trade Fundamentally worship Buffettology,Buy and hold forever become fabulously rich, jump on a kite and meet me in London for a beer!!!
> 
> Why the hell are you all bothering with this absolute rubbish.
> If this is fundamental analysis then there are a heap of academics who should have studied Buffettology to get their positions as reseach analysts for investment banks world wide!
> ...




Yep ! but what *Fun its being*  

Bob.


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> It is like bodybuilding or gymnastics or mountain climbing ( I know you guys love my analogies so I'll continue)
> 
> In the 1970's Arnold Schwarzenegger achieved the perfect reuslts in bodybuilding, and Nadia Comenechi achieved them in gymnastics. In the 1950's Sir Edmund Hillary climbed Everest.
> 
> ...




Why not just invest in BRKA then?

http://finance.yahoo.com/q?s=brka


----------



## swingstar (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> It is like bodybuilding or gymnastics or mountain climbing ( I know you guys love my analogies so I'll continue)
> 
> In the 1970's Arnold Schwarzenegger achieved the perfect reuslts in bodybuilding, and Nadia Comenechi achieved them in gymnastics. In the 1950's Sir Edmund Hillary climbed Everest.
> 
> ...



Climbing Mt Everest for the first time, I agree, can only be achieved once. But Arnold's achievements have been surpassed twice, and he only achieved the 'peak' what, thirty years ago? 

http://en.wikipedia.org/wiki/Mr._Olympia#Winners




> Buffet's hit the peak. He learnt from Graham - there is no way to beat them.



Unbelievably shocking attitude. Who was at the 'peak' before Buffet, eh?


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Yep, BRKA looks more like business in the business of doing business, than a business that invests.




> Berkshire Hathaway, Inc. and its subsidiaries primarily engage in the insurance and reinsurance of property and casualty risks business. It provides automobile, multi line, and credit and income protection insurance; excess-of-loss reinsurance and quota-share coverage; and reinsurance for life, accident, and health risks. The company also manufactures and distributes clothing, including uniforms for police, fire, postal, and military markets; and footwear, as well as manufactures and distributes clay bricks, concrete blocks, and cut limestone; building products of other manufacturers, including glass block and other masonry products; and sells ceramic floor, and marble and granite stones. In addition, Berkshire Hathaway produces general purpose coatings; fiber glass wool insulation products and pipe and duct insulation products; roofing systems and components; and non woven mats, fabrics, and fibers. Further, it engages in the provision of manufactured homes, commercial real estate and consumer receivable financing, and annuity contracts; and ownership and management of manufactured housing communities, as well as provision of training to operators of aircraft and ships. Additionally, the company provides rental furniture and accessories; leases transportation equipment; offers wholesale distribution and logistics services; and retails household appliances, electronics, computers, and other home furnishings. Further, it provides tufted and woven carpets, and laminated flooring; home cleaning systems; confectionery products; and wood and metal moulding, matboard, foamboard, glass, equipment, and other framing supplies, as well as publishes news editions and sells kitchen tools. The company was founded in 1889 and is headquartered in Omaha, Nebraska. Berkshire Hathaway, Inc. acquired Business Wire in March 2006.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Why not just invest in BRKA then?




If only I had Wayne, if only.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Yep, BRKA looks more like business in the business of doing business, than a business that invests.





It owns businesses - 100% share holding.

If I could buy WDC and FGL outright myself - I would, the next best thing is to buy shares in them. Part ownership is all I can afford.


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> It owns businesses - 100% share holding.
> 
> If I could buy WDC and FGL outright myself - I would, the next best thing is to buy shares in them. Part ownership is all I can afford.




But then you would have to run them... and therein lies the difference between a businessman and an investor... Buffet and you


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> But then you would have to run them... and therein lies the difference between a businessman and an investor... Buffet and you




Nope.

Buffet does not run Coke, Gilette, Washington Post or Tesco.

He's an investor not a manager.


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> If TA gives you greater returns longterm how the hell did Warren Buffet make US$60,000,000,000 doing fundamental investing, buying undervalued companies on a downtrend and holding forever?
> 
> .




Lets expose this little piece of BS

If WB was an investor and achieved the quoted 24% return p/a, he would have had to have started with > $1.5 million in 1957... ANDS THATS 1957 DOLLARS. A whopping amount back then.

Simple arithmetic would show up the fallacy here.

Buffet is a businessman, not an investor.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				WayneL said:
			
		

> Lets expose this little piece of BS
> 
> If WB was an investor and achieved the quoted 24% return p/a, he would have had to have started with > $1.5 million in 1957... ANDS THATS 1957 DOLLARS. A whopping amount back then.
> 
> ...




 

So Buffet has never invested?    

Oh man I must have my facts wrong, I could have sworn he'd bought some shares at some stage.

Buffet is an investor first and foremost and a *hands off businessman* secondly.

This is from Wikipedia.   http://en.wikipedia.org/wiki/Warren_Buffett

Management style
Buffett views himself as a capital allocator above anything else. His primary responsibility is to allocate capital to businesses with good economics and keep their existing management to lead the company.

When Buffett acquires a controlling interest in a business, he makes clear to the owner that:

he will not interfere with the running of the company;  
he will make the hiring and compensation decision of the top executive; and 
capital allocated to the business will have a price tag (a hurdle rate) attached; this process is to motivate owners to send excess capital that does not return more than its cost to Berkshire headquarters rather than investing it at low returns. [citation needed] This cash is then free to be invested in opportunities that offer higher returns. 
Buffett's hands-off approach has held strong appeal and created room for his managers to perform as owners and ultimate decision makers of their businesses.  This acquisition strategy enabled Buffett to buy companies at fair prices because the sellers wanted room to operate independently after selling.


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

This is for Julia 

Investment approach
Buffett's philosophy on business investing is a modification of the value investing approach of his mentor Benjamin Graham. Graham bought companies because they were cheap compared to their intrinsic value. He was of the belief that as long as the market undervalued them relative to their intrinsic value he was making a solid investment. He reasoned that the market will eventually realize it has undervalued the company and will correct its course regardless of what type of business the company was in. In addition he believes that the business has to have solid economics behind it.

And this is for Cuttlefish..

Buffett's next concern would be when to buy. He does not hurry to invest in a business if the value is not discernible. He will wait for market correction or downturn to buy solid businesses at reasonable prices, as he views downturns in the stock market as buying opportunities. He is conservative when greed and speculation is rampant in the market and he is greedy and aggressive when others are fearing for their capital.


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> So Buffet has never invested?
> 
> Oh man I must have my facts wrong, I could have sworn he'd bought some shares at some stage.
> 
> ...




Wikipedia!! LOL

So Warrens doesn't have a say? LOLOLOLOL



> The myth
> Brilliant, Buffett has been deified by a media longing for color in the drab world of executive privilege and power. That he lives in the stucco house he bought more than 40 years ago for $31,500 in Omaha, Neb.; has modest Midwestern tastes for food and luxuries; drives his own American-made sedan; and plays cards with Bill Gates -- aw, shucks, he might just be America's grandpa, except for the fact he is not like you or me at all. He is the world's second-richest man.
> You might have a weakness for chocolate. Warren, who controls See's Candies, likes private jets.
> That the myth of Buffett is so pervasive is no accident. The "Oracle of Omaha" actually gives few interviews outside of his famous annual meeting in Nebraska each year. Those whom he does talk to, such as Fortune's Carol Loomis, are either on his payroll or don't dare criticize St. Warren lest they lose access.
> ...


----------



## Realist (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

What on earth are you trying to say Wayne?

Buffet is an investor - there is no doubt about that.  He is also a businessman of course - who isn't?

Quite simply he made his money buying undervalued companies, kept them forever, reducing tax cause he never sold - what on earth is there to disagree with??


that opinionated blurb you posted is irrelevant. What was your point?

What do you disagree with exactly?

1. Buffet is an investor
2. he likes to hold forever (thus compounding, and not paying tax)
3. he bought companies when the price was in a downturn.  

They are 3 indisputable facts.


----------



## Julia (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> This is for Julia
> 
> He was of the belief that as long as the market undervalued them relative to their intrinsic value he was making a solid investment. He reasoned that the market will eventually realize it has undervalued the company and will correct its course regardless of what type of business the company was in.




Oh God.  I'm just not going to go over this yet again.  If you want to hold on to some "undervalued" unrecognised sweetheart of a company, then do so.
I find it hard to care any more.  My point, briefly, was that while you are waiting for the market to recognise the brilliance of this contender, you could have been actually making money somewhere else.

Julia


----------



## wayneL (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> What on earth are you trying to say Wayne?
> 
> Buffet is an investor - there is no doubt about that.  He is also a businessman of course - who isn't?
> 
> ...




It shows that anyone who thinks they are buffetologists are off with the pixies. Determining intrinsic value in a company, public or otherwise would require forensic accounting to cut through the garbage designed to decieve the plebs.

You *can't* invest like Buffett. Therefore the private investor must employ a host of other techniques to optimize his or her investment practices.

I strongly suggest your technique is suboptimal and that you are probably the least qualified on this board to comment on other techniques due to your religious adherence to a dogma promoted by those hitching a ride on the Buffett myth.

Your studious avoidance of pertinent points reveals a narrow mindedness that is breathtaking to behold. 

Indeed you are also a troll and have alluded to that fact yourself. My strong advise to you is to desist in trolling activities forthwith. We do our best to avoid having an aggravated community here and you seem to be doing your darndest to p!ss everyone off. Fair Warning!


----------



## cuttlefish (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				WayneL said:
			
		

> Determining intrinsic value in a company, public or otherwise would require forensic accounting to cut through the garbage designed to decieve the plebs.




Thats a fairly paranoid attitude, almost implying that anyone running a public company deliberately provides misleading information in their annual accounts. There are obviously exceptions to the rule but on the whole many small and mid-cap company accounts are reasonably straightforward, unless I've been being duped for years.




			
				wayneL said:
			
		

> It shows that anyone who thinks they are buffetologists are off with the pixies.




For someone that claimed there wasn't criticism of a fundamental investment approach on this thread this post sounds like criticism to me.  (unless being 'off with the pixies' is a good thing  lol)



			
				WayneL said:
			
		

> You *can't* invest like Buffett. Therefore the private investor must employ a host of other techniques to optimize his or her investment practices.





A smaller investor can't buy a whole business (though in some small caps it doesn't take that much of an investment to appear on the top 20 shareholder list) but they can adopt investment strategies that are based on principles espoused by Graham and Buffet succesfully,  which are based largely on treating a stock investment as a partial investment in a business and attempting to buy value when buying a partial business investment.


----------



## It's Snake Pliskin (11 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Or they read Graham or Buffet and have a religious epiphany!



..and try to proselytize only to cop an interdiction.


----------



## MichaelD (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I'd like to make an attempt to bring this thread back to something that there is actually a point in discussing (rather than wasting time on circular arguments).

A while back, BSD posted a rather interesting question.

*"Why dont the investment banks just hire a team of chartists with etrade accounts and margin loans?"*

This has got me thinking. Why don't they run funds like this? Here are some of the reasons I can think of;

1. Chart trading requires the psychology to accept losing most of the time. Most people cannot handle this. Put an extra layer on top of this - the investment banking bureaucracy - and you have two layers or more of psychology to get through before being able to handle trading this way. I'd argue that the chances of this sort of culture existing in an investment bank are close to zero. To put this another way - I'd argue that few people in the investment bank industry know how to trade and rather rely on very deep pockets to survive at sub-index performance.

2. The people investing their money in this endeavour would need to be able to cope with drawdowns. The natural behaviour of most people is to put their money into outperforming funds and pull their money out of underperforming funds. This is exactly the wrong thing to do for trend following. This will lead to problems of having to close positions at the wrong time for a fund in order to cover withdrawals from the fund. In other words, there is a third psychological layer to get through.

3. One of the edges a private trader has over an investment bank is size. By and large traders can enter and exit positions without moving the market. This is impossible once you get above a certain size and would make it harder to be profitable as a large scale trend trader. I believe Soros has a word for this phenomenon, but it slips my mind at the moment.


I note with interest that in the US there are boutique funds that do indeed invest technically and even mechanically - I am unaware of any such funds in Australia.

Food for thought.


----------



## ghotib (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> A smaller investor can't buy a whole business (though in some small caps it doesn't take that much of an investment to appear on the top 20 shareholder list) but they can adopt investment strategies that are based on principles espoused by Graham and Buffet successfully,  which are based largely on treating a stock investment as a partial investment in a business and attempting to buy value when buying a partial business investment.



Whew!!! Thanks Cuttlefish, you've just stated the core of my (current) investment strategy. 

One of the Buffet (though not Graham AFAIK) principles that's important to me is that I want to know the people who are running "my" company, so I'm staying with small companies where those people sometimes even answer their own phones. Not that I want to distract them from the details of "my" business, but I like to know that I could.  

Dallee, if you're still there, I'm a beginner investor working with very small capital (about $10K). I'm also a late beginner; I'm well into my fifties and I have a healthy amount in super being managed by professionals. Your post sounded as though you're starting at a much more sensible age than I did, but the other side of that is that you might find your other commitments are less flexible than mine are and that they pick the worst possible times to interfere with your stockmarket education. Something to keep in mind when working out your approach.

Ghoti


----------



## It's Snake Pliskin (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> It shows that anyone who thinks they are buffetologists are off with the pixies.
> Agree Wayne.
> 
> I strongly suggest your technique is suboptimal and that you are probably the least qualified on this board to comment on other techniques due to your religious adherence to a dogma promoted by those hitching a ride on the Buffett myth.
> ...




A just call here Wayne!


----------



## It's Snake Pliskin (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Although its copped a fair bit of criticism in this thread, a fundamentals based approach will teach you a lot.




What will it teach a beginner? I`m interested in the content here.



> There's probably no clear safe option for a beginner entering the market, because the first thing to overcome in sharemarket investing is your emotions which will come into play regardless of your approach, but investing in companies with sound fundamentals  is likely to lower your downside risk.




Downside risk is ever present like a barking dog tied up next door wanting to rip your leg off whenever you walk past.

There ain`t nothing like the feeling of assurance.


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> Thats a fairly paranoid attitude, almost implying that anyone running a public company deliberately provides misleading information in their annual accounts. There are obviously exceptions to the rule but on the whole many small and mid-cap company accounts are reasonably straightforward, unless I've been being duped for years.
> 
> I think it is demonstrable that there is a significant degree of "creative" accounting. To be sure, one must develop techniques to look behind the published numbers. This is beyond the capability of most investors, and we certainly cannot rely on analysts because of vested interests.
> 
> ...




Cheers


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

For those interested:

A blog on Buffett style investing

http://berkshireruminations.blogspot.com/



> Chew on this: Small investors have a huge advantage over the Oracle of Omaha. While his returns may be limited because of the sheer size of his company, the typical individual faces no such limitation. This blog is about applying the wisdom of the Oracle to the small portfolio.




Enjoy


----------



## cuttlefish (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Buffett doesn't actually espouse very much at all.




In his letters to Berkshire shareholders he does, these were summarised in a small book at some point (I read it a while ago, can't remember if it was 'annotated' by the author or not, but was mostly raw extracts from the Berkshire letters).  As far as I  know the Berkshire letters are the only writing Buffets done, its the only stuff by/about him that I've read.


----------



## cuttlefish (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> What will it teach a beginner? I`m interested in the content here.




It'll teach them to think about what it is they're actually buying when they buy a share, and think about why they are buying that share.  It'll cause them to start to think and act independantly.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Nick Radge said:
			
		

> Unfortunately that is up there with other market misconceptions.
> 
> I am happy to debate but I, and no doubt others, would like a sensible answer. There are 3 cornerstone attributes to profitability and I do say that *every* trader/investor on the planet does pocess them. I'll give you two, you give the the third, then we'll discuss.
> 
> ...




Sorry, I missed this question Nick. (Snake reminded me)

Well I'm guessing number 3 is the amount invested.

You may say the number of trades though?   


I'd say you need to include both, but the amount is the key in my opinion.

1000 trades of $100 will get you nowhere, tax, brokerage and stress will kill you. But 1 trade of $1 Million with a 100% win is a great result obviously.


----------



## professor_frink (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist,


The more important part is the number of trades. The first 2 attributes nick mentioned are used to calculate expectancy . From there, the number of trades determines how much you can make. For example, if you are evaluating 2 trading systems with the same expectancy, the amount the system trades will determine which should be more profitable overall.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Thanks Prof.

Definately in percentage terms the number of trades is important.

And I'd day it is easier to get many quick 20% wins, than it is to get one 200% win.

But in monetary terms one trade of $40,000 with a 20% return is worth 8 trades of $5,000 at 20% return. So amount and number of trades go hand in hand.

And that is where holding comes in:

$40,000 held for over 1 year with a 20% return = $5970 profit after tax and brokerage.

$5,000 traded 8 times quickly, all making 20% returns = $3920 profit after tax and brokerage.

That is why I say the more you trade the more you lose.


----------



## professor_frink (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> $40,000 held for over 1 year with a 20% return = $5970 profit after tax and brokerage.
> 
> $5,000 traded 8 times quickly, all making 20% returns = $3920 profit after tax and brokerage.




Interesting example.

$3920 profit on $5000(which is min requirement for your trading example)= 78% return

$5970 profit on $40000 invested= 15% return.

Alternatively, if both have the same $40 000 bank, then the trader will have a lower return, but his risk is much lower- $5000 maximum loss vs $40 000.



> That is why I say the more you trade the more you lose.




Not quite. If you are trading with positive expectency, then the more the system trades, the more you make.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> Interesting example.
> 
> $3920 profit on $5000 (which is min requirement for your trading example)= 78% return
> 
> $5970 profit on $40000 invested= 15% return.




Good point!!

But you have $40,000 in total and only put $5,000 on each trade the return is only $3920 on $40,000.  It all depends what you do with the other $35,000.

Prof,  if you have $40,000 to your name - how much would you place on each trade?

If I had $40,000 - I'd invest between $20,000 and $30,000 in about 6 to 8 different shares.  $10,000 sits in the bank - as a safety net and incase I see a great opportunity to buy.

My return would be about $10,000 * 0.05 from my bank account. And $30,000 * 0.12 from shares.  So about $4000. 

Say 10% after all taxes and expenses. (more in bull markets, less in bear markets)


----------



## mit (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Why is the trader not using the $40k eight times quickly? That's more the reality. I probably turnover my capital 7 times a year (more actual if you take account of leverage).

Yes I hate paying the interest and brokerage but it's still very profitable and "consistant"


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> Why is the trader not using the $40k eight times quickly? That's more the reality. I probably turnover my capital 7 times a year (more actual if you take account of leverage).
> 
> Yes I hate paying the interest and brokerage but it's still very profitable and "consistant"





You put all of your capital into each trade?


----------



## mit (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> I'd like to make an attempt to bring this thread back to something that there is actually a point in discussing (rather than wasting time on circular arguments).
> 
> A while back, BSD posted a rather interesting question.
> 
> ...





I'd add a fourth and fifth and sixth 
4. Charting does not suit the psychology of a typical fund analyst. They are more suits & ties/power breakfasts/$500 lunches with clients. Being sat in the corner with a computer wouldn't cut it. 

5. These guys are mostly applied finance graduates. The universities and bosses still tend to treat charting as a form of astrology (Sorry Yogi).

6. They make their money on their fees and most people would not understand a "charting" fund and would not invest in it.

MIT


----------



## professor_frink (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Good point!!
> 
> But you have $40,000 in total and only put $5,000 on each trade the return is only $3920 on $40,000.  It all depends what you do with the other $35,000.
> 
> ...





The amount I would put in changes with each trade. 2% maximum loss is the max I would take.

For an example-
ZFX is currently at 10.90 and I want in. After looking at the chart, I decide that I will sell out at a loss if it trades down at $10, meaning I will accept a 90 cent per share loss.
2% of my $40 000 is $800.
800/90 cents per share loss= absolute maximum 888 shares or $9680 invested.

Now I wouldn't be comfortable having 1/4 of my money tied up in one share, so I'd probably invest closer to $5000, or 460 shares, meaning my max loss for the trade would be about $415, or slightly over 1% of my bankroll. When brokerage and slippage are included, buying 460 shares will mean I am highly unlikely to lose more than the 2% on this trade(outside of a major event occuring).

Hope my maths is right here(someone correct me if it's a little off!)


----------



## mit (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> You put all of your capital into each trade?




You haven't been listening very well (or read Guppy or Leon Someone very well) have you no wonder you aren't getting it. It's not the capital in the trade its the risk in the trade. If you want to risk 2% and your stop is 2% from your entry then you would put 40k on the trade.

MIT


----------



## It's Snake Pliskin (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> It'll teach them to think about what it is they're actually buying when they buy a share, and think about why they are buying that share.  It'll cause them to start to think and act independantly.




Most follow brokers and analysts opinions thoough.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> Now I wouldn't be comfortable having 1/4 of my money tied up in one share,




Thanks Prof, what you do sounds wise.   Basically the same as an investor diversifying.

And that is my point MIT.  You'd be a brave man to put ALL your capital into each trade.


As we discussed yesterday there have been cases where a share drops 80% overnight - unlikely of course, but it has happened and could possibly happen again.

Kitty Hawk -on the Nasdaq was the one. 93% in a week, 80% overnight from memory.


----------



## It's Snake Pliskin (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Sorry, I missed this question Nick. (Snake reminded me)
> 
> Well I'm guessing number 3 is the amount invested.
> 
> ...




A terrible answer Realist!


----------



## mit (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> Realist,
> 
> 
> The more important part is the number of trades. The first 2 attributes nick mentioned are used to calculate expectancy . From there, the number of trades determines how much you can make. For example, if you are evaluating 2 trading systems with the same expectancy, the amount the system trades will determine which should be more profitable overall.




I'd add to this drawdown (or shape of the equity curve). A lower drawdown enables the trader to gear more or get a more consistant return with lower leverage. I've seen some published systems that look great for the first three items but have deep or long drawdowns.

I think it depends where you head is at. I want to live on trading so I want to make salary every year.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> A terrible answer Realist!




Thanks.    

you think the amount traded is irrelevant?


----------



## mit (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Thanks Prof, what you do sounds wise.   Basically the same as an investor diversifying.
> 
> And that is my point MIT.  You'd be a brave man to put ALL your capital into each trade.
> 
> ...




But it was your strawman example? So why is $40k in one share for a year not dangerous as well?

MIT


----------



## professor_frink (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Thanks Prof, what you do sounds wise.   Basically the same as an investor diversifying.
> 
> And that is my point MIT.  You'd be a brave man to put ALL your capital into each trade.
> 
> ...




most of us traders work in this way, or a similar way. I would never have all my money in one trade even if I would be risking 2% or less on it, but that's just me. Trading is often about surviving long enough to get the big wins. If that means taking a lower return for a while, then so be it.



			
				mit said:
			
		

> I'd add to this drawdown (or shape of the equity curve). A lower drawdown enables the trader to gear more or get a more consistant return with lower leverage. I've seen some published systems that look great for the first three items but have deep or long drawdowns.
> 
> I think it depends where you head is at. I want to live on trading so I want to make salary every year.




bang on. If you can keep your drawdown to a minimum, then you can use alot more gearing. But me thinks that topic is a whole thread by itself!


----------



## It's Snake Pliskin (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Thanks.
> 
> you think the amount traded is irrelevant?




Lets look at the original question then:



> I am happy to debate but I, and no doubt others, would like a sensible answer. There are 3 cornerstone attributes to profitability  and I do say that every trader/investor on the planet does pocess them. I'll give you two, you give the the third, then we'll discuss.
> 
> 1. Win %
> 2. Win / Loss ratio
> 3. ?


----------



## blinkybill (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

you should also keep track of

1. $ profit per profitable trade

2. $ loss per loss making trade

3. # profitable trades / # loss making trades

so you can see from these numbers it's very important to keep losses small.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> But it was your strawman example? So why is $40k in one share for a year not dangerous as well?
> 
> MIT




I would not put 100% of my capital in any one share ever.

But there is a difference to what investors buy and traders.   Traders look for better returns and take more risks - hence they need stop losses.

An Investor may buy CBA for instance - dead boring but it'll be around next year. Traders may buy BMN - it may triple, it may go under, who knows?

But trading with 100% of your capital in one stock is risky in my opinion even with stop losses - what Prof Frink does seems about right to me.  What MIT does may come unstuck one day.


----------



## Nick Radge (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

#3 is trade frequency. The amount of money is irrelevant. Once you have a positive expectancy, regardless of whether you are an investor or a trader, then your sole goal is to replicate that expectancy as many times as you can. 

A stock can increase by 100%, but it takes time. In certain periods the time taken can be less than in other periods, assuming of course that the stock itself will double. The last few years have been exceptional,but a period such as 1990 through 1993 was nothing but treading water. 

Trading however can replicate a positive expectancy outcome numerous times in a single day and usually regardless of underlying direction. Yes, taxes and commissions need to be paid, but they are still part of the positive expectancy equation which in turn still needs to replicated as much as possible.

I have a very close friend who starts each year with $25,000 in his account. By year end he's usually at $500,000. His accounts statements since 1999 reflect this each and every year. He has no concept of drawdown or percentage return. He simply has $25,000 to start and builds by trade frequency alone, not compunding his positions. He does 4 to 5 trades a day, all the same size and usually whilst on the golf course. He does not look at charts. He does not use FA. He rarely even looks at his computer. Gut instinct and a remarkable ability to remember price activity.


----------



## mit (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I would not put 100% of my capital in any one share ever.
> 
> But there is a difference to what investors buy and traders.   Traders look for better returns and take more risks - hence they need stop losses.
> 
> ...




My quote was mainly around the strawman example of yours, I actually limit a position to 15% in shares. But still explain why the trader buying CBA is limited to $5k because of the risk and the investor can invest 100% in CBA but doesn't have a risk because CBA will still be around?

It's still a strawman argument as you are defining risk different for the trader and investor.

MIT


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Nick Radge said:
			
		

> I have a very close friend who starts each year with $25,000 in his account. By year end he's usually at $500,000. His accounts statements since 1999 reflect this each and every year. He has no concept of drawdown or percentage return. He simply has $25,000 to start and builds by trade frequency alone, not compunding his positions. He does 4 to 5 trades a day, all the same size and usually whilst on the golf course. He does not look at charts. He does not use FA. He rarely even looks at his computer. Gut instinct and a remarkable ability to remember price activity.




Nick, Why does he start with $25,000 each year?

What does he do with the other millions?


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> But still explain why the trader buying CBA is limited to $5k because of the risk




My point is how many traders waste their time buying CBA?

Most investors have a bank somewhere in their portfolio though.


----------



## mit (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> My point is how many traders waste their time buying CBA?
> 
> Most investors have a bank somewhere in their portfolio though.





A lot actually. Some traders will only concentrate on a single or a couple of companies and go long and go short repeatedly. CBA has gone from 43 to 47 down to 41 and back up to 46. That's around 15 dollars of movement compared to 3 dollars if you buy and hope. If you caught just 50% of each swing that's still almost 8 dollars of movement and even better because a trader would be leveraged.

MIT


----------



## eddievanhalen (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Well I thought 100% pa was good on straight shares Nick   I don't think 475k profit pa is anything out of the ordinary (depending on your capital base ofcourse)but from a capital base of 25k.......this guy's extraordinary indeed, even allowing for the fact that it's often easier to make large % returns from a smaller capital base.

Seeing as we've being talking mostly straight share investing/trading, can you clarify if he is trading straight shares, CFDs etc........

Cheers,

Ed


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> A lot actually. Some traders will only concentrate on a single or a couple of companies and go long and go short repeatedly. CBA has gone from 42 to 47 down to 41 and back up to 46. That's around 16 dollars of movement compared to 4 dollars if you buy and hope. If you caught just 50% of each swing that's still 8 dollars of movement.
> 
> MIT




Well in the first 6 months of this year it's gone from about 43 to 47 to 42 to 45.

= 12 point's of movement.

And about $2 for buy and "hope" + $1 dividends.

If the trader catches half the movement they get $6 - $3 after tax, the same as the investor.

I own CBA myself.  It's solid - that's all it's got going for it at the moment!


----------



## mit (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Well in the first 6 months of this year it's gone from about 43 to 47 to 42 to 45.
> 
> = 12 point's of movement.
> 
> ...




Sorry the low was 41 that's where I got my $14 from. The investor also has a tax liability from the dividends (15%) and CBA when they eventually sell (50 cents for this piece of growth). So it is $3.50 against $2.35 and don't forget  the trader will leverage.

Going back to my original point why does the investor get to use all of his money and it is low risk and the trader doesn't because it is "too risky"

MIT

ps. I'm holding CBA at the moment for my dividend system. It has returned 10% on my capital (leveraged) to date, Taking an average trade I expect to make 20% on it by the time I'll sell on the exdiv date. My tax will be lower as I'll have swap around half of the capital growth for the dividend and have the 30% tax credit if it is fully franked.


----------



## Bobby (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist, get a copy of Nicks book ( Adaptive Analysis ) & read it over & over till you get it.
Also try reading as mentioned before Frank Watkins book ( Exploding the Myths ).
Iv'e got both & *DO recommend* them especially Nicks !

After you study them , you will have a new outlook   we can only hope   

Bob.


----------



## tech/a (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Bobby said:
			
		

> Realist, get a copy of Nicks book ( Adaptive Analysis ) & read it over & over till you get it.
> Also try reading as mentioned before Frank Watkins book ( Exploding the Myths ).
> Iv'e got both & *DO recommend* them especially Nicks !
> 
> ...





Sound advice if the recipient is looking for advice.

Clearly they arent.
They know it all ,Nick may learn a thing or 2.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				mit said:
			
		

> Going back to my original point why does the investor get to use all of his money and it is low risk and the trader doesn't because it is "too risky"




If an investor and trader are buying the same stocks then it is actually the investor who takes more risk.

I just don't see any reason why you'd want to buy CBA to be honest.   




> So it is $3.50 against $2.35 and don't forget the trader will leverage.




What the?    

You borrow $100,000. Buy CBA shares at about $44 and make $3.50 after taxes etc.  So an 8% return. But your loan costs you 8% p/a to pay.

How do you make any money?


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hey guys!!

I read in the paper today that 145,000 people in Aus registered for new share accounts in the past year.

It showed some mum who trades from home.  "I gave up on property, becuase I couldn't make any money. Now I trade for a living, I make over 100 trades a month on etrade"

Does that scare you?    

your thoughts?   


It makes me want to buy property.


----------



## eddievanhalen (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Cripes - that's a sensible point Realist.   

That does scare me a bit......more for her sake than anything else.   I don't believe we have reached the point of a final flood of exuberance that often signals a top.  And ofcourse plenty of people had their fingers burned May -June and it'll take some time before the newbies recover and/or a new batch arrive to be slaughtered one last time  

So no........I don't necessarily think it says much about the market just yet but it does pay to keep that type of thinking in the back of your mind.

If she is an absolute beginner and is trading resource stocks and thinks she's going to make a nice easy living out of it for the next 10-20 years then she's in for a surprise I'd say.  Whilst learning to trade in a bull market can be fun it invariably leads to a false sense of confidence ("Don't confuse a bull market with brains" etc.........)

I invested mostly in the 90's but didn't really hit the market hard with a decent size TRADING kitty until 2001-2002 and I am grateful now that I honed my skills during some pretty tough and volatile times.  I learned more hard lessons (the best ones) in that 2 year period than I have in the following 4 years that's for sure.

Ed


----------



## Bobby (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> How do you make any money?




By not doing this  :sheep:  :sheep:


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

WooHoo someone finally agrees with me.    

I saw ad's on tv in the states for home Forex trading kits.   This lady reminded me of that.  She tried property and failed, tried shares - soon to fail no doubt. What next?   Amway.

It was in the Sydney Daily Telegrah about page 20 or so.

The thing that scared me was "I make over 100 trades a month".   I got a shudder down my spine when I thought about the brokerage.   : 


Crazy..


----------



## Bobby (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I got a shudder down my spine when I thought about the brokerage.




Gee that reminds me about the old fart who won millions in lotto some years back.
He was freaking out about how it would affect his pension   

Bob.


----------



## NettAssets (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> You borrow $100,000. Buy CBA shares at about $44 and make $3.50 after taxes etc. So an 8% return. But your loan costs you 8% p/a to pay.
> 
> How do you make any money?




In the past 12 months you would have done this at least 3 times on CBA

Buy October - sell november
buy december - sell january
buy march - sell may
buy june - still holding

so about 6 months of interest or 4%  for a 24% return.
Seems like there is money there! 

But you may be better off using options and not margin.

John


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Bobby said:
			
		

> Gee that reminds me about the old fart who won millions in lotto some years back.
> He was freaking out about how it would affect his pension
> 
> Bob.




Or is it like Michael Schumacher moving to live in Monaco to avoid tax?


----------



## professor_frink (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Quick question for you realist,

You've mentioned previously that you would be happy with a 10% return on your money over the long term, could you explain to me the benefit of investing the way you do, as opposed to buying into an index fund, or etf?

I'm not trying to have a go at you here, I'm just curious as to the advantage of your way of investing over the lazy man's "buy the index" way.


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> The thing that scared me was "I make over 100 trades a month".   I got a shudder down my spine when I thought about the brokerage.   :
> 
> 
> Crazy..




Notwithstanding that a bunch of numpties will have their head handed to them on a platter by answering those types of ads:

When I ran my manufacturing business, wages were 10's of thousands per week, the lease on the building was 10' of thousands per year, as was insurance, and other overheads. I spent 7 figures every year buying raw material.

Did that bother me? Nope!

What I was looking at was the bottom line. Now I could have worked as an upholsterer and had NONE of those expenses, but $700 a week (at the time ) was not as appealling as the profit of running a reasonably sized business.

This is the same as brokerage. It is a cost of business when the business is trading share or derivatives.

What matters is the bottom line. Those traders who are sastified that the bottom line (after tax)  in their trading business is greater than it would be if they merely invested their capital, will continue trading. Thats all there is to it.

Oh, and I paid tax when I was manufacturing too... company tax, income tax, sales tax (before GST) payroll tax etc etc et-bloody-cetera. Taxation as a trader is one whole lot more less burdensome than a manufacturing business.

The bottom line.... get it?

Cheers


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Good question Prof Frink.  First of all I think I said I was happy with 12% after all taxes and expenses are taken out. That is about my success point longterm, of course in good times like the present I need to make more, cause sure enough the bad times will come.

I do not know of any Aussie index funds??    Do you?

Also index funds charge fees - I don't like fees as you know. Fees over the longterm eat into profits quite significantly. I would not buy into a managed fund because of that (and the fact they trade too much), I am thinking of self managing my super actually.

But the main reason is - I enjoy the challenge of trying to beat the market.  I quite like reading Graham and looking through reports and balance sheets to see if I can find an undervalued gem.

I aim to beat the market - everyone does, but I am realistic enough to be happy to equal it.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> When I ran my manufacturing business, wages were 10's of thousands per week, the lease on the building was 10' of thousands per year, as was insurance, and other overheads. I spent 7 figures every year buying raw material.





Serious question.   Does that manufacturing plant still exist Wayne?

Or has it closed down, because it is cheaper to import the goods from China than manufacture them here?

Their costs would be much lower of course.

High overheads will get you eventually.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Wayne, you also missed my point. I was not having a go at traders... 

My point about that lady trading was she moved from property investment to trading 100 times a month just like that.

Does that not ring alarm bells to you?

I do not deny people can make money trading.  But to jump in and trade like a bat out of hell is surely financial suicide?


----------



## professor_frink (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Good question Prof Frink.  First of all I think I said I was happy with 12% after all taxes and expenses are taken out. That is about my success point longterm, of course in good times like the present I need to make more, cause sure enough the bad times will come.




Sorry, 12% then(hey I was close anyway  ).



			
				Realist said:
			
		

> I do not know of any Aussie index funds??    Do you?




I was actually looking at the etf today for the top 200(STW). Apart from that I'm not sure.



			
				Realist said:
			
		

> Also index funds charge fees - I don't like fees as you know. Fees over the longterm eat into profits quite significantly. I would not buy into a managed fund because of that (and the fact they trade too much), I am thinking of self managing my super actually.




yes, index funds do charge fees, but they are alot lower than managed funds. 



			
				Realist said:
			
		

> But the main reason is - I enjoy the challenge of trying to beat the market.  I quite like reading Graham and looking through reports and balance sheets to see if I can find an undervalued gem.
> 
> I aim to beat the market - everyone does, but I am realistic enough to be happy to equal it.




that's a good enough explanation for me


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

From the Daily Telegraph page 25..



> One happy punter is single mum Cydney O'Sullivan, who started out developing property, but found it was too hard to make money - and to keep it, when she did.
> "I decided to try share traing and I absolutely loved it", said the Kenthurst resident, who makes about 100 trades a month on E*Trade.
> If you are a successful trader, the tax system is quite geared towards investors. You can keep more of the money you make," she said.
> "In business, or in being a real estate investor...it's very difficult to make a profit"




"the tax system is quite geared towards investors"

what the hell is she talking about?


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Wayne, you also missed my point. I was not having a go at traders...
> 
> My point about that lady trading was she moved from property investment to trading 100 times a month just like that.
> 
> ...




Yes I do take your point, and yes it does ring alarm bells. I have no respect for the clowns that run these "seminars". The cost and hype seems to be inversely proportional to value and education obtained.

Trading should be viewed as an apprenticeship, not a "turn-key" wealth panacea as promoted. There are hard yards to be travelled and an unrealistic dream is sold by these heathen that this can be by-passed.

It annoys the bejeezuz out of me.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Wayne,

How would you suggest someone starts to get into trading then?

What should be the steps...

Books?   
Seminars? (or save your money and stay away)
Set up a commsec account?
Free evaluations of Ezytrade or whatever it's called?
Buy a few shares magazines and study teh paper, internet etc.
Create a plan and backtest it?
Paper trade for a while?
Then trade with small amounts on what you perceive to be "certain" trades?
Learn from your success and mistakes?
Constantly improve your plan and methodology?


I don't know, I'm just guessing, is that about right?


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Serious question.   Does that manufacturing plant still exist Wayne?
> 
> Or has it closed down, because it is cheaper to import the goods from China than manufacture them here?
> 
> ...




Sold it when Messrs. Hawke & Keating (may their chooks turn to emus and kick their dunny down  ) started (un)levelling the playing field.

Import duty was slashed on finished product, yet was maintained on imported raw material, much of which is NOT available in OZ... The gummint ensured we were at a severe DISadvantage. At that point the exit strategy was triggered. It is still going but at a much smaller level and greatly metamorphosized.

The chinese et al were (and still are) incapable of reproducing our quality, however the imported cr@p does set a price point and the gap became too great to justify in the minds of many consumers.


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Wayne,
> 
> How would you suggest someone starts to get into trading then?
> 
> ...




Nicks book/course would set anyone on the right track IMO.

In addition, "some" of the above, being very careful to avoid hype... and treat mags, newspapers as highly suspect; they are only journalists for the most part. One must have a functioning BS meter  

Tech/A and others have some fantastic material on this site on precisely this subject, that go into great depth... my little corner is derivatives mainly, so others have better answers there.

Cheers


----------



## professor_frink (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> *One happy punter* is single mum Cydney O'Sullivan, who started out developing property, but found it was too hard to make money - and to keep it, when she did.
> "I decided to try share traing and I absolutely loved it", said the Kenthurst resident, who makes about 100 trades a month on E*Trade.
> If you are a successful trader, the tax system is quite geared towards investors. You can keep more of the money you make," she said.
> "In business, or in being a real estate investor...it's very difficult to make a profit"




The first three words of that article pretty well sum it up.


----------



## cuttlefish (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Most follow brokers and analysts opinions thoough.




I was originally going to elaborate a little on what I meant by fundamental investing in the post this was in response to, but I took it as a given that when I meant a fundamentals based approach I didn't mean following broker and analyst opinions.   

This debates starting to annoy me - both approaches have merit and can be combined succesfully.  I really don't understand the level of animosity from one side to the other.   

I think Realists inconsistent and shifting presentation of the fundamental side of the debate, as well as his lack of understanding of the technical approach is probably part of the cause of the frustration.

Realist - you mentioned Commonwealth Bank as solid and not going anywhere - so I assume you don't remember what happened to Westpac in the late 80's/early 90's.

You may also recall an incident with NAB where some  'rogue' traders not too long ago lost several hundred million dollars trading - lucky for NAB it wasn't more.  

Remember a very old and reliable British bank called Barings - they were founded in 1762 - solid as granite - err woops.

No company is a guaranteed safe investment. No business is guaranteed to be around for 30 years. No brand is invincible.

I'm out of this debate, we're going around in circles so much I'm getting dizzy.


----------



## Magdoran (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				dallee said:
			
		

> Seeing as this is sitting in the beginners' thread, can I ask what if for argument's sake we say that technical analysis provides the greater returns, but the investor is not confident/competent enough to use it and is happy with the returns from some solid research and a more conservative buy-and-hold strategy that produces good dividends but a slower capital growth. Isn't it better to be in the market in this capacity than not at all?
> 
> Would I, for example, be foolish to gear into some blue chip stocks, watch the market to the best of my ability, make a few mistakes along the way but hopefully come out on top in the end; or, if this is the limit of my current abilities, salary sacrifice into super with the knowledge someone else has the expertise to make it work? Although the second option doesn't sound as much fun.




Hello dallee, 

The comment below may address some of the points raised in your question:



			
				Realist said:
			
		

> Wayne,
> 
> How would you suggest someone starts to get into trading then?
> 
> ...




Now this is actually quite a good question…

The answer to some extent is yes – but each answer really depends on the individual.  It is actually quite difficult to learn effective trading methods since there is such a diversity of approaches and there are so many variables, both in materials/approaches/concepts/systems, not to mention the uniqueness of each individual.

Basically the idea is to study as much as you can with an open, but discerning mind.  Trading is like obtaining a medical degree to become a neurosurgeon.   There are 4 key aspects to it – 

•	Psychology, (e.g. Douglas’ “Trading in the Zone”)
•	Analysis (fundamental/technical/other), 
•	Strategy (which market, which instrument, hedged or not, diversified etc…), and 
•	System (when to enter, when to exit, and all the rules for locating and executing market decisions - like trading plans).

This site is full of alternative approaches.  Probably the best way for a new trader to start is cautiously look at the styles that seem emotionally the most attractive and comfortable, and start there.  Especially start in areas you have some existing knowledge, and incrementally bolt on new concepts.

Sure, paper trading is a good idea initially, then very small positions since trading with real money is nothing like paper trading.  In all trading approaches, looking back to examine the past history in markets is worthwhile to help to formulate approaches for the future.  As you can see though from the diversity of approaches on this thread, let alone this site, that there are many roads to choose from, each with their virtues and drawbacks.

The key is to develop your own style that you understand and are comfortable with.  Trade your own knowledge, and be prepared to accept that mistakes are part of doing business.  It is the capacity to learn from these mistakes and grow and improve that separates the amateurs from the professionals.


Regards


Magdoran


----------



## Joe Blow (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> The first three words of that article pretty well sum it up.




Yes, but how long will she be a 'happy' punter I wonder.


----------



## professor_frink (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Joe Blow said:
			
		

> Yes, but how long will she be a 'happy' punter I wonder.




If this happy punter couldn't make any money out of property in recent years, then you wouldn't expect her to do much better in the sharemarket  

Here's the whole story-
full article 

The whole article is pretty scary!



> A WHOPPING 145,000 Australians have set up share trading accounts in the past year, *the highest number since the dot-com boom.
> *
> Of these, 91,000 had never traded a share before.




I wonder what kind of shares they are buying  
I reckon the end result will be pretty similar to the tech boom as well!!!!


----------



## Porper (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Nicks book/course would set anyone on the right track IMO.
> 
> Tech/A and others have some fantastic material on this site on precisely this subject, that go into great depth... my little corner is derivatives mainly, so others have better answers there.
> 
> Cheers




I totally agree.The course by Nick Radge is excellent for the beginner or intermediate i.m.o.

His book is even better, and the Chartist better still.There is good advice to be found on ASF, but it is mixed in with some garbage, some of the comments on this thread prove that.

It depends how serious we want to be.We can either play at it or treat it very seriously, whether that be as a fundamentalist or in a technical capacity.


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Of these, 91,000 had never traded a share before.




Oh My!!!

The top is in folks!


----------



## Joe Blow (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Oh My!!!
> 
> The top is in folks!




Wayne, we better batten down the hatches. Sounds like we're gonna have an influx of newbies.  Or maybe they're already out there... lurking. Mwahahaahahahahaha!


----------



## professor_frink (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Oh My!!!
> 
> The top is in folks!





We may have a little bit more to run, Realist mentioned the article was on page 20 or 25, when this kind of story makes it into the first 5 pages then we'll have to look out!! In the meantime, all these newbies should add plenty liquidity to the 'speccie' end of the resource market.

Wonder how many of them were buying AUM as an "investment" last week


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Oh My!!!
> 
> The top is in folks!




Indeed.   

When single mums and 91,000 other completly new punters jump in and some of them start trading over 100 times a month it is time to be extra careful.

I read that article and thought oh boy I better be carefull, I'll sit and watch for a while (not sell) and buying property is sounding better all the time.

If punters are leaving property to "invest" I should do the opposite.

Will the next significant downturn in the ASX be the signal to buy proprty do you think?  Punters will no doubt follow later once they've been stung sufficiently trading.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> No company is a guaranteed safe investment. No business is guaranteed to be around for 30 years. No brand is invincible.




 

I know, I know.  Hence why I diversify.

But jees if the CBA aint safe I do not know what is.

The sun may not come up tomorrow, and the CBA may go under overnight - both are quite unlikely though.

The very fact Westpac, NAB and Barings had 'issues' makes the CBA that little bit safer in my opinion. Once bitten, twice shy.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

"In business, or in being a real estate investor...it's very difficult to make a profit"

This is a great comment as well.

She may as well have said -

"It is extremely easy to make lots of money on the sharemarket, everybody can be rich"


----------



## cuttlefish (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				professor_frink said:
			
		

> Wonder how many of them were buying AUM as an "investment" last week




ok there were plenty of punters jumping into AUM last week that didn't have a clue, and there will be plenty more jumping in and out of it as well, but I'm curious:

how many TA's on here went with the breakout and rode it till trailing stops got hit?

how many FA's, due to the attention it was receiving, had a stab at putting a valuation on it based on the reserve estimates/grade, even if just out of curiousity?


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Indeed.
> 
> When single mums and 91,000 other completly new punters jump in and some of them start trading over 100 times a month it is time to be extra careful.
> 
> ...




I'm waiting for the capitulation selloff in property before I go anywhere near it. If there is one area where I believe in "Buffettology" is property. 

Buy value!

We are a freakin' long way from anything that even resembles value in the property market IMO( the res. market anyway) !


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> I'm waiting for the capitulation selloff in property before I go anywhere near it. If there is one area where I believe in "Buffettology" is property.
> 
> Buy value!
> 
> We are a freakin' long way from anything that even resembles value in the property market IMO( the res. market anyway) !




Well, I can't see a capitulation happening in the near future.

The Aussie economy is doing well, recent tax cuts are fairly significant, and we've had falling house prices for the past 3 years (in Sydney), along with rising rents.

Residential poperty in Sydney is getting closer to fair value I think.

Another 5% fall in Sydney over the next year, a 0.5% increase in interest rates, and a 10% rise in rents to me would signal an opportunity to look to buy again.

You of course would want to be fussy and bargain damn hard to get a good deal.


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Well, I can't see a capitulation happening in the near future.
> 
> The Aussie economy is doing well, recent tax cuts are fairly significant, and we've had falling house prices for the past 3 years (in Sydney), along with rising rents.
> 
> ...




What do you perceive as fair value... how would you quantify that?


----------



## cuttlefish (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

If you're a hard core counter cyclical you wouldn't buy property until it was neutrally or positively geared.   And let me laugh when someone pipes up and say's that couldn't happen in the Sydney market ... they'd be the same ones that five years ago were saying property never goes down.

That being said, there's always that old saying - _"whens the best time to buy property? .... now!"_.  And the expression _'safe as houses_' didn't come about for nothing either  lol


----------



## cuttlefish (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Well, I can't see a capitulation happening in the near future.




I wouldn't discount the possibility.  Ever seen a credit squeeze combined with a sharp economic downturn?


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> What do you perceive as fair value... how would you quantify that?




Well I just work it out for myself for my situation .. Something like:

Say the average house price in the suburb I liked was $500,000 and rents for an equivalent place were $400 a week. And I have a $100,000 deposit.

So my mortgage (just interest) would be about $30,000 a year.
or my rent would be $20,000 a year.

Owning has other expenses that renting doesn't, insurance, body corporate, rates etc. say $5000 a year.

(Much higher for investors though - stamp duty for one. But Negative gearing can offset that.)

And having say a $100,000 deposit invested would get me about $10,000 a year after tax.

So I'd have to make up about $25,000 or a 5% increase  on the house for it to be worthwhile buying.

Now, if I buy and my house went down - I'm screwed I lose alot of money.  If  I don't buy and it goes up 10% - well I missed the boat a bit but my deposit is growing as well. No great loss.

The house would really need to go up by more than 10% for me to lose much.

How do I know how much they'll go up?   Gut feel, recent history, comparative cities, average earnings, economy situation, tax rates, interest rates.  Many many factors.

My belief is when interest rates are high that is the time to buy!  Because it weeds out punters and investors and when they go down your payments are easier to make.


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> If you're a hard core counter cyclical you wouldn't buy property until it was neutrally or positively geared.   And let me laugh when someone pipes up and say's that couldn't happen in the Sydney market ... they'd be the same ones that five years ago were saying property never goes down.
> 
> That being said, there's always that old saying - _"whens the best time to buy property? .... now!"_.  And the expression _'safe as houses_' didn't come about for nothing either  lol




I've always observed the mean gross yield and would consider that, along with the wages/house price ratio as an indicator of value.

We are still at greater than 2 sigma from the mean by both measures



			
				cuttlefish said:
			
		

> Ever seen a credit squeeze combined with a sharp economic downturn?
> Today 06:49 PM




The younger generation has never seen that... this may be about to change


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Well I just work it out for myself for my situation .. Something like:
> 
> Say the average house price in the suburb I liked was $500,000 and rents for an equivalent place were $400 a week. And I have a $100,000 deposit.
> 
> ...




You are valuing the house more on a speculative than fundamental basis IMO.

Where's Ben Graham stand on perhaps the biggest purchase in your life?

"Value is a matter of opinion, whereas debt is real"
Mervin King - Governor, BoE


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> The younger generation has never seen that... this may be about to change




Well longterm houses will always go up, just like the sharemarket will. Just like the sun will rise tmorrow. (I know Snake will disagree of course   ).

But that of course does not mean there are not optimal times to buy and sell.

3 years ago in Sydney it was obvious you do not buy.

Right now seems about middle ground to me. You wont go *horribly* wrong buying or not buying.

The question is will they ever be "undervalued" - in which case I'd mortgage myself to the hilt and buy 2 of course.

I'm not sure Sydney house prices will ever be undervalued again in the near future.  

Ben Graham would not buy one if he lived here. He only buys at a discount.

Buffet on the other hand would buy one. He'd make sure he does not pay too much for it of course, and it would be in a great suburb and truly solid house and he'd find an uncanny place which is about to magically get seaviews because some other building is being pulled down or something.

I'm not sure Buffet would buy now, but next year he may.  Graham would wait and wait.

Ultimately Graham would get the best bargain, but Buffet would have the best house.


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> You are valuing the house more on a speculative than fundamental basis IMO.




The amusing thing is I would look at a chart of house prices.*    

And you would wait till they are at a great discount compared to their true value!!  

Ohh man, we've swapped identities..     


*I'd look to see significant and constant recent price rises and use them as an indication of weakness though - not the other way around. I wouldn't buy cause everyone else was buying. I'll be buying when everyone else is selling.


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I'll be buying when everyone else is selling.




Well you ain't seen nuttin' yet.


----------



## Julia (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Bobby said:
			
		

> Gee that reminds me about the old fart who won millions in lotto some years back.
> He was freaking out about how it would affect his pension
> 
> Bob.




Yes, Bobby,  just like the housewife who was interviewed on TV a few years ago with a house full of TV sets, I think about a dozen.  She had bought them because each purchase of a TV set put her in the draw to win $100 worth of groceries!!!

Julia


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				wayneL said:
			
		

> Well you ain't seen nuttin' yet.




I hope you are right Wayne, I am an extremely patient investor. I waited and waited and will continue to do so before buying, my deposit is ever growing.

A crash would suit me fine.   

But I'll try and do a Buffet not a Graham, I will buy a really nice place for a good price.  I wont wait forever to get an absolute bargain - I may miss the boat if I do.

I think you are better off buying a great place at a good price, than a good place at a great price.


----------



## wayneL (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> But I'll try and do a Buffet not a Graham, I will buy a really nice place for a good price.  I wont wait forever to get an absolute bargain - I may miss the boat if I do.
> 
> I think you are better off buying a great place at a good price, than a good place at a great price.




That seems sensible enough. There are other considerations with home ownership other than the purely mercantile aspects. 

"A Wonderful Home at a Fair Price"? :


----------



## Realist (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Yeah it depends if you are buying a house or a home.

Money is not everything in life.

As someone (maybe Kennas??) said "it's no fun driving around in a porsche as an old lonely man"

Life needs to be balanced.  Money is important and you need to treat your investments carefully. But you need to live also, enjoy your money, money is a means to an end - make sure you have an end - a nice house, nice family and friends, go on holidays, do things, enjoy yourself.

Waiting forever to get the perfect bargain on a house is not wise.  Buy a great house for a good price and enjoy it.  Who cares if it goes down a little, in the whole scheme of things a few thousand here and there is irrelevant.


----------



## mit (12 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> If an investor and trader are buying the same stocks then it is actually the investor who takes more risk.
> 
> I just don't see any reason why you'd want to buy CBA to be honest.
> 
> ...




Interest on six months so 4% and it comes off before tax on the original 15% so 11% or 5.5% after tax. Remember this is leverage. As CBA has a relatively low volatility you could use CFDs at a reasonably high leverage (say 80%). So on the capital invested you make 22% in six months only capturing half of the trend. So not a bad return for a boring stock. 

But any way that's imaginary. I just checked my records I have bought CBA twice. The first time in Jan/February for a 10% move (30% after leverage) over 35 days and hold it currently since 26th Jun for 3.5% so far (10% after leverage). This is before tax but I get a lot of dividends and thus franking credits. This includes franking credits on stocks I lost money on but held for dividend. 

MIT

MIT


----------



## It's Snake Pliskin (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> Well longterm houses will always go up, just like the sharemarket will. Just like the sun will rise tmorrow. (I know Snake will disagree of course   ).
> 
> What do you mean by that? Actually,property can go the other way permenately, depending on location of course.
> 
> ...




I don`t see the similarities between property and stocks.


----------



## It's Snake Pliskin (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> Money is not everything in life.
> 
> As someone (maybe Kennas??) said "it's no fun driving around in a porsche as an old lonely man"




Especially if you have your hand on the wrong gear stick!


----------



## It's Snake Pliskin (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*


----------



## wayneL (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Especially if you have your hand on the wrong gear stick!




 :


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Snake Pliskin said:
			
		

> Houses are valued not undervalued. They have a value that is represented by a valuation by a property valuer. If a house is for sale at a lower price than its true valuation, then that is undervalued, but no fool would do that especially if in the hands of an agent. So we tend talk about its value or it being valued.
> .





So you are trying to tell me that no-one has ever sold a house for less than it is worth?

 

When interest rates go up, unemployment rises, oil soars - there'll be people mortgaged to the hilt that have to sell, they simply can't afford the mortgage. That's when you'll get a house for less than it is truly worth.

Hence houses will be undervalued compared to their true value.


----------



## tech/a (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

*God now he's a Housing Expert.*

Ive never read so much verbal diarrheoa on Trading and Property Investment in the 52 yrs Ive been on this planet.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> *God now he's a Housing Expert.*
> 
> Ive never read so much verbal diarrheoa on Trading and Property Investment in the 52 yrs Ive been on this planet.




 

Please tell us oh wise one what you think the Sydney property market will do over the next 2 years.


----------



## tech/a (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I'll leave that to the expert----Your only interested in your own voice not that of any other.
Regardless of what would be presented you would and do take a counter veiw.

There are some knowledgable people here who just dont bother to become involved.
Some have attempted most including myself dont even bother.

Whats the point??


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> I'll leave that to the expert----Your only interested in your own voice not that of any other.
> Regardless of what would be presented you would and do take a counter veiw.
> 
> There are some knowledgable people here who just dont bother to become involved.
> ...





   So you are not here to give opinions, just criticise others who do.

Great, thanks.


----------



## tech/a (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I and others I am certain have no intention of posting relevant information.When contributors are sarcastic,opinionated,show no humility,whos only goal in the discussion is to promote their own "opinionated veiw" on others.

Your goal is to control the thread.You have no desire to learn.You have no respect for others opinions particularly as 90% of them dont fall into your Mindset of what you think "Should be".


Show some humility with other posters and you may get a better discussion.

Frankly you need to have these "qualities" pointed out.
It certaintly is critisism which will have I expect no effect.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> I and others I am certain have no intention of posting relevant information.




 

That takes the cake.  Hahahahaaaa

You admit that you have no intention of posting relevant information.

What the hell are you posting for then? 

If you have no intention of posting relevant information then I suggest you just read and not post at all.

I, like everyone else has opinions, I express them here, I do not belittle others opinions like you enjoy doing, my opinions like everyone elses are valid, and if you disagree with them you should explain why. Do not argue the person, argue the point.

I have no doubt you know more about houses than me, and trading than me. I am in no way an expert on houses or trading, I've never expressed that I am, I've never bought a house or "traded" a share - I only "invest". Wayne asked me a question about houses. I gave an answer - it could well be wrong, if so I'd rather someone pointed out what was wrong and what the correct answer is than trying to get personal and criticisng me.

I'll ask you again, so you can redeem yourself...

What do you think Sydney house prices will do in the next 2 years?


----------



## macca (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I think we will see Sydney house prices drift until the median rental return is about the same as the RBA interest rate.

If we ignore the waterfronts etc and look at most suburban houses, when the gross rental return is about 5.5% to 6% I would be buying at the first sign of tightening in the market.

Regional areas will get up to 6% + like they were before this last charge in prices.

If I were being ultra cautious I would wait until the first drop in the RBA interest rate then buy.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				macca said:
			
		

> I think we will see Sydney house prices drift until the median rental return is about the same as the RBA interest rate.
> 
> If we ignore the waterfronts etc and look at most suburban houses, when the gross rental return is about 5.5% to 6% I would be buying at the first sign of tightening in the market.
> 
> ...




Good point Macca, I think you are right.

Any idea where we can get exact figures on rental returns?


----------



## tech/a (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> I and others I am certain have no intention of posting relevant information.When contributors are sarcastic,opinionated,show no humility,whos only goal in the discussion is to promote their own "opinionated veiw" on others.




If the statement is taken in context its humor value diminishes.




> Do not argue the person, argue the point.




Many have tried that but your opinion is "THE" opinion you have no capacity to discuss any opinion (and infact some of the "opinion" offered here are quantifiable fact),let alone adopt a proven fact statement or methodology.



> I'll ask you again, so you can redeem yourself...




*I am deeply and for ever greatful that you in your generous wisdom will allow such an opportunity.*

Ill post a little later if that fits with your timeframe.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				tech/a said:
			
		

> Ill post a little later if that fits with your timeframe.




Good man.

There's no denying I am opinionated, but despite what you say i do at least read others opinions and consider them.

And I would genuinely be interested in your opinion on house prices.

I personally think I have done well not buying so far in Sydney (I didn't have the money 5 years ago) and instead investing in shares. Obviously results prove that - houses have gone down if anything and shares significantly up.

I know there will be a turning point though, when reducing your shareholding and instead moving it into property would be the wise move.

When is that?  it can't be too far off - between 6 months and 4 years is my guess?


----------



## tech/a (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



> There's no denying I am opinionated,




You remind me a lot of myself many moons ago.

Fortunately I have learned that there are many who have a great deal to contribute and I have been fortunate enough to take on board and apply much of that which sticks out as obvious (And sometimes the not so obvious---some af Radges thought) in my own backyard.

Enthusiasm like yours is hard to find and a quality that if used wisely will see you reach your goals.

Back soon.


----------



## Sean K (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

You guys going to start talking about technical and fundamental analysis again soon?


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				kennas said:
			
		

> You guys going to start talking about technical and fundamental analysis again soon?




Yes back to the battle   :casanova:


:shoot: :sword:


----------



## ghotib (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Is THAT what this thread is about? Gee... who'd a thunk it?


----------



## Bobby (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				ghotib said:
			
		

> Is THAT what this thread is about? Gee... who'd a thunk it?




Yep ? its all about  posts    who can post the most !

And the winner is ? -------  who at this rate will average 4400 in his first year  :


----------



## tech/a (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Ill post response in the housing thread.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Bobby said:
			
		

> Yep ? its all about  posts    who can post the most !
> 
> And the winner is ? -------  who at this rate will average 4400 in his first year  :





I'm heading for 6000 posts!     

As I said before I am changing jobs soon, so have spare time and I'm bored sh*tless (maybe I should trade   ).  and I going to Singapore for work, then maybe South America or Europe for a month or so on holiday, then NZ for a month. So unfortunately for you guys I wont be here all the time posting unbiased well thought out indisputable facts for you all to admire.


----------



## cuttlefish (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist,

You might find it interesting to look at the CMI chart. I'm no wizzbang TA but its interesting the point at which its found resistance (around $1.30). I suspect the TA's would say its pretty textbook. (If I understand correctly its hit the downtrend resistance line). 

If you look at historical price action you'll also see that it tended to bump into the 1.30 support line quite a bit over the past year (which is now also acting as resistance).

I"m curious - what price did you enter CMI?  It's pretty unlikely you entered it at $1. 

The reason I'm raising it is not to pick on your strategy but to explore the idea of combining both FA and TA.  In this situation you've identified a stock that you think is worthwhile based on your own FA.  

You could possibly have waited a while before entering as it is in a downtrend.  Then on the sign of a break from the immediate downtrend, traded it up until the 1.30 resistance of the larger downtrend. Sold on a tight trailing stop around that level and now be waiting for a reentry.

I'd be curious for the TA's to comment because I'm not really that versed in TA.

I suspect the first thing we'd be waiting for is some sign of whether the recent upswing is a real break from the longer term downtrend or just a reversal in the long term downtrend.  

The risk with the trading approach would be that it punches through one of those resistance levels without a breather and you miss out on some strong profit. But for a company like CMI,  who aren't about to discover the next bass strait or invent a time machine, its probably a fairly safe bet that they won't do anything too unpredictable.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I bought 1000 CMI shares at $1.20 - collected some dividends then sold in June 30 at a small loss.   

I cleaned up my portfolio before tax year end. Sold RIC as well.

I speculated with tiny amounts on CMI and RIC and CDO and broke even.       

Graham did recommend selling and buying back if tax works in your favour.  I sold CDO at $4.35 and made a profit - it is worth less now.

If CMI went under $1 I may buy back??  

CMI may be a good buy soon, it's going to report earnings soon and they are as good as last year supposedly.  About a $7M profit for a $44M company. Quite excellent really.


----------



## It's Snake Pliskin (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> So you are trying to tell me that no-one has ever sold a house for less than it is worth?
> 
> 
> 
> ...




NO properties will represent their value as a result of the conditions. It is highly possible that some will sell for less than others to get a quick sale, but that does not constitute undervaluation as you would think stocks are undervalued. 

Asking prices are not always true representations of value due to mark ups and testing the market - revelation for you. Hence they are not undervalued when they sell for less. If they can`t sell for what they are asking the price drops to its real value,  or changes value to a lower price representing its new value due to market conditions - thats only if they are keen to sell though.

So its value is its value. 
Ta, ta,


----------



## cuttlefish (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I bought 1000 CMI shares at $1.20 - collected some dividends then sold in June 30 at a small loss.
> 
> I cleaned up my portfolio before tax year end. Sold RIC as well.
> 
> ...




   consistency isn't your thing is it.  lol


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				cuttlefish said:
			
		

> consistency isn't your thing is it.  lol




I invest most of my money in large successful near monopolies who have a global presence. I hold for years. Buy in downturns.

WDC, FGL, BHP etc.

I've never sold any of these ever!!!

I'll also dabble tiny amounts in pissy little undervalued small caps that pay dividends, companies that I perceive to be quite undervalued and have a good P/B and low PER ratios, these are speculative and I never put much money in them

CDO, CMI, RIC.

I'll sell if I've made good money (CDO) and they aren't undervalued any more, or if they go down and the tax offsuit suits me (CMI and RIC) or if I fell I am getting nowhere.

simple right?

I buy and hold big companies,  and dabble a little money in small caps.

That is consistency at its finest.


----------



## MichaelD (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Ah, bugger it. I've held back from posting this and held back and held back, but SURELY enough is enough. Time to call a spade a spade.


PLEASE those of you who should know better (myself included) stop feeding the troll. He's not even a very good troll (there's a much better one around) and he has been fed *extremely* well.

Plenty of you have declared your stop losses hit in this thread, so stop the ongoing slippage!

Let the market teach the troll his lesson - he sure ain't listening to any of us.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> I've held back from posting this and held back and held back,




Keep holding next time, it wasn't worth the wait.      



> (there's a much better one around)




Who's the better troll?


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> Currently CMI is not giving a buy signal, but is giving sell signal after sell signal.





MichaelD, you posted this on June 20th. About a stock I mentioned.

CMI since went up 30% in 3 weeks.

Any comments?


----------



## RodC (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Realist said:
			
		

> I bought 1000 CMI shares at $1.20 - collected some dividends then sold in June 30 at a small loss.




Realist,

You need to learn about shorting. It looks like you've successfully bought into a downtrend and sold near the bottom.

Rod.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

I did not lose on it Rod, I got dividends - look at the yield on CMI.    

I was experimenting - a failed experiment admittedly.   

But I lost no money and gained some experience I suppose.

I was not interested in its trend. I was interested in its ridiculously low PER and high Yield and the fact it has made a profit year after year.  Sure enough it shot up 30%.

Just one of those things I suppose - my worst buy this year..


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Hey guys...


What do you think of WDC now?    

Dividends coming soon.. 

Would you buy now??


----------



## RodC (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Realist,

Regarding WDC. 

Depends what you wnat to get out of it.

There seems to be some resistance at about $18.30, I probably wouldn't look at it for my longer term holdings until it got thru there.

Having said that I also have a shorter term "dividend portfolio", I may be interested in it for that, but I managed to lose on it over the last couple of dividends so I may well leave it alone.

I actually like WDC and would like to own it long term, but it just doesn't seem to work for me at the moment.

Rod.

This is not advice, don't take it as such.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Thanks Rod. I agree with you.

Now final one MRE  Minara Resources Limited (MRE, formerly Anaconda Nickel Limited)?

What do you think Technically?  Because Fundamentally it looks ok...

Is it worth a punt?


----------



## Sean K (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

WDC is a good long term investment. Would suit your investment theory I think realist. It's almost a buy and forget. It'll go through cycles, but management is top notch. Turned around Australian soccer!


----------



## ghotib (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				kennas said:
			
		

> WDC is a good long term investment. ... It'll go through cycles, but management is top notch. Turned around Australian soccer!



ROFL 

Better be sure about the succession planning though.

Ghotib


----------



## Sean K (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Technically MRE is struggling with past resistance/top. Could fall back to $2.40 and then retest highs, or break through depending on all else. Needs positive market or at least stability to climb now.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				kennas said:
			
		

> Turned around Australian soccer!




Yep Frank Lowy is a genius alright   

He's so smart infact he could take over Channel 9 and get it to win the ratings one night..  Which no-one else seems to be able to do, even Eddie.

Dancing on ice - oh dear?


----------



## RodC (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Lowy actually used to own Channel 10 back in the 80's. He lost heaps, so he went back to concentrating on what he does best.

Rod.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Thanks Kennas,

Fundamentally I like the following resource stocks because they make profits, have a low PER, little debt, and a reasonable P/B ratio, and they pay dividends!


MRE, ILU, and ZFX



I own none of them as they don't meet my criteria though - only BHP and RIO.


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				RodC said:
			
		

> Lowy actually used to own Channel 10 back in the 80's. He lost heaps, so he went back to concentrating on what he does best.
> 
> Rod.




 

Wow I did not know that.  AAhh you have ruined my image of him.  Still WDC is doing well.

My other shares are taking a pounding today, WDC is just about the only green one I've got for today.


----------



## RodC (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Lowy's biography is worth reading, it's a pretty amazing story.

Rod.


----------



## Magdoran (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> Ah, bugger it. I've held back from posting this and held back and held back, but SURELY enough is enough. Time to call a spade a spade.
> 
> 
> PLEASE those of you who should know better (myself included) stop feeding the troll. He's not even a very good troll (there's a much better one around) and he has been fed *extremely* well.
> ...



MichaelD


*Applause!*

You've got my vote.  I'm *100%* behind you.


Regards


Magdoran
P.S. I liked that piece you wrote about institutional trading - must respond to that at some point - really interesting perspective


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Magdoran said:
			
		

> *Applause!*
> 
> You've got my vote.  I'm *100%* behind you.
> 
> ...





Nice use of the *bold* button Magdoran.

It is nice to see the percentage of *your* posts moaning about *me* are growing.


----------



## Magdoran (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				MichaelD said:
			
		

> PLEASE those of you who should know better (myself included) stop feeding the troll. *He's not even a very good troll * (there's a much better one around) and he has been fed *extremely* well.




You know Michael, I think we should invite the other troll around for dinner on this thread, the current one’s become quite boring and repetitive, hasn’t he?  

The other one’s much smarter, more humourous, and I’m sure is much more sophisticated in comparison.

Perhaps there could even be a troll “session” between them to liven up the thread, now wouldn’t that be fun? – kind of like one of “snakes” Asian “**** fights” he was talking about?

Who wants to be the bookie for the bets?


Mag


----------



## Realist (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Magdoran said:
			
		

> Who wants to be the bookie for the bets?





Me!!  I will!

Your percentage of posts about me is ever growing.  Just put me on ignore if I get to you that much.

Who is this 'other troll' anyway, he sounds interesting?


----------



## dallee (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*

Magdoran

Thanks for your advice two pages back. My how this site moves when you spend your day doing 'a real job' (actually I work in the public service but trying to get with the vibe of this forum by insulting someone at some point!). This site has been a bit of an eye-opener. We revalued the house, which has risen in value without us really noticing -- no charts involved -- (Realist, just go for it)  and have a healthy line-of-credit to spend. Based on this discussion I won't dip a toe in until I have much more of an idea of what I'm doing and the market is not as fully valued and forgiving of mistakes.

I'll continue to read this forum in the meantime, though, cause the audacity of the insults makes me laugh out loud.

dallee


----------



## swingstar (13 July 2006)

*Re: Which one do you use? Technical or fundamental analysis*



			
				Magdoran said:
			
		

> MichaelD
> P.S. I liked that piece you wrote about institutional trading - must respond to that at some point - really interesting perspective




Have you guys read Market Wizards? A lot of the traders were initially institutional traders yet still out did colleagues by heaps. Just pulling out a snippet on Michael Marcus... _"In a number of years, his profits exceeded the combined total profit of all the other traders. Over a ten-year period, he multiplied his company account by an incredible 2,500-fold!"_

As MichaelD said, _I'd argue that few people in the investment bank industry know how to trade._ Dare I say most are just academics who trade parrot fashion, and they probably have a lot reigns pulled tight on them. 

A private trader... it is their livelihood, hobby, and career. There is a lot more at stake, however there is also a lot more freedom to grow and move. 

*"Why dont the investment banks just hire a team of chartists with etrade accounts and margin loans?"*

So, not sure what context this was in, but why don't intitutions just hire a bunch of private traders? Well it then depletes any reason a trader chooses to take that path, and would probably have negative consequences on their results. However, it may be beneficial if they were free to go wild. But what is the likelihood of say AMP setting up accounts with people's super and investment funds for a bunch of retail traders? LOL, I don't think it's going to happen...


----------



## insider (2 August 2007)

*Re: Which one do you use? Technical or fundamental analysis*

The European markets are currently trading Possitively


----------



## clayton4115 (25 October 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Realist said:


> Okay Bunyip, or anyone else that agrees with this theory...
> 
> To prove this please advise me of the last share you bought, or the next you intend to buy.  Assuming I buy it this Monday morning 11am.
> 
> ...




_____________________________________________________________________________________
Above quoted June 2006

lets see 3 1/2 years later

FGL $5.58
WDC $13.17

would have earned more in a term deposit,

point is some stocks you buy and hold could be complete dogs.


----------



## nulla nulla (25 October 2009)

*Re: Which one do you use? Technical or fundamental analysis*



clayton4115 said:


> _____________________________________________________________________________________
> Above quoted June 2006
> 
> lets see 3 1/2 years later
> ...




Interesting. I don't know much about fgl but wdc went up to $22.00+ then down to less than $9.00 and is now trending slowly back up again. In the last 3 1/2 years it has paid a good annual dividend which if turned back into the market would have generated further returns. While your capital base in the fixed deposit would still be safe, i'm not sure it would have generated a higher rate of return than wdc?


----------



## alphaman (29 October 2009)

*Re: Which one do you use? Technical or fundamental analysis*

According to Comsec's data, WDC's annualised total shareholder return is -6.6% over the last 3 years, 2.7% over the last 5 years. So term deposit wins, for now.


----------



## bunyip (7 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Realist said:


> I'll tell you 2 ASX shares to buy on Monday morning and we'll see what happens.
> 
> Okay my shares are FGL ($5.55) and WDC ($17.20) - and I recommend you hold them for 30 years minimum and reinvest dividends.
> 
> Why buy them?  Great companies, great brands, they pay dividends, worldwide market leaders, property and wine is a bit out of fashion at the moment but will surely be back in fashion sooner or later.  They are fairly valued. And I firmly believe people (mainly Aussies but worldwide as well) will shop at Westfield and buy beer and wine in 30 years time.




Must be a couple of years since I've seen Realist on the forum...not sure if he's still with us or not.
It's interesting to see how WDC and FGL have performed since he picked them three and a half years ago.

If we look at the period from 17/06/06  (the date of Realist's two picks) until 1/11/07 when the bull market peaked, we see that........

* The All Ords gained 39% over this period.
* FGL gained 30% plus dividends
* WDC gained 36.5% plus dividends

But since then they've both caved in.
FGL is now at $5.31 (4.3% loss in the 3.5 years since he bought it)
WDC is now at $12.21 (29% loss in the 3.5 years since he bought it)

To be fair, his strategy of holding for 30 years still has another 26.5 years to run. Both stocks may be much higher by then. Or much lower. Worst case scenario - both companies may no longer exist. Who knows what the next 26 years will bring for these two stocks. So far at least, their performance has been pretty dismal.

Realist could have utilised his capital much more effectively by implementing the strategy he scoffed at - investing in blue chip stocks that were outperforming the general market, and sticking with them only as long as they continued to outperform. 

While the All Ords gained a further 39% after he made his two picks, there were many stocks that performed much better over the same period.
Some gained several hundred percent. A few gained over 1000%, e.g. FLX gained 1269%
His lost opportunity cost has been enormous.

Results 26 years from now? Unknown at this stage.....his two stocks might be doing very well or very badly by then, or may not even exist.
If he was to follow a strategy of buying the outperformers over the next 26 years, and holding them only as long as they continued to outperform, it's highly likely that this would prove to be a superior strategy to buy and hold.


----------



## alphaman (7 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

bunyip, how do you define outperformance and loss of outperformance?


----------



## condog (8 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

A bit of both, but with out a doubt Fundamental is far more important, as id rather buy an over priced good stock then a cheap dog of a stock anyday....

We use fundamental to find the stocks we want and to know what represents good and bad value with that stock......

Then we just look at price and Relative Strength Index to find a better entry point. My opinion is fundamental analysis wins hands down, its just much harder / more expensive to do....


----------



## condog (8 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



alphaman said:


> According to Comsec's data, WDC's annualised total shareholder return is -6.6% over the last 3 years, 2.7% over the last 5 years. So term deposit wins, for now.




That in fact may be the case.....

Fact is their returns have been smashed by write downs in asset values due to GFC. At some point they will have massive increases in asset values. 

Buying now why they are out of favour , have hopefully seen all their write downs may just prove to out do term deposit by a lot ....where as waiting till they are laready returning +10-20% theres a lot of upside already gone....

WDC has proven to be a fantastic long term asset for many investors. Its well managed, has 1st class assets, well diversified. Its just presently in a rut due to GFC.....

Using Buffetology "buy when no one else wants it" assuming its a good stock, which you could do a lot worse....  Now is probably when the smartest investors are grabbing huge chunks of WDC....


----------



## Julia (8 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



condog said:


> WDC has proven to be a fantastic long term asset for many investors. Its well managed, has 1st class assets, well diversified. Its just presently in a rut due to GFC.....
> 
> .



Over what time period do you think WDC has 'proven to be a fantastic long term asset'?


----------



## bunyip (8 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



alphaman said:


> bunyip, how do you define outperformance and loss of outperformance?




My software has a number of features that enable it to easily find outperforming and underperforming stocks. These features include......

* Relative Comparison scans, where it will scan the stocks of your choice and give you their percentage gain or loss over whatever time period you nominate.
The All Ords can be included in the scan....makes it quick and easy to see which are the best and worst performers relative to the All Ords, and relative to each other.

* Ability to overlay one chart on top of another, e.g. a stock chart overlaid on an All Ords chart to give you a quick visual reference of the performance of one compared to the other. Also it can overlay sector charts on the All Ords chart to tell you which sectors are performing above or below the general market. This can be a great help in telling you which sectors of the market to focus on. Or it can overlay a stock chart on it's sector chart, to see which are the best or worst performing stocks in that sector.

* ROAR indicator (rate of annual return) and the ability to scan for stocks whose ROAR has just risen above a user-defined figure.

I used all these tools in combination, but I didn't use any particular percentage figure to assess which stocks were outperforming. What I basically did was scan for the outperformers, then look at their charts to see which were in the most sustainable and steady trends. By 'sustainable' I mean a steady slope from bottom left to top right corner of my screen. I wasn't interested in stocks that were outperforming because they'd suddenly shot up 80 or 100% in the last couple of weeks - such stocks have a nasty habit of going down even faster than they went up.

I speak in past tense because I no longer trade stocks.


----------



## alphaman (8 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



bunyip said:


> By 'sustainable' I mean a steady slope from bottom left to top right corner of my screen. I wasn't interested in stocks that were outperforming because they'd suddenly shot up 80 or 100% in the last couple of weeks - such stocks have a nasty habit of going down even faster than they went up.



Thanks, that sounds perfectly reasonable to me. I've always wanted to code a relative performance based system, just never get around to it.


----------



## bunyip (9 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



condog said:


> WDC has proven to be a fantastic long term asset for many investors.




Considering that WDC is worth less now than five years ago, I'm wondering why you think it's been such _'a fantastic long term asset for many investors.'_


----------



## LaptopPro (9 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Mostafa said:


> I combine both fundamental and technical analysis, at first I choose some stocks with fundamental analysis then with technical analysis decide when trade them.
> 
> How do you trade?




Yep thats pretty much my main daily strategy.


----------



## bunyip (10 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

The video link below might be useful to anyone who recognises the benefit of investing in the strongest stocks in the strongest sectors, rather than tying up their capital for years on end in dogs like WDC whose current price is almost 30% less than its price 5 years ago.

http://www.youtube.com/watch?v=wEypGm5ahCI


----------



## Wysiwyg (10 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



bunyip said:


> The video link below might be useful to anyone who recognises the benefit of investing in the strongest stocks in the strongest sectors, rather than tying up their capital for years on end in dogs like WDC whose current price is almost 30% less than its price 5 years ago.



I see Stuart has his own flock at OnlineTradingMastermind but the yard must be full because ---- The OTM Is Currently Closed.


----------



## nomore4s (10 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Julia said:


> Over what time period do you think WDC has 'proven to be a fantastic long term asset'?




Since March 09:


----------



## Julia (10 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



nomore4s said:


> Since March 09:






Even in this rally period, it would be hard to term it a fantastic investment, given it was around $10 in March and now is not much more than $12.

If WDC is a fantastic investment, I hate to think what a dog would be.


----------



## condog (11 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Julia said:


> Over what time period do you think WDC has 'proven to be a fantastic long term asset'?




When you buy a stock like WDC you do not buy it to compare with the likes of JBH, MND, BHP or WOW.... 

Any property stock will by its very nature carry a higher debt to equity, higher liabilities and lower ROE, ROFE and ROA.

WDC is the world's largest listed retail property group.  It has interests in a truly global portfolio of 120 of the worlds absolute best quality regional and suburban shopping centres. 
WDC and pre WDC Westfield  has a long history of ongoing growth, strongly growing yields and very high occupancy, with high rents and long term leases.....as well as some of the highest % of retained tennants on the planet.

At present WDC on price alone is in the dumps because it has suffered massive statutory accounting write downs in underlying asset values.... In property stocks these appear as reduced earnings / profits and hence reduce SP.  

Since the vast majority of WDC assets are in fact commercial property which will inevitably and strongly bounce back, WDC's true worth cannot be judged on todays value....

If you judge WDC based soley on SP today, then it has not performed well at all.  But if you consider:
1.  that its current share price is massively reduced due to write downs in property values, caused by fire sales in commercial property around the globe
2. Income is reduced due to statutory write downs compounded by rents linked to tennant sales figures 
You will quickly recognise that this is a company whos current share price in no way reflects its true value and the incredible quality of its underlying assets and income base....

Even if property prices simply stop reducing you should  see an improvement instantly in WDC SP and returns.

As soon as commercial property, lending and retail begin to bounce back in the US and UK , I would expect a massive increase in WDC income and SP which makes todays values seem ridiculous......The growth in property prices whilst compounded by the growth in earnings will highlight the point Im making here....

On this basis given all the forecasters are looking to 2H10 and 1H11 WDC time frame would be 12-18 months minimum....but its true value will most likely be seen in 2014 or so....

Lets just say its a VERY  bad time to be selling WDC, while its SP in no way reflects a fraction of its true  value...


----------



## condog (11 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



bunyip said:


> Considering that WDC is worth less now than five years ago, I'm wondering why you think it's been such _'a fantastic long term asset for many investors.'_




See my post above.  

It is a dog if your only considering share price... 

But consider it had Net profit of 5.58 Billion in 2007 and only 300M in 2009 with negative 2Bn in 2008.... Largely caused by write downs.... caused by fire sales of competitors properties. 


When 2009's $300M profit bounces or climbs steadily back to 2007 levels of $5.6 B , this income is an increase of almost 2000%....  over any time frame that will look good.

What do you think the value of the stock might be.....

I agree in the short term its a dog.....but in the long term it would seem likely to be an incredible buy......  

If one viewed the property sector as a slow moving titanic compared to the bust and boom of 09 on the equity markets, I think many people will look back and see Late 2009 / early 2010 as the chance of a life time on WDC......  

Clearly not all commercial property will be as good.... but with WDC we are talking about many of the best managed centres in the best parts of the world, with the best tennants at unsustainable bargain basement prices....


----------



## Julia (11 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

Well, Condog, I'm really happy for you that you can regard WDC with such affection.

Personally, I'm in the share market to make money and have no interest holding onto a dog while I wait for it to actually start growing the SP.

Especially when there are plenty of sound, well managed companies out there with rising share prices and reasonable dividends.  I simply find your position baffling.

But that's fine.


----------



## chrislp (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Julia said:


> Personally, I'm in the share market to make money and have no interest holding onto a dog while I wait for it to actually start growing the SP.




So true. If you have done that much theoretical work on a company you may best be served by spending some time on when the share price might reflect that "value" & keep your money elsewhere until then.


----------



## nomore4s (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



condog said:


> When you buy a stock like WDC you do not buy it to compare with the likes of JBH, MND, BHP or WOW....




LMAO. You're right you wouldn't compare it with those stocks because those stocks would have actually made you money.



condog said:


> It is a dog if your only considering share price...


----------



## bunyip (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



condog said:


> See my post above.
> 
> It is a dog if your only considering share price...
> 
> ...




OK Condog - you've come up with a host of fundamental reasons why WDC should perform well in the future, with a corresponding performance (perhaps) in its share price.
I don't disagree with you, although personally I wouldn't know as I don't study fundamentals. In fact I don't even trade stocks - I did for ten years or so, but I've phased out of stocks since discovering the currency market a few years back.
But in my stock trading days, I looked at current performance rather than possible future performance based on an assessment of the fundamentals.
My method, which incidentally was very profitable, was to find the strong sectors and the strong stocks in those sectors when  the market was bullish.
And when the overall market was bearish, to find good shorting candidates in the weakest stocks in the weakest sectors. 
For entry setups into these stocks I used simple technical analysis strategies such as buying after temporary retracements during bull markets, and shorting after temporary rallies during bear markets.
Basically, I used the same approach that's outlined in that video link I provided a couple of posts back.

It's a rare blue chip that puts in strong price performance while it has lousy fundamentals. If a blue chip stock is being bought up by eager investors who are pushing the price higher, you can in most cases correctly assume that these investors have studied the fundamentals and found them to be very positive. 

While I have no doubt that your approach works over the longer term, and will more than likely work sooner or later with WDC if you were to buy it now, the problem I see with it is that sometimes your capital will be tied up for prolonged periods while your stock goes nowhere. 
We've seen a good example of this happening with Realist's recommendation to buy WDC more than three years ago when it's price was almost 30% higher than it is today.
Like you, Realist came up with various reasons why WDC was a great buy back then. And yet, the stock has lost considerable ground over that three and a half years.
Certainly, the global meltdown is a big part of the reason. But the point is that while Realist has been waiting for the stock to come good, he's had his capital stranded in a non-performing stock instead of having it gainfully employed in the many stocks that would have given him several hundred percent profit over the same period.

In my 15 years of involvement in the financial markets I've met hundreds of traders and investors through organisations like the ATAA. Time and time again I've seen them sitting on a dead stock for months and sometimes years in the hope that it will come good and start making some decent price movement. The interesting part is that they can always come up with convincing fundamental reasons why it _*should*_ come good. 
Meantime, they miss out on harvesting big profits from performing stocks while their money is tied up in a dog.

I don't expect you to think the same way as me. I'm pleased that  different people have different ways of investing in the market, as it's these different strategies that make the market what it is.
The primary reason any of us play the markets, whether it's stocks or Forex or whatever, is to make money. My view is that the most money is made by getting on stocks or currencies that are moving solidly right now, rather than looking for something that may move at some time in the future, and having your money tied up with little or no growth for prolonged periods if the expected price growth takes much longer to eventuate that you anticipated.

Thank you Condog, for your post. I enjoy discussing these issues - in fact our discussion has brought out the poet in me. 
I wrote the following poem to summarise my thoughts about trading the market.

_If bullish fundamentals cause
Upward stock price movement
Then surely all we need to do 
To guarantee improvement
In our accounts, is find the stocks
With fundamentals glowing
This surely is the way to keep 
Our money ever-growing


We'll look for value while they're cheap
It sounds so good in theory
And yet in practice, not so great
It gets a little dreary
To watch a stock stagnate for years
Against our expectations
It should be moving strongly up
Not causing us vexation

Their value's right - they must go up
Is nothing but conjecture
A better bet is look for stocks
That form the strongest sectors

"But fundamentals", you may say
"We really must examine
Otherwise we can't be sure
That we won't buy a lemon"

Well fair enough, but don't you think
That sectors which are climbing
Are full of stocks that shape up well
Their fundamentals shining?

A stock with fundamentals great
Can still spend years in slumber
I see no point in holding stocks
With unimpressive numbers

We're in the game to make some dough
To keep our money moving
We need to buy performance stocks
Whose value keeps improving

And when they stop 
We sell them out
And find the next contender
In stocks and sectors climbing hard
We've no time for pretenders

For every stock that goes to sleep
For years,  with little movement
A score of others offer us
Substantial price improvement
Our cash is put to better use
By feeding these strong movers
Than feeding dogs who've lost their bite
Why put our cash in losers?_


----------



## skyQuake (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

Thank you bunyip for your insights. Interesting read.

Just like to add Keynes's quote

_"Markets can remain irrational longer than you can remain solvent."_


----------



## Timmy (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

Bunyip, great work with the poem.  That deserves its own thread.


----------



## bunyip (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Timmy said:


> Bunyip, great work with the poem.  That deserves its own thread.




Thanks Tim. I'm an old poet from way back - written quite a few over the years.


----------



## Out Too Soon (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

Well done Bunyip  Very well done 

Re: "Which one do you use? Technical or fundamental analysis"  

Do you cover one eye when you drive your car?
Do you use only one pedal when riding a bike?

Why not use all the tools at your disposal?  

Technical analysis is a good way to find new stocks/ companies that you may not have been aware of & get in ahead of the crowd.
 Finding new companies with good Fundamentals often means reading a report ie- the sheep are already aware of it.

TA is good for making entries & exits ie making a buck shorter term
FA is the retirement accumulation way of patiently building a nest egg.

Different strokes for different folks.

Personally I am much more dependant on TA  because I don't have a steady income stream for investing long term but I never buy a share without checking the basic fundamentals.


----------



## condog (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

Hey Bunyip great arguments.....makes a lot of sense and I totally agree with your way of thinking about being stuck in dogs whil you could have the money working.....

It was challenged that WDC is a dog and it clearly is not.......Its a fantastic stock in a rut, currently massively oversold.....but oversold on a short term good reason....

Love your poetry......you have too much time...


----------



## $20shoes (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

Gees, just took a look at WDC's chart. It's clearly one of those buy and pass on to the grandkid type stocks. Just ranging for the last 6 years with a little bit of a run as the market peaked - mostly sideways and down. I don't care what the fundamentals are, the chart is sh!!te.


----------



## skc (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Julia said:


> Over what time period do you think WDC has 'proven to be a fantastic long term asset'?




I read Frank Lowy's biography and an early investment in Westfield has returned some staggering percent. Sorry I don't have the book and can't recall exactly, but it's a figure that is STAGGERING... if someone has access to that book please look it up.

So at some time in history WDC has proven to be a fantastic long term asset. But as the company has grown to a certain size the same growth rate cannot possibly be sustained.


----------



## $20shoes (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



skc said:


> I read Frank Lowy's biography and an early investment in Westfield has returned some staggering percent. Sorry I don't have the book and can't recall exactly, but it's a figure that is STAGGERING... if someone has access to that book please look it up.
> 
> So at some time in history WDC has proven to be a fantastic long term asset. But as the company has grown to a certain size the same growth rate cannot possibly be sustained.





It should be mandatory for Aussies to read his story...legend

_Westfield Development Corporation
Ltd floated in September 1960. The issue was for 300 000
ordinary shares priced at 5/–, half of which was payable on
application, so raising £75 000, with a further £75 000
payable by January 1961. There was also an issue of 300 000
unsecured convertible notes at 5/– each. About 38 per cent of
the stock went to the public, 20 per cent went to Kent, with
Saunders and Lowy each owning half of the remaining 42 per
cent. The board comprised founding chairman Don Stephens,
Paul Kent, Saunders and Lowy. _

-----------------------------------------------------------------

_In the summer heat of early February 1969, Westfield’s directors
made an attractive offer to shareholders. As the company had just
experienced a 45 per cent jump in net profit for the half-year to
December 1968, they were offering a one-for-six issue to
shareholders. 
Shareholders registered by the end of February were invited to
take up one new 50 cent share for every six shares held._


----------



## condog (12 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

Its to my pleasure that you LMOA   , glad i could entertain you.....

Just hope i can return the favor ....... as Im cashing in the profits...


----------



## Julia (13 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



skc said:


> I read Frank Lowy's biography and an early investment in Westfield has returned some staggering percent. Sorry I don't have the book and can't recall exactly, but it's a figure that is STAGGERING... if someone has access to that book please look it up.
> 
> So at some time in history WDC has proven to be a fantastic long term asset. But as the company has grown to a certain size the same growth rate cannot possibly be sustained.




Well, I suppose there will be hundreds of companies which - in the vague terms above - could be considered to have provided staggering returns.

You don't give any indication of how many years "an early investment" indicates.
And "staggering" to some people would be thousands of % over a few years,  but to others as little as 100% over ten years.
One person will say "I did really well out of XXX" when to another person that amount would be way below expectations.

And Westfield in its present form has only been around for five years.
Prior to that I had shares in its previous entity for a couple of years.
Sold them because they were doing nothing much and there was decent money to be made elsewhere.

If you're talking cradle to grave investing, then yes I suppose WDC like many other companies might be OK.  But unless you can quote X% over X years, then I just don't find such a claim very meaningful.  
I'm not trying to be obstructive or difficult:  just wanting some clarification if the discussion is going to be useful.


----------



## skc (13 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Julia said:


> Well, I suppose there will be hundreds of companies which - in the vague terms above - could be considered to have provided staggering returns.
> 
> You don't give any indication of how many years "an early investment" indicates.
> And "staggering" to some people would be thousands of % over a few years,  but to others as little as 100% over ten years.
> ...




I know it was a terrible example because I couldn't quote the exact figure. But it was staggering... 

And by staggering I mean numbers that are comparable to people quoting $1 invested in Microsoft or Berkshire Hathaway type return... I will try to look up the book in our local library.


----------



## awg (13 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



skc said:


> I know it was a terrible example because I couldn't quote the exact figure. But it was staggering...
> 
> And by staggering I mean numbers that are comparable to people quoting $1 invested in Microsoft or Berkshire Hathaway type return... I will try to look up the book in our local library.




fwiw, just to help you out SKC, I believe the figure was about 42% annual compound growth with reinvestment, from inception, up until the change of entity some years ago.

Outperformed Berkshire, not sure about Microsoft,

Also fwiw, dont think they have compelling fundamentals from either a top down or bottom up perspective atm, although they may well be undervalued and offer reasonable income, so does Telstra.

They have also underperformed their sector recently, for which they account 38%

disclaimer: dont hold


----------



## skc (13 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



awg said:


> fwiw, just to help you out SKC, I believe the figure was about 42% annual compound growth with reinvestment, from inception, up until the change of entity some years ago.
> 
> Outperformed Berkshire, not sure about Microsoft,
> 
> ...




Thank you awg.

Found the real answer here... http://westfield.com/corporate/pdf/history/chapter2.pdf   Top left corner of page 6.

Anyone who invested $500 (actually pounds in those days) in 1960, reinvested for 40 years, would by 2000 made $109m. That's 36% compounded annual return.

It fits my definition of staggering.

Anyhow... enough of history lessons. I doubt WDC in it's current form has the same growth profile. The trick is finding the next Westfield... and my guess is only fundamental analysis can do that.


----------



## condog (13 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

Mature businesses will never grow at the rates from its infancy..... The simple reason is they are to big and have too many parts of the business to keep ticking and growing organically .....

The second reason is often managment of mature companies gets lazy and becomes acquisitive buying existing businesses at market rates plus premiums..... and although they may find ways to increase ROE, they ultimately can never get the ROE's accross the entire business that they attained in there early years....when they where successfully growing a new concept or capturing rapid market share in under-competitive markets...


----------



## lukeaye (13 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



skc said:


> Thank you awg.
> 
> Found the real answer here... http://westfield.com/corporate/pdf/history/chapter2.pdf   Top left corner of page 6.
> 
> ...




Can i just say **** ME. That is an amazing example. I think you would find the problem these days is people are interested in what can happen in 2 days not 40 years. But man o man, what an investment.

I am not schooled in fundamentals. I wonder how easy/hard it is to pick up on something like that. I imagine it would take alot of research and following the companies in speculation on there progress.


----------



## alphaman (13 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



skc said:


> I doubt WDC in it's current form has the same growth profile.



What was WDC's ASX code before it merged with its trusts? Was it WSF?


----------



## $20shoes (13 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



lukeaye said:


> Can i just say **** ME. That is an amazing example. I think you would find the problem these days is people are interested in what can happen in 2 days not 40 years. But man o man, what an investment.
> 
> I am not schooled in fundamentals. I wonder how easy/hard it is to pick up on something like that. I imagine it would take alot of research and following the companies in speculation on there progress.





It's a load of croc really. If you weren't involved in a company as a partner, and you invested $500 back then, which would have been a reasonable sum, and you managed to turn that in to $10,000 you would likely sell. If you could turn it into a 100K you'd almost certainly liquidate in a major bear market to lock in your profits. If you turned it into a million dollars and started to see your equity fluctuate by many tens of thousands of dollars you couldn't sleep at night. if you turned it into 100 mill and then watched your equity swing by tens of millions during corrections - well no human could tolerate that in reality: thats suicidal territory.


----------



## bunyip (13 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



skc said:


> Anyone who invested $500 (actually pounds in those days) in 1960, reinvested for 40 years, would by 2000 made $109m. That's 36% compounded annual return.





Yeh, 36% compounded return is a good performance for a large company.
Considerably better than Buffet gets.

But realistically, similar returns or better are available year in year out to trend traders who know what they're doing - even in bear markets....._*IF*_ they're willing to go short as well as long.


----------



## bunyip (14 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Out Too Soon said:


> Well done Bunyip  Very well done
> 
> Re: "Which one do you use? Technical or fundamental analysis"
> 
> ...




I find no fault with 'checking the basic fundamentals' as a way of substantiating the technical view.

But bear in mind that technical analysis in its purest form is, in effect, a method of fundamental analysis anyway.
TA has been bastardised to some extent in recent years with the invention of hundreds of so called 'technical indicators' that put squiggly lines on your chart, but which provide limited value in my onion.
Pure TA examines price action rather than indicators, and more specifically, the trend or direction of price action. The trend of price action is determined by what thousands of people think of a particular stock or market. And what they think of a stock is largely based on what they know about the fundamentals of that stock.

If a blue chip stock is rising solidly in a clear uptrend, the most obvious reason is that it's coming under heavy buying pressure because thousands of people believe it has good fundamentals.
If a blue chip is being sold off and pushed downhill, chances are that thousands of investors have uncovered negative fundamentals for that stock.
Hence, by studying trends of blue chips stocks, we can get a pretty fair idea of the fundamentals.

We can take this a step further by using the 'top down' approach that looks firstly at the trend of the overall market, then examines the trend of the main market sectors, then finds the strongest trending stocks within the strongest trending sectors.
This gives us a short list of the outperforming stocks - the ones most likely to provide us with decent gains. Most of these stocks will have strong fundamentals, and we didn't have to spend one single minute of our time doing fundamental research to find them. 
All we needed was software with the ability to do _*'relative comparison'*_ scans.

A man called Nick Darvas decided to try his hand at trading stocks back in the 1950's. After a somewhat shaky start, he made 2 million dollars over the next several years - equivalent to perhaps 60 to 80 million dollars in todays values.
He outlined his method in his book _'How I Made Two Million Dollars In The Stockmarket'._

Darvas first traded from tips - it seemed that just about everyone knew a good stock to buy. Darvas bought all of them.....and quickly found out that trading from tips was a fast road to the poor house.
Next he decided that company research must be the road to profits. He conducted exhaustive fundamental research to help him decide which stocks to buy.
To his surprise and dismay, he once again lost money.
His next idea was to trade from broker recommendations - he figured that as professionals in the game, brokers would have access to far better research and information than he had, and would be able to recommend stocks that were likely to perform well.
Same result - Darvas lost more money.

By this time he was just about at his wits end - he'd done nothing but lose money after 18 months of trying everything he could think of to extract profits from the market.
One day he was trolling through the stock quote pages, wondering how he'd ever make money out of the game, when he noticed a stock that had been moving solidly upward on heavy volume for the last few weeks.
He'd never heard of the stock, but he figured that if lots of people were buying it and pushing the price up, there must be something bullish about the fundamentals.
He took a punt and bought it, and made an impressive profit.
At first he could scarcely believe that making money could be as simple as buying a stock that was in favour. He repeated his experiment with another stock, and another and another, each time buying purely on price action and volume. No fundamental analysis of his own - he simply looked at the trend of the stock to get a summary of what people thought of its fundamentals.
He was employing 'relative strength comparison' in its simplest form....finding outperformers by comparing the strength of individual stocks relative to the strength of the overall market.
He simply bought into these outperforming stocks, and hitched a ride on the trend until they stopped performing. His results were spectacular.

I used a similar strategy in my stock trading days, with just a few refinements such as sector analysis. I can't claim to have made 80 million dollars but I achieved results that were not to be sneezed at. It definitely works.
Now I use basically the same approach to trade Forex....find a currency pair in the early stages of a solid new trend either up or down, jump on and hitch a ride until the trend runs out of steam.


----------



## Wysiwyg (14 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

The tricky one is the up-trending share price with terrible company fundamentals.


----------



## bunyip (14 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



condog said:


> Hey Bunyip great arguments.....makes a lot of sense and I totally agree with your way of thinking about being stuck in dogs whil you could have the money working.....
> 
> It was challenged that WDC is a dog and it clearly is not.......Its a fantastic stock in a rut, currently massively oversold.....but oversold on a short term good reason....
> 
> Love your poetry......you have too much time...




Condog

You're commenting on WDC the company, whereas most of us are commenting on WDC the stock.
No matter how rosy the fundamentals of a company, we only make money (apart from dividends) if its good fundamentals translate into significant movement in its stock price. 
I think it's foolishness to hold a stock for a prolonged period of flat or falling prices, when there are dozens (probably hundreds) of good, well managed companies out there from which it's possible to make good money.

WDC has been a dog for at least five years in terms of stock price movement, irrespective of how great the stock may stack up from a fundamental perspective.
The company itself may not be a dog, but the stock itself certainly is.
Astute market players don't make their money work part time, they keep it working _*all the time*_ - and the market provides plenty of opportunities for doing so.

_I'd rather own a racehorse
That's powering down the straight
Than half a dozen mangy dogs
All whining at the gate!_


----------



## bunyip (14 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



Wysiwyg said:


> The tricky one is the up-trending share price with terrible company fundamentals.




I think that's more common in smaller stocks whose prices are prone to being moved by rumour, rather than by solid fundamentals.


----------



## metal_loz (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

Hi everyone,

I just did a course at uni which solely focused on fundamental analysis to value stocks. I have been searching for historical data so I can compute a market return. The S&P website only has total returns for the past 5 years. If I were to calculate the geometric return for the past 10 to 25 years it yields a result lower than the risk free rate.


What market return do you use in your models when you are calculating cost of equity?

I know you can't rely on these models, I just want to apply the knowledge I have learnt.

Thanks for anyone who answers my newbie question


----------



## skyQuake (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



metal_loz said:


> Hi everyone,
> 
> I just did a course at uni which solely focused on fundamental analysis to value stocks. I have been searching for historical data so I can compute a market return. The S&P website only has total returns for the past 5 years. If I were to calculate the geometric return for the past 10 to 25 years it yields a result lower than the risk free rate.
> 
> ...




*Good luck!* Doubt you'll find much applicable knowledge from 60year old professors, teaching 80 year old theories.

Finance.yahoo.com has longer term stuff eg. ^AXJO is our index, historical goes back quite far.


----------



## AlterEgo (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



bunyip said:


> I think that's more common in smaller stocks whose prices are prone to being moved by rumour, rather than by solid fundamentals.




Or it could be moving based on inside information, which is also fundamental information, but fundamental information that you're not aware of. Just because you're not aware on any positive fundamental information, doesn't mean there isn't any. It may just not be widely known, or you may not have looked hard enough to find it.

Basing investment or trading decisions purely on fundamental information is, in my opinion, fundamentally flawed, because you're relying on the publicly available information on being complete, correct and accurate. And that's not an assumption that I think can be assumed.

Why put all that time and effort into analysing company balance sheets (which may be based on some "creative accounting"), etc, when a glance at a chart tells you all you need to know? If a stock is rising on high volume, there is obviously a reason for that move. Whether you know what that reason is or not makes no difference, you can still profit from it.

I love this quote from Nicolas Darvas:

*"My only sound reason for buying a stock is that it is rising in price. If that is happening, no other reason is required. If that is not happening, no other reason is worth considering."*


----------



## motorway (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

How Do You Know When A Stock Gets To Be Too Cheap?


Motorway


----------



## metal_loz (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



skyQuake said:


> *Good luck!* Doubt you'll find much applicable knowledge from 60year old professors, teaching 80 year old theories.
> 
> Finance.yahoo.com has longer term stuff eg. ^AXJO is our index, historical goes back quite far.




Yeh I know about yahoo finance. I calculate the price return to be around 4.7%. How can I even use this as an input into capm when it's lower than the risk free rate? The cost of equity figure will be incredibly low and lead to everything coming up undervalued.

I plan on studying/reading as much material on investing before I start. I just want to know what market risk premium to use.


----------



## bunyip (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



motorway said:


> How Do You Know When A Stock Gets To Be Too Cheap?
> 
> 
> Motorway




Thank you Motorway.....what an absolutely excellent article.

A good example of the pitfalls of the bargain hunting mentality was given to me by a bloke who sat beside me at an Options information evening in Brisbane some years ago.
He told me he made numerous purchases of Pasminco while its share price was heading south. He lost his entire investment - in excess of 100 grand - when the company went broke.

I asked him why he kept buying a falling stock.
His reply was...
_"For quite some time after the share price started going down, various brokers were still singing the praises of the company, saying it was fundamentally sound and represented excellent buying at current values. Even Rene Rivkin was recommending it in his newsletter. 
I thought I was getting a bargain. I bought more as it kept falling because I thought I was getting an even better bargain"._


----------



## alphaman (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



metal_loz said:


> I plan on studying/reading as much material on investing before I start. I just want to know what market risk premium to use.



Based on the research estimates I've seen, market risk premium for US equity ranges from 4.5% to 5.5%, which looks reasonable to me in a low interest rate environment.

But you might want to think again about using CAPM for investing.


----------



## skc (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



$20shoes said:


> It's a load of croc really. If you weren't involved in a company as a partner, and you invested $500 back then, which would have been a reasonable sum, and you managed to turn that in to $10,000 you would likely sell. If you could turn it into a 100K you'd almost certainly liquidate in a major bear market to lock in your profits. If you turned it into a million dollars and started to see your equity fluctuate by many tens of thousands of dollars you couldn't sleep at night. if you turned it into 100 mill and then watched your equity swing by tens of millions during corrections - well no human could tolerate that in reality: thats suicidal territory.




If you are thinking in the perspective of a short term technical traders, then you will never hold on to a stock for 40 years. 

If you are a fundamentalist however, then you should be forward looking, not looking back at how much you've paid or how much you've made. If the company has significant growth prospects then you hold on to your shares. 

And, if your holding is in fact in the millions, then why would you care about day to day fluctuations of a few $Ks? No body says that it will be easy, but just because you can't easily do it doesn't mean it isn't doable...




bunyip said:


> Yeh, 36% compounded return is a good performance for a large company.
> Considerably better than Buffet gets.
> 
> But realistically, similar returns or better are available year in year out to trend traders who know what they're doing - even in bear markets....._*IF*_ they're willing to go short as well as long.




A significant difference is tax... trader making 36% return will soon be paying tax at the highest marginal rate, so he will soon be compounding at 18% instead of 36%.


----------



## $20shoes (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



skc said:


> If you are thinking in the perspective of a short term technical traders, then you will never hold on to a stock for 40 years.
> 
> If you are a fundamentalist however, then you should be forward looking, not looking back at how much you've paid or how much you've made. If the company has significant growth prospects then you hold on to your shares.
> 
> And, if your holding is in fact in the millions, then why would you care about day to day fluctuations of a few $Ks? No body says that it will be easy, but just because you can't easily do it doesn't mean it isn't doable...




I'm not so  sure that a fundamentalist could hold on for much more than a multibagger. In fact, I know that the pressure to take money off the table would be be too overwhelming for 99% of fundamentalists out there. In fact, I know a lot of fundamentalists who  get shaken out of their positions readily as market sentiment shifts. 

If I were overexposed in one stock, that was worth millions and the GFC was just starting to kick in, my equity wouldn't just be rippling...you'd typically be talking swings in a bear  market of hundreds of thousands....why would you hold through that??...not many could hold through the mind play that would ensue. Human psychology would not let you.. you'd either be smart and sell at the top or finally break and sell at the bottom or at least attempt to average down to compensate.

Even being exposed to one security with millions at play would not even be remotely feasible for 99.9% of investors. The fear of losing it would be too great and your health and lifestyle would be adversely affected by the precarious position you'd believe your wealth is in.


Would love to hear from investors who have been overexposed in one stock, and how they dealt or didn't deal with it - particularly form a human psych point of view. I'm sure there are some who can take the exposure, but I'd say you're a rare breed.


----------



## Wysiwyg (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*

An alternative would be with a free carried parcel of shares. Knowing you have nothing to lose and everything to gain from holding through thick and thin.
A 10 bagger would be hard to ignore though.

Nahh. Take the money and run.


----------



## Julia (15 November 2009)

*Re: Which one do you use? Technical or fundamental analysis*



$20shoes said:


> Even being exposed to one security with millions at play would not even be remotely feasible for 99.9% of investors. The fear of losing it would be too great and your health and lifestyle would be adversely affected by the precarious position you'd believe your wealth is in.



Agree, $20shoes.
With the probable exception of someone who has inherited stock, understood nothing about the market, had no interest, and eventually found themselves with a considerable profit.


----------



## rbbrain (3 January 2010)

*Re: Which one do you use? Technical or fundamental analysis*

Hi all 
(selected good comments over the last 3 years above)


Mostafa said:


> I combine both fundamental and technical analysis, at first I choose some stocks with fundamental analysis then with technical analysis decide when trade them.





Realist said:


> Any true Fundamental investor can not use Technical analysis...





suhm said:


> I think I'd have to disagree with you realist, maybe they wouldn't use it to trade per se but i think it is useful to identify companies that might be undervalued for analysis





skc said:


> If you are thinking in the perspective of a short term technical traders, then you will never hold on to a stock for 40 years.





$20shoes said:


> It's a load of croc really. If you weren't involved in a company as a partner, and you invested $500 back then, which would have been a reasonable sum, and you managed to turn that in to $10,000 you would likely sell.





I have been posting under a different thread on a very similar topic, and just stumbled over this thread. The original question that Mostafa asked is a very good one.

For my take (using FundaTechnical Analysis), and the ensuing comments, please see this thread:  
https://www.aussiestockforums.com/forums/showthread.php?t=18333

Cheers


----------



## Value Hunter (26 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



tech/a said:


> Interesting logic.
> A charts price reflects the markets perception of its share price at that point in time.Regardless of wether you or 100 analysts value the share at even remotely the same core valuation.
> 
> Its not possible to even get 2 people agreeing on a valuation let alone 10,000 share holders,as can be seen by fluctuations in price.
> ...




I disagree with that last statement. For a fundamental investor in many cases they can get a return from dividends, capital returns and takeovers.


----------



## Value Hunter (26 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



$20shoes said:


> I'm not so  sure that a fundamentalist could hold on for much more than a multibagger. In fact, I know that the pressure to take money off the table would be be too overwhelming for 99% of fundamentalists out there. In fact, I know a lot of fundamentalists who  get shaken out of their positions readily as market sentiment shifts.
> 
> If I were overexposed in one stock, that was worth millions and the GFC was just starting to kick in, my equity wouldn't just be rippling...you'd typically be talking swings in a bear  market of hundreds of thousands....why would you hold through that??...not many could hold through the mind play that would ensue. Human psychology would not let you.. you'd either be smart and sell at the top or finally break and sell at the bottom or at least attempt to average down to compensate.
> 
> ...




I personally have one stock which represents around 25% of my total gross assets (my assets include shares, property and commodities and are leveraged). Not only do I own shares in the company, my parents (based on my recommendation) own shares both personally and in their super-fund. 

The shares have done so well (we have all actually added to our share count over time by buying more shares) that between myself and my parents we have well over $1 million Australian dollars (I'm not going to give an exact figure) invested in the stock at current market value. Neither my parents nor myself are wealthy people (at least not by my standards) so for us that is a lot of money. We are happy to bank the increasing dividends and sit tight. I/we first purchased shares in the company in 2008 and are still holding and enjoying the ride. Like I said our sum total number of shares owned has gone up over time. As Peter Lynch pointed out you wanting to be cutting the weeds and watering the flowers, not the opposite. There have been weeks where the shares drop or rise by $50,000 or even $100,000 in a week (it tends to be a volatile stock). It doesn't really affect me much. What affects me are the fundamentals which have been consistently strong since I bought in.


----------



## Value Hunter (26 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*

Also I think a lot of people have misplaced fears of downside risk. Strong companies can deteriorate, but if you did your research right and picked a truly good business, even if the business deteriorates, you will still be able to get out well before it goes to complete ****. For example if an investor bought Woolworths (WOW) at the float price of around $2.50 in the 1993 float, even if you sell out now based on the fundamentals because you accept the business is not as good as it once was (its losing ground to Aldi and Coles) its $22 now. Sure a few years ago you could have sold out for over $35. But selling at $22 is still around a 10% p.a. rate of capital growth since you bought it. If you include dividends, especially if you reinvested the dividends in more shares than your return would have very handily outperformed the overall market. As Phillip Fisher pointed out leading companies tend to come off their stilts so slowly that you have plenty of time to sell (yes after the share price has peaked but sill much higher than when you bought). 

Another good example is Reckon (RKN). Its been arguably losing ground to Xero for a few years now and the share price is down. The long term investor who bought in the mid 2000s when the company started to become profitable has received good dividends and could still sell out for a profit today, accepting that the fundamentals of the company have deteriorated over the past few years.


----------



## Value Hunter (28 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*

A concentrated portfolio has the potential to provide higher returns.


----------



## cynic (28 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> A concentrated portfolio has the potential to provide higher returns.




Wow! That's profound!

A spin of the roulette wheel has the potential to land on black! So would that mean that red and green are wasted bets?!


----------



## craft (28 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> A concentrated portfolio has the potential to provide higher returns.




exactly matched with its potential to provide lower returns. 

You had better know what you are doing before you widen the range of potential outcomes otherwise luck alone might just land you on the wrong side of the distribution.


----------



## Value Hunter (28 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



craft said:


> exactly matched with its potential to provide lower returns.
> 
> You had better know what you are doing before you widen the range of potential outcomes otherwise luck alone might just land you on the wrong side of the distribution.




I agree with you 100% Craft.  I will note that academic studies have shown that the top five share holdings of fund managers on average outperform the market and provide better returns than the balance of their portfolio. Academic studies also show that on average concentrated portfolios outperform diversified portfolios. It seems that on balance to a reasonably intelligent investor who is capable of performing a reasonable level of research and analysis is *on average* better off having a concentrated portfolio. But yes the potential distribution of outcomes is wider and *so is the risk in some cases 
*

In some cases a concentrated portfolio can have lower risk. For example in Australia where banks and miners (both notoriously risky industries) represent somewhere close to half the share-market an investor with 5 to 10 stocks that does not own banks or miners and owns a collection of good business such as Dominoes Pizza, Cochlear, CSL, Credit Corp, etc arguably has a safer portfolio that is less likely to suffer from a nose-dive in earnings and dividends than an index fund. The Australian share-market unlike say the U.S. share-market is full of many rubbish companies.


----------



## Value Hunter (28 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*

In Australia lets look at the top twenty stocks and look at earnings per share growth/decline over the past ten years:

AMP - bad
ANZ - good
BHP - bad
Brambles - bad
CBA - good
CSL - good
Insurance Australia Group - bad
Macquarie Group - bad
NAB - bad
QBE - bad
RIO - bad
Scentre Group - bad (not ten years of history since spun off but if you look at WDC before the break up bad)
Suncorp Group - bad
Transurban - I'm not sure I think good
Telstra - bad
Westpac - good
Wesfarmers - bad
Westfield - bad
Woodside - bad

So out of the current top twenty companies only 5 have done a reasonable job of increasing earnings per share over the past ten years. On average Australian "blue chip" companies are rubbish compared to U.S. or U.K. blue chip companies. 

You look at that list and tell me how many companies on the list do you think will produce reasonable earnings per share growth over the next ten years? I doubt it will be more than 5 (not necessarily the same 5 and the index list will likely change over that period). Investing the S&P 500 is a completely different thing the ASX 200 or even the All Ordinaries index.

Most of the large "blue chip" companies in Australia are managed by Muppets, in addition to the fact that they operate in a small mature market and are not globally competitive.

Is it any wonder why the S&P 500 and the DAX the FTSE, etc are well above their pre-GFC highs while our index either the ASX 200 or the All Ordinaries (the price index not the accumulation index) are well below the pre-GFC high?


----------



## Boggo (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> In Australia lets look at the top twenty stocks and look at earnings per share *growth/decline over the past ten years*:
> 
> *Telstra - bad*




And right there is a perfect example of everything that is wrong with hanging on to stocks for ten years.
In the last ten years you have had the 2008 and 2011 declines.

Why would anyone with a functioning brain hang on to stocks such as TLS while you watch them halve in value and then ten years later blame the stock !

I am familiar with TLS, it has been an absolute splendid performer since mid 2011 up to the end of 2014, over 50% increase in value (without leveridge or dividends) unless you were silly enough to ride it down then you only got back to where you were in 2007.

It has numerous warrants, pays a good dividend (multiply x 3 with instalment warrants ) and I get a 15% tax credit in my SMSF.

Have a good listen to what Craft is telling you elsewhere on here, you seem to be in the same position on the learning curve where TLS was in 2011 on that "squiggly" stuff.

Rather than taking the easy way out and blaming the stocks because you didn't take the time to manage them - do some work.
They are your employees, when they stop working you sack them !
I reckon that if I went through the rest of those stocks on your list and thought of them as employees then I would find the same failures in your argument and I would have made them redundant at some point rather than criticising them because I didn't do my job properly.

I find that the harder I work the luckier I get - try it.


----------



## Value Hunter (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Boggo said:


> And right there is a perfect example of everything that is wrong with hanging on to stocks for ten years.
> In the last ten years you have had the 2008 and 2011 declines.
> 
> Why would anyone with a functioning brain hang on to stocks such as TLS while you watch them halve in value and then ten years later blame the stock !
> ...




You completely missed my point Bogo. I was rebutting Crafts point that a concentrated portfolio is necessarily riskier than a
A diversified portfolio. For example if you hold an index fund representing the ASX 200 it will be full of rubbish and it may therefore be less risky for you owning shares in a handful of quality businesses. That was my point. I never said people should buy and hold the top 20 stocks!


----------



## Value Hunter (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*

I should add that over the very,  very long term (since 1900) the Australian sharemarket and the U.S. sharemarket have posted a virtually identical inflation adjusted return. Does that invalidate ,y argument about our indexa being full of rubbish or has the quality of our index detiorated or the quality of the U.S. index increased over time? Or is it merely a cyclical phenomenon?

In reregards to returns since 1900 here is the link: http://cuffelinks.com.au/wins-australians-investing-us-shares/


----------



## Value Hunter (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> In Australia lets look at the top twenty stocks and look at earnings per share growth/decline over the past ten years:
> 
> AMP - bad
> ANZ - good
> ...




I forgot to add Woolworths to that list. As we all know its doing badly in terms of earnings these days.

Interestingly if you look at the top twenty list all of those companies except for BHP and Rio and Woodside which are currently facing cyclical headwinds should have in theory done well goven the underlying structural/iindustry tailwinds. If you look at superannuation growth and consumer credit growth and retail sales growth over the past ten years the figures have been respectable.Given that is the case the financial and consumer stocks should have all done well given their dominant market positions in oligopoly type markets. Yet bungled or overpriced acquisitions, ill fated overseas expansions and diworseifications into unrelated  business lines caused poor earnings performance for most of these companies. I therefore conclude that bad management at our largest corporations is the primary cause of mediocre sharemarket index returns over the past ten years in Australia compared to other markets e.g. Germany, U.S. U.K.

Are Australian management teams greedier/more self servimg or dumber than other countries on average or am I missing something?


----------



## So_Cynical (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> A concentrated portfolio has the potential to provide higher returns.




A large portfolio of many stocks provides larger exposure to positive things, discounted SSPs, rights issues, spinoffs, capital returns, takeovers and mergers etc.


----------



## Value Hunter (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> I should add that over the very,  very long term (since 1900) the Australian sharemarket and the U.S. sharemarket have posted a virtually identical inflation adjusted return. Does that invalidate ,y argument about our indexa being full of rubbish or has the quality of our index detiorated or the quality of the U.S. index increased over time? Or is it merely a cyclical phenomenon?
> 
> In reregards to returns since 1900 here is the link: http://cuffelinks.com.au/wins-australians-investing-us-shares/




I will add this link also as believe both links should be read to give a full picture.

http://cuffelinks.com.au/wins-australian-versus-us-investors-local-shares/


----------



## cynic (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> ...
> Is it any wonder why the S&P 500 and the DAX the FTSE, etc are well above their pre-GFC highs while our index either the ASX 200 or the All Ordinaries (the price index not the accumulation index) are well below the pre-GFC high?



Yes! No mystery at all !

QE, ZIRP and in some locales NIRP!

I never realised that those "muppets", to whom you refer, were able to exert such influence over international monetary policy!


----------



## craft (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Boggo said:


> And right there is a perfect example of everything that is wrong with hanging on to stocks for ten years.
> In the last ten years you have had the 2008 and 2011 declines.
> 
> Why would anyone with a functioning brain hang on to stocks such as TLS while you watch them halve in value and then ten years later blame the stock !
> ...




Nothing at all wrong in holding stocks for ten years+. Two ways to potentially outperform. Timing or selection. No amount of disaster examples that you often put up negates the potential of outperforming by selection. I also suspect that a 10 year hold on TLS has out performed the mathematically possible average of those actively attempting to outperform the market.

Ps all I was trying to tell VH was that he didn't need to attack other methods based on a *lack of understanding*. He seems to be mending his ways and making much more interesting contributions.


----------



## craft (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> I will add this link also as believe both links should be read to give a full picture.
> 
> http://cuffelinks.com.au/wins-australian-versus-us-investors-local-shares/




The chart in your link has the notation for current underperformance resulting from the size of the mining and credit boom. So you have basically now you have put up two reasons, this and managers of the top twenty are Muppets.????????


----------



## Value Hunter (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*

Craft I know it sounds ridiculous to say the performance of the top twenty has been poor necause of bad management but if you actually examine my thesis im detail by looking at each of the top twenty stocks on a bottom up basis you will realise what I am talking about. For examplw:
-Telstra: David Thodie is the first sensible CEO of Telstra in a very very long time. If you examine the damage to the company Sol Trujillo and most of the others did to the company it is clear. Now kets look at the telco sector. Internet usage and mobile phone grew strongly over the past ten years. Smaller companies like TPG telecom, iinet, Amaysim, Vocus, M2 telecommunixatiins, etc all did very well by eating Telstras lunch.
-NAB: even though the other big banks have done phenomwnally well NAB has suffered due to poor acquisitions and unsuccessful dicersification into the U.K. amongst other reasons.
-IAG and QBE: basically same reasoning as NAB dumb acquistions and ill fated overseas expansion caused them indegestion.
-Wesfarmers: Paid too much for Coles Geouo then did any emergency capital raising durimg the GFC aftwr the share price nosediced thereby heavily diluting e.p.s. they have also badly mismanaged Target (K-mart is doing well and Target is doing badly therefore its not an industry or macro problem. 


I could go on and on but my point is if you look at the top twenty stocks which have performed badly most of the wounds were self infli ted rather than caused by ezternall circumstances. Also do to high dividend payout ratios in Australia due to franking credits d also self managed super, Australian companies have higher payout ratios than most other countries thus retaining less for growth. The result has been less earnings per share growth than other markets.


----------



## Value Hunter (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



cynic said:


> Yes! No mystery at all !
> 
> QE, ZIRP and in some locales NIRP!
> 
> I never realised that those "muppets", to whom you refer, were able to exert such influence over international monetary policy!




Are you postulating that in the U.S. and Europe zirp and other such policies have been 100% responsible for differences in earnings per share growth of different country stock market indexs? If that is the case then how come in Europe different stock markets within the Euro currency have performed differently in terms of earnings per share growth and total shareholder returns? How come Japanese companies have done poorly in  terms of increasing their earnings per share despite more than 20 years of low interest rates? Your argument does not stand up to scrutiny.

In fact much has been written or said by international value investors such as Hunter Hall, Platinum Asset Management and others about Japanese management culture (albeit slowly improving now) being the cause of persistent low returns on equity of large Japanese corporations.


----------



## Smurf1976 (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> Are Australian management teams greedier/more self servimg or dumber than other countries on average or am I missing something?




My opinion is based purely on anecdotal evidence, it's not something I've seriously studied, but it seems that in a lot of cases there's a definite "follow the herd" tendency in Australian management culture with a big problem there being that the "herd" referred to is limited to other Australian companies (not global).

So one big company does something and a lot of others seem to follow a similar approach.

Even the public service has elements of doing that. Obviously the PS isn't in the business of takeovers and so on but the overall management approach still has a lot of "follow the herd" about it and there's a crossover between private enterprise and the PS in terms of how that works.

Work in a large company for a while and you'll go through the cycle of the various buzzwords and corporate objectives. Get yourself a job in the PS and in due course you'll go through the cycle of the exact same buzzwords and most of the same objectives apart from things like takeovers which obviously don't apply with government.

Headcount, KPI's, cost to serve, increasing revenue, being more competitive, staff retention, staff reduction, expanding into new markets, getting back to core operations, whatever. It's all a cycle and it seems to be pretty much the same in any large business and also government.

Whether or not it's the same overseas I've no idea.


----------



## craft (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> Craft I know it sounds ridiculous to say the performance of the top twenty has been poor necause of bad management but if you actually examine my thesis im detail by looking at each of the top twenty stocks on a bottom up basis you will realise what I am talking about. For examplw:
> -Telstra: David Thodie is the first sensible CEO of Telstra in a very very long time. If you examine the damage to the company Sol Trujillo and most of the others did to the company it is clear. Now kets look at the telco sector. Internet usage and mobile phone grew strongly over the past ten years. Smaller companies like TPG telecom, iinet, Amaysim, Vocus, M2 telecommunixatiins, etc all did very well by eating Telstras lunch.
> -NAB: even though the other big banks have done phenomwnally well NAB has suffered due to poor acquisitions and unsuccessful dicersification into the U.K. amongst other reasons.
> -IAG and QBE: basically same reasoning as NAB dumb acquistions and ill fated overseas expansion caused them indegestion.
> ...




VH

I'm not debating your point, don't need to - your doing a good job of that yourself as all I did was point out that the link you posted pointed to a different driver of current underperformance.

And there is also a bit of a contradiction in this post in bemoaning both the high payout ratio and the failed attempt to invest. If a company can't deploy its incremental capital to economic advantage then they should return it.


----------



## Value Hunter (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*

I think one cause of poor management performance in Australia compared to the U.S. and other markets is the lack of activist investors. We dont really have as many activists (for example Carl Icahn in the U.S.) in Australia to keep companies on track.


----------



## Value Hunter (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



craft said:


> VH
> 
> I'm not debating your point, don't need to - your doing a good job of that yourself as all I did was point out that the link you posted pointed to a different driver of current underperformance.
> 
> And there is also a bit of a contradiction in this post in bemoaning both the high payout ratio and the failed attempt to invest. If a company can't deploy its incremental capital to economic advantage then they should return it.




I agree with what you are saying that companies should payout cash to shareholders rather than invest it badly. I am just pointing put the fact that markets like the U.S. that combined a lower payout ratio with a high incremental return on equity have done better than ours. If you look at the return on equity of the S&P500 compared to the ASX 200 and also compare the dividend payput ratios this becomes obvious. 

I  think in Australia most of the very large companies should pay a high dividend because their reinvestment potential is limited (we are a small economy and most of our large companies are not internationally competitive) because they will end up squandering the funds if they have a low payout ratio.


----------



## cynic (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



Value Hunter said:


> Are you postulating that in the U.S. and Europe zirp and other such policies have been 100% responsible for differences in earnings per share growth of different country stock market indexs? If that is the case then how come in Europe different stock markets within the Euro currency have performed differently in terms of earnings per share growth and total shareholder returns? How come Japanese companies have done poorly in  terms of increasing their earnings per share despite more than 20 years of low interest rates? Your argument does not stand up to scrutiny.
> 
> In fact much has been written or said by international value investors such as Hunter Hall, Platinum Asset Management and others about Japanese management culture (albeit slowly improving now) being the cause of persistent low returns on equity of large Japanese corporations.




I don't need to postulate it! The correlation was visible in the price action/reaction to Central Bank announcements by the major indexes and related currencies.

It seems that others may have been too busy examining eps and obsessing about muppets to notice!


----------



## galumay (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



cynic said:


> The correlation was visible ...




Sorry to be a grammar/logic nazi, but correlation is not causation!


----------



## cynic (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



galumay said:


> Sorry to be a grammar/logic nazi, but correlation is not causation!




Quite true!

However, causation does often give rise to correlation! 

One doesn't need a genius IQ to understand what happens to currencies and stock indices when interest rates are lowered and fiat monetary supply increased!


----------



## galumay (29 May 2016)

*Re: Which one do you use? Technical or fundamental analysis*



cynic said:


> Quite true!
> 
> However, causation does often give rise to correlation!
> 
> One doesn't need a genius IQ to understand what happens to currencies and stock indices when interest rates are lowered and fiat monetary supply increased!




Well, yes - but thats an entirely different argument!

If "A" causes "B" then there will be correlation between "A" and "B".

If there is correlation between "D" and "E" then on its own it tells us absolutely nothing about cause.


----------



## cynic (29 May 2016)

cynic said:


> I don't need to postulate it! The correlation was visible in the price action/reaction to Central Bank announcements by the major indexes and related currencies.
> 
> It seems that others may have been too busy examining eps and obsessing about muppets to notice!




Galumnay, perhaps in your eagerness to highlight the distinction between correlation and causation, you may have neglected to notice my inclusion of the word "reaction" in my original post.


----------



## galumay (29 May 2016)

cynic said:


> Galumnay, perhaps in your eagerness to highlight the distinction between correlation and causation, you may have neglected to notice my inclusion of the word "reaction" in my original post.




Truth be told Cynic, I am just a little bored on a Sunday arvo and a bit of banter fills in the time! (Its certainly nothing personal.)

So when I read this i am paraphrasing that he is asking whether you are postulating that "A" caused "B" _



Value Hunter said:


> Are you postulating that in the U.S. and Europe zirp and other such policies have been 100% responsible for differences in earnings per share growth of different country stock market indexs?




To which you replied,



cynic said:


> I don't need to postulate it! The correlation was visible in the price action/reaction to Central Bank announcements by the major indexes and related currencies.





To which my slightly bored and under-occupied mind responded, the correlation that was visible does NOT mean "A" caused "B". Correlation is just correlation. 

Sorry for the off topic discussion and the slightly wankerish and pedantic approach. I will put the laptop down and go back to reading my book!


----------



## cynic (29 May 2016)

galumay said:


> Truth be told Cynic, I am just a little bored on a Sunday arvo and a bit of banter fills in the time! (Its certainly nothing personal.)
> 
> So when I read this i am paraphrasing that he is asking whether you are postulating that "A" caused "B" _
> 
> ...





Thanks for clarifying your position.  

Reaction is just reaction. 

A word that can be readily understood to strongly imply a response to the presence of a causative influence and/or event. 

Both reaction and correlation were included in the same sentence within my post for a reason.

Like yourself, I also enjoy banter.

Unlike yourself, I do not claim to be apologetic for being a grammar/logic nazi.

Do enjoy your book!


----------



## Value Hunter (30 May 2016)

Although as a long term investor I am personally not a fan of trading I do admit a lot of traders have superior portfolio/money/risk management than a lot of (a lot but not all) investors. 

As an investors I try to implement the cut your losers and let your winners run strategy. I am, very good at letting winners run but not as great at cutting losers quickly enough. As a value/fundamental investor I define a losing investment as a company whose intrinsic value is falling and a winner as a company whose intrinsic value is rising (based on the premise that price follows value over the long term). 

I wonder as a *trading * strategy, how successful would you be if:
1) You threw darts at a board to select 10 different random stocks and put an equal amount of money into each. 
2)You implement a 30% trailing stop loss so that if a stock falls more than 30% from your purchase price or the most recent high after you purchased the shares you sell it. 
3)You let all positions run until they hit their trailing stop loss. You then sell and put the money in the bank.
This strategy means losing stocks would not fall too much whereas a lot of winning stocks will give you a good ride before you get stopped out (if you have a tighter stop due to volatility you are unlikely to catch any multi-baggers)

I suspect that by taking full advantage of the upward long-term bias of the stock market and the positive mathematical asymmetry of returns that over time you would outperform the market.


----------



## cynic (30 May 2016)

Value Hunter said:


> Although as a long term investor I am personally not a fan of trading I do admit a lot of traders have superior portfolio/money/risk management than a lot of (a lot but not all) investors.
> 
> As an investors I try to implement the cut your losers and let your winners run strategy. I am, very good at letting winners run but not as great at cutting losers quickly enough. As a value/fundamental investor I define a losing investment as a company whose intrinsic value is falling and a winner as a company whose intrinsic value is rising (based on the premise that price follows value over the long term).
> 
> ...




Here's my perspective,others might disagree:

Given that the presence of the number zero typically arrests downward descent, and the sky is the limit, the idea of a looonnngggg term upward bias seems reasonable at first glance.

However, the reality of life, is, that most things will perish at some stage. So the true long term bias might actually be mean reversion (excluding dividends). If so, then the use of stops for risk management, may backfire by causing the trader to sell lower after having bought higher.

The trailing stop may be seen by some as a technique for cutting losers and letting winners run.

In any market where this approach might potentially work, the percentage distance chosen for the stop will usually be critical to success.

That's my verbose way of saying maybe, maybe not, and to take care when building strategies based upon assumptions.


----------



## Wysiwyg (30 May 2016)

cynic said:


> In any market where this approach might potentially work, the percentage distance chosen for the stop will usually be critical to success.



Uh oh  For every percentage loss then greater gain has to be made to compensate. 




Stop placement is critical in my opinion and percentage stops are least effective due to average price range variations. People want to profit - the majority (of money) wins, so if support (long) or resistance (short sell) "zones" are broken then exit in my opinion. They are places where money  agrees or disagrees. Low risk v reward.


----------



## cynic (31 May 2016)

Wysiwyg said:


> Uh oh  For every percentage loss then greater gain has to be made to compensate.
> 
> View attachment 66896
> 
> ...




In this instance my inclusion of the word "percentage" was influenced by the post to which I was responding, however I do recognise that, in so doing, the intended meaning of that paragraph has been undermined.

Thankyou for bringing this oversight to my attention.


----------



## Wysiwyg (31 May 2016)

cynic said:


> In this instance my inclusion of the word "percentage" was influenced by the post to which I was responding, however I do recognise that, in so doing, the intended meaning of that paragraph has been undermined.
> 
> Thankyou for bringing this oversight to my attention.



That is fine mate. I have a strong natural lean toward black and white perspective. This helps me with the modern day thieves that are more word orientated. No apologies for digressing.


----------

