Which one do you use? Technical or fundamental analysis?
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tech/a
No Ordinary Duck
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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
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
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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
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
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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
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
Re: Which one do you use? Technical or fundamental analysis
Hi Tech, Bullmarket and Happytrader,
Hi Tech, Bullmarket and Happytrader,
Useful thread I’m studying it.tech/a said:
You mean you use soft wares?tech/a said:
I read your post about NPV in ‘Fundamental Analysis Software?’ thread, thanksbullmarket said:
tech/a
No Ordinary Duck
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Re: Which one do you use? Technical or fundamental analysis
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
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
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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.
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.
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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.
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.
Realist
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Re: Which one do you use? Technical or fundamental analysis
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.
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.
tech/a
No Ordinary Duck
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Re: Which one do you use? Technical or fundamental analysis
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 $$ return then $10K is common and as more leverage and compounding takes effect that will rise as it has over the 3.5 yrs.
Addition of capital,such as in a superfund will also have a positive impact.
Downturns like now have a large impact on return on a trend following method.Trading its equity curve and switching the method off converting all to cash is a very good way to maximise return and minimise risk.
Other *Switches* are being investigated eg--Indexes,Composite portfolio charts and or Universe charts.
Mostafa said:
Sorry Mostafa Just saw your post.
Return /mth relative to what? If initial investment some months have been 100% positive and the odd one like now -100%
If purely $$ 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.
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Re: Which one do you use? Technical or fundamental analysis
I use both, but mostly technical.
I use both, but mostly technical.
Realist
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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.
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
No Ordinary Duck
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Re: Which one do you use? Technical or fundamental analysis
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.
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.
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Re: Which one do you use? Technical or fundamental analysis
Hi Realist
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
Hi Realist
Realist said:
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
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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
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
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Re: Which one do you use? Technical or fundamental analysis
Value is a figment of the imagination.
True fundamentalists should use a chart to draw squiggly lines on when bored.
Realist said:
Value is a figment of the imagination.
True fundamentalists should use a chart to draw squiggly lines on when bored.
Realist
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Re: Which one do you use? Technical or fundamental analysis
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.
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.
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