Any studies on FA vs TA?

[Paladin]

In a bull market when sentiment is positive people see opportunity and downplay risk, in a bear market people see risk and downplay opportunity, thus there is far less leeway on a fundamental investor during a bear market than a bull market - but it is also a time where great opportunity can be ignored by the market in the same way that great risk gets ignored in a bull market.

That, my appetising friend, is one hell of a good point, methinks.

 

[prawn_86]

Well I can confirm one thing - FA definitely DOES NOT WORK - and I use to be a firm believer - yes I am also in the dumb camp AND not profitable.

Perhaps you are looking at the wrong time frame for FA.

Plus im sure all those who have made money from FA would disagree with you.

WHat you mean is FA doesnt work, FOR YOU

 

[tech/a]

Ive never seen a post from a Fundie to go short?

Do fundies ever look for weakness?
Overvaluation---and of course take action on it?

 

[prawn_86]

Ive never seen a post from a Fundie to go short?

Do fundies ever look for weakness?
Overvaluation---and of course take action on it?

You obviously havnt read much fundie analysis then.

Personally i dont go short as my broker doesnt allow it, but i have called a few shorts.

MRC&CO has fundie leanings and often goes short, same with Reece55 as far as im aware

 

[Paladin]

I'm going to take this totally OT for a bit.

Has anyone seen a daoist spoof of the market, like "The Tao of Pooh" and "The Te of Piglet" did for the winnie the poo books? Reading all these quotes etc has made me think that such a book would be a good pitch and might be a bit of fun. "The Tao of Wall Street?" "The Chart of War?" I have a few books in print and if anyone wants to play with this idea, contribute a chapter, or whatnot, feel free to PM me. I'm too clueless to write such a thing myself, obviously, but reckon my lit agent (who is in a Sydney/New York/London outfit and one of the biggies) would like this. I also have a good in with the editor at Random House who looks after finance books.

 

[wayneL]

Perhaps you are looking at the wrong time frame for FA.

Plus im sure all those who have made money from FA would disagree with you.

WHat you mean is FA doesnt work, FOR YOU

Exactly.

This is the point I rather obtusely tried to make before.

Nothing works (If it doesn't work for you)
Everything works (Because lots of people are using "it" to make money)
What does work mean? (If it does what the trader wants, it works)

etc etc

Academic studies are nonsense not because they come to the wrong conclusion, but because they ask the wrong question.

Holy crap, even Gann works for some past being fooled by randomness.

All is nonsense, yet all makes sense.

 

[cuttlefish]

Ive never seen a post from a Fundie to go short?

Do fundies ever look for weakness?
Overvaluation---and of course take action on it?

Yeah I do occasional shorts (back earlier in this very thread I mentioned a bank short). In hindsight I wish I'd been using them more over this year though I'm still refining my short term trading technique so its been a sideline rather than the main game.

One issue with shorting is finding a good instrument for doing it. I've been using options but don't like the MM spread slippage and lack of liquidity. I'd have the same concerns doing it via CFD's.

The timeframe is an issue as well - unlike long positions the timing seems more important for the short positions as they tend to occur abruptly (and when using options you have to juggle the greeks as well and make sure the position doesn't get eroded too much by theta decay or IV collapse etc.).

I've only been allocating relatively small capital to the positions but because they're leveraged they've still proven very profitable when the timing has been right.

I'm also incorporating my amateur TA when entering or closing short positions - so using an overall fundamental view then technicals to try to get the timing right (candlesticks, support/resistance and simple chart patterns).

Still a bit hit and miss with it so have only used it when I've felt its a fairly obvious opportunity. I also find it a bit hard to implement stops effectively with the options MM slippage.

When I trust myself enough I'll open a futures account as I think this is the best vehicle for this sort of thing, but as mentioned I'm still refining my shorter term trading technique and discipline.

 

[MRC & Co]

MRC&CO has fundie leanings and often goes short, same with Reece55 as far as im aware

I actually only go short on T/A.

A great company can only fall so far, until of course, those fundamentals change (got caught on JST with it's profit downgrades, despite them clearly stating their business is thriving and on a fire at the EQN construction site , ha ha). But the later is still good for the cheese I feel, not so sure about the former, retail sector is now being hit full-force by this downturn, check out latest retail figures. http://www.stgeorge.com.au/resources/sgb/downloads/treasury/eco_outlook/July_2008.pdf

Should have been more proactive and dumped this one earlier, as stated in my blog.

Dogs can also rise far beyond their fair value, but I have never tried going short on them (then again, I don't really peruse dogs in an uptrend). May be something to look at down the track.

Fair value of course, is quiet a subjective word, so my F/A value is just that.

I use F/A in two ways. Wait for a great company to become rediculously undervalued and then a T/A set-up (I will then either trade this stock or if I really love it and the price, put it in the bottom drawer).

That being said, T/A (of course with trade and money management) is what is keeping me afloat at the moment.

Both though, definately worth their weight in gold if you know how to use them. While most don't beat an index, plenty still do. Can't be hard to beat the current index, right? The bank alone will do that for you!

I know there are some guys here who are probably averaging 100% pa over the last several years.

Cuttle, you can short a lot of the big names through IB, espeically on the US market. You can do it with your own funds, or upto 50% margin. I personally, use the later.

Anybody been on the MER (Meryll Lynch, spellling?) short lately? ha ha. Wayne?

 

[wayneL]

as stated in my blog.

M,

You have a blog? What's the URL?

 

[MRC & Co]

M,

You have a blog? What's the URL?

Wayne,

Just my rediculous little ASF blog. Really should create a page for one and do it properly.

I have a lot of economic and global macro ramblings to make.

 

[Julia]

Well I can confirm one thing - FA definitely DOES NOT WORK - and I use to be a firm believer - yes I am also in the dumb camp AND not profitable.

Others have already aired appropriate responses to your assertion that "FA definitely does not work".
To your comment that you are not profitable, may I very politely ask what you are doing about that? If you have rejected the FA approach, then what is your current approach?

 

[mazzatelli1000]

As someone who has worked in the accounting industry and audited financials of big companies --- i dont believe in pure FA as much as I used to

To much complacency in procedures and controls

For me having an overall economic sense of the market, combined with some TA and essential fundamentals of the underlying (not necessarily performing financial statement analysis) has worked.

 

[johenmo]

As someone who has worked in the accounting industry and audited financials of big companies --- i dont believe in pure FA as much as I used to.

To much complacency in procedures and controls

All I can say is Amen to the above.

I'm not an accountant but still work for a big company, and all I can say for nearly all the organisations I've worked for/come in contact with is that if they were half as good as they think they are, they'd be a hell of a lot better than they really are!

Newbies trying to figure this out could get confused by the above. My FILaw is pure FA and has made heaps (he's not interested in trading) but he is careful about what he buys and when. I think he could probably do better with some TA and as I work on building something I can see that I will use both.

As for studies - I think there's too many variables for a conclusive study.