Fundamental investing, all the reports but it's still a guess?

[So_Cynical]

Re: Fundamental investing, all the reports but its still a guess?

Lincoln Indicators does FA better than anyone else I've seen. Very expensive, but if I had a multi-mill$ blue chip portfolio, it would be number one on my list of must haves.

So if you had a multi million portfolio that you got by not using Lincoln Indicators, you would then use them? and why the hell wouldn't you be relaxing on the beach in Phuket, getting a $10 coconut oil massage? i know that's what i would be doing if i had a multi million portfolio.

 

[Market Depth]

Re: Fundamental investing, all the reports but its still a guess?

Lincoln Indicators does FA better than anyone else I've seen. Very expensive, but if I had a multi-mill$ blue chip portfolio, it would be number one on my list of must haves.

WOW! there's a name in the industry I haven't heard of for a loooong time. You'll need very very deep pockets

 

[Market Depth]

Re: Fundamental investing, all the reports but its still a guess?

So if you had a multi million portfolio that you got by not using Lincoln Indicators, you would then use them? and why the hell wouldn't you be relaxing on the beach in Phuket, getting a $10 coconut oil massage? i know that's what i would be doing if i had a multi million portfolio.

Lots of different Clients use Lincoln, from sports people to sucessful business people, large coporations, property developers, and private traders. You can be wealthy in other areas of life, not just from trading. And these clients have the money to pay for quality advice and guidence.

 

[Gringotts Bank]

Re: Fundamental investing, all the reports but its still a guess?

cynical, I mean like if I had $$$ in blue chips and wanted to just sit and watch it, collecting divs and not trading it. Would take the stress out of it knowing that the companies have reasonable financials. Maybe I inherited the millions from a long lost aunty.

 

[mattryanshares]

Re: Fundamental investing, all the reports but its still a guess?

Whats Lincons hit and miss ratio???

 

[Wysiwyg]

Re: Fundamental investing, all the reports but its still a guess?

The most important thing ?

Is the trend !

Motorway

Yes well if this subject was on another thread I would be very interested in opinions on trading a trend.

 

[Frankie]

How ever how do you truly form an opinion on a company you know nothing about when all your reading is there own propaganda?

Hi mattryanshares,

I always tell myself to be careful when I read anything. When I read, I ask myself this:

What does the person writing the article have to gain from writing it?​

My preference is to follow the advice of independent research houses.

I look for research houses that have good track records for recommending stock.

I look for consensus amongst research houses. I believe that the more research houses recommending the same stock the better.

I always try to be careful with what I read. I’m on the look out for facts, not propaganda!

 

[Tysonboss1]

Hi mattryanshares,

I always tell myself to be careful when I read anything. When I read, I ask myself this:

What does the person writing the article have to gain from writing it?​

I look for consensus amongst research houses. I believe that the more research houses recommending the same stock the better.

!

If it is being recommended by every man and his dog it may turn out to be a wonderful company but a terrible investment.

A wonderful company only makes a good investment if you can buy it at a sensible price, and if it is a market "Darling" it is probally trading at a price well over fair value, and the first sign of market jitters may see it have significant falls back towards fall value.

( for an example of this look at Tol 10 year chart, Great business, good growth stock recommended as a buy by many investment houses, if you had bought at it's most opptomistic highs it would have been a terrible investment. Tol business is sound, it is growing but paying to much will get you in trouble)

 

[Tyler Durden]

I was going to create a thread asking this question, but this thread seems to be along similar lines so I'll ask it here.

Assuming one is investing for capital gains rather than dividends, wouldn't one be better off choosing more popular shares over shares of companies that have the 'fundamentals'?

I mean, if everyone thinks that company x is great (when in actual fact it's not), they'll all rush to buy the shares therefore propping the SP up. And if everyone thinks company z sucks (when in fact it is the most fundamentally sound on the market), then the SP will never go anywhere because no one likes it?

 

[robusta]

I was going to create a thread asking this question, but this thread seems to be along similar lines so I'll ask it here.

Assuming one is investing for capital gains rather than dividends, wouldn't one be better off choosing more popular shares over shares of companies that have the 'fundamentals'?

I mean, if everyone thinks that company x is great (when in actual fact it's not), they'll all rush to buy the shares therefore propping the SP up. And if everyone thinks company z sucks (when in fact it is the most fundamentally sound on the market), then the SP will never go anywhere because no one likes it?

Heaps of people thought ABC, TLS, QAN were great ten years ago - look up a ten year chart for these.

BHP was not very popular ten years ago look at that chart.

 

[Tyler Durden]

Heaps of people thought ABC, TLS, QAN were great ten years ago - look up a ten year chart for these.

BHP was not very popular ten years ago look at that chart.

Yes, but provided you capitalised on your gain (or loss) within those ten years, that means the merit of your decision didn't really matter, as it was still decided by popularity.

 

[So_Cynical]

that means the merit of your decision didn't really matter, as it was still decided by popularity.

And many stocks got to be popular because there fundamentals changed...look at any commodity stock, low commodity price = unpopular and thus lower SP...a rising commodity price the opposite.

 

[robusta]

Yes, but provided you capitalised on your gain (or loss) within those ten years, that means the merit of your decision didn't really matter, as it was still decided by popularity.

Sorry I dont understand your point.

The point I was trying to make is if you can avoid the ordinary businesses (QAN, TLS..) and focus your attention on the extraordinary businesses you will out perform the market.
Plenty of crap companies (ABC Learning, Quintex, Bond Corporation...) were popular until just before they went broke.

You cant tell me the merit of your decision to invest in TLS, QAN or BHP would not matter 10 years ago or today.

 

[Julia]

I was going to create a thread asking this question, but this thread seems to be along similar lines so I'll ask it here.

Assuming one is investing for capital gains rather than dividends, wouldn't one be better off choosing more popular shares over shares of companies that have the 'fundamentals'?

I mean, if everyone thinks that company x is great (when in actual fact it's not), they'll all rush to buy the shares therefore propping the SP up. And if everyone thinks company z sucks (when in fact it is the most fundamentally sound on the market), then the SP will never go anywhere because no one likes it?

Ah Tyler, you have latched on to the basis of trend following, i.e. jump onto a rising SP and hold until it starts to fall.
I totally support your thinking.

(And please, fundamentalists, don't let's get into all the reasons why you don't do this. Tyler has raised a valid point, and I'm simply endorsing it.)

 

[Tysonboss1]

I was going to create a thread asking this question, but this thread seems to be along similar lines so I'll ask it here.

Assuming one is investing for capital gains rather than dividends, wouldn't one be better off choosing more popular shares over shares of companies that have the 'fundamentals'?

I mean, if everyone thinks that company x is great (when in actual fact it's not), they'll all rush to buy the shares therefore propping the SP up. And if everyone thinks company z sucks (when in fact it is the most fundamentally sound on the market), then the SP will never go anywhere because no one likes it?

You don't have to invest for dividends to be a fundamental investor. You just have to be buying a stock because it has two things,

Great business
Sensible price

And you have to be able to back these two things up with facts not hearsay.

What it comes down to is , For capital gains to occur (longterm, outside of any shorterm volitility) you need to buy a business that is either under priced that will eventually return back to fair value or Is a growing business that is not already over priced.

P.S,

It is a myth that us Value investors have portfolios filled with obscure companies that never go any where and we just sit collecting petty dividends.

The truth is that once I indentify a Great fundamental Buy, It rarely stays around for long and I often see big capital gains and as a side note often receive solid dividend cashflow as a bonus.

 

[Tyler Durden]

Well let's just take a business that is morally horrific, yet financially sound in a fundamental sense. Assuming the business is against the morals of everyone, no one would want to buy the shares. So no matter how 'great' it is doing financially, the SP will not go anywhere.

But that's going off on a slight tangent. My initial pondering really was meant to say, what if everyone was wrong about a company, thinking it was great when it wasn't? The SP of that company would still go up, and if everyone is wrong about a fundamentally sound company, that company's SP would not go anywhere.

 

[Tysonboss1]

. My initial pondering really was meant to say, what if everyone was wrong about a company, thinking it was great when it wasn't? The SP of that company would still go up, and if everyone is wrong about a fundamentally sound company, that company's SP would not go anywhere.

Yes, It will initially go up, just like every internet company back in 2000, Then it will come crashing down, like almost every internet company during the tech wreck.

Now around the time of the tech boom, "Old economy" stocks fell way out of favour Woolworths was about $4 at one stage, But guess what, the market does not ignore fundamantals forever, and the tech stocks crashed and the fundamantally sound companies started a 10year climb in capital gains and dividends.

If I wouldn't want to hold a share for 5 years, I don't want to hold it 5 minutes.

Trend following is a short term trading stratergy, which is not the game I am in. I invest, I don't trade.

 

[So_Cynical]

what if everyone was wrong about a company, thinking it was great when it wasn't? The SP of that company would still go up, and if everyone is wrong about a fundamentally sound company, that company's SP would not go anywhere.

There is always a shift in SP (popularity) when a company (fundamentally) changes from being great to being not quite as great as it was...just take CPU for example over the last 10 or so months, the share price went from a high of over $12 down to $8.50 a few months ago and now after a little run up, has gone back down to around $9.60 today and yesterday.

CPU became a little unpopular due to a 35% or so drop in profit, fundamentally there has been a small shift in the markets perception of CPU and its profitability going forward...the SP reflects that change in fundamentals...SP always does.

Can anyone think of a company that went bust with its share price going up, trending up over a period of many months? i cant think of any...the SP of any substantial stock always reflects what's going on fundamentally, just never with any great accuracy and always subject to other influences like sentiment and availability of debt etc etc.

 

[ROE]

Well let's just take a business that is morally horrific, yet financially sound in a fundamental sense. Assuming the business is against the morals of everyone, no one would want to buy the shares. So no matter how 'great' it is doing financially, the SP will not go anywhere.

But that's going off on a slight tangent. My initial pondering really was meant to say, what if everyone was wrong about a company, thinking it was great when it wasn't? The SP of that company would still go up, and if everyone is wrong about a fundamentally sound company, that company's SP would not go anywhere.

Most long term investors hold stock for many years this doesn't make much difference
they don't buy today and sell next week so why would they care if the share price
go up one day down the next, up again next month, go down and stay down for another year?

What they care is over all long term return.

over 10-15 years will it provide me adequate return
Capital appreciation + dividend

Fundamentally strong companies that deliver increase earning WILL ALWAYS
get recognise, and price correctly by the market at some stage....and the time they dont price correctly we buy up in large quantities

Every so often a new fashion will hit the market (Tulip Mania, 80's corporate raiders, dot com, mining exploration boom etc...)

and these fundamental strong companies may get pushed a side for a little while but they will be around once the fashion gone out of style.

You can chose to chase the fashion and get out before fashion goes out of style
or the slow and steady path without timing, without fashion and steady as she goes return...

Have a look at these fundamentally strong companies, despite crash, boom and bust do they provide long term investor (10 years) with adequate return??? I say more than adequate, I say STELLA return...

CBA, CCP, CCV,FLT, REH, TRS, WOW, ONT, DMP, QBE, NVT, TGA

I have interest in many of those listed stocks....
Long term investing in fundamentally strong companies works and it works to perfection....

 

[Market Depth]

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