Fundamental vs. Technical

[divs4ever]

am unfamiliar with either term , in regard to share trading

so far i am just an investor learning as i go ( in uncharted waters )

 

[systematic]

Great Doco and many thanks

Is he a FA'er Or a TA'er?

You must always remember that this doco is 8 years old
Crikey!
That could be 1 or 2 Booms and Busts ago

Don't get me wrong
I publish the chart of Berkshire Hathaway with great respect
and ask
Is he an FA'er or a TA'er?

Yet again, it depends on your definition of the terms. I’ve come to accept that most don’t share mine.
Given that he has spent a lot of his life sitting in his office, reading financial statements, I think you would call him an FA’er, by your definition.

Added to that, given that his stock picking doesn’t load on momentum at all (meaning that recent price direction doesn’t seem to factor in) I think you’d definitely call him an FA’er.

 

[Value Collector]

Great Doco and many thanks

Is he a FA'er Or a TA'er?

You must always remember that this doco is 8 years old
Crikey!
That could be 1 or 2 Booms and Busts ago

That's what you get if you waste time reading Sweet FA Yahoos and Sweet FA Twits
IMHO Tread Carefully is my advice with these modern intelligentsia

Don't get me wrong
I publish the chart of Berkshire Hathaway with great respect
and ask
Is he an FA'er or a TA'er?

And I Ask Sea-Cadet gg does this remind you of AMP?

View attachment 141887

The video is actually a bit over 10 years old, but Warren is 62 years into his career, and has been through many booms and busts, and the video is largely about his style of thinking.

Warren is definitely a fundamental investor.

The companies that Berkshire Buys 100% of it plans to never sell, it literally plans to hold every company it buys 100% of forever until that company eventually dies and is sold off for parts, So market ups and downs and technical analysis isn’t relevant to these holdings, the same is true for some of their large share holdings that they consider semi permanent.

 

[Captain_Chaza]

Yet again, it depends on your definition of the terms. I’ve come to accept that most don’t share mine.
Given that he has spent a lot of his life sitting in his office, reading financial statements, I think you would call him an FA’er, by your definition.

Added to that, given that his stock picking doesn’t load on momentum at all (meaning that recent price direction doesn’t seem to factor in) I think you’d definitely call him an FA’er.

The First and Only Broker I worked for came into the office at 8.30am Read 3 pages of the Financial Pages of the AGE and Then told us to ring our clients to sell XYZ and Buy ABC
Would you call that FA ?

 

[Value Collector]

from memory apart from the high profile stocks ( like Coca-Cola ) Warren invested a lot in railways , and that is an interesting investment theme if you start at the right time in the cycle , they make nice core-holdings and probably a sensible counterbalance to the insurance company investments

i WAS using power companies like that until they were taken over recently ( i just can't find a good price on AZJ , so they are unlikely to be a substitute )

the hard part on being a new(ish ) investor and looking back at early Warren is visualizing the companies he invested in ( WHEN he invested in them ) take a company like GE it is massively different to the 1970 GE

Warren invests a lot in power companies too, look up their “Berkshire Hathaway Energy”

When you look at Berkshire Hathaway it’s made up of a few parts, or as warrens describes it “groves”

1, Is the group of 100% owned companies which there is over 50.

2, Is the insurance companies

3, is the two large infrastructure businesses eg Berkshire Hathaway energy business and BNSF Railroad.

4, the portfolio of partly owned companies eg shares

5, A massive pile of cash.

their strategy is fairly simple, they use their Insurance businesses to enlarge their cash pile which is currently over $100 Billion, and then they constantly try to use as much of this cash as they can to buy 100% of companies they wish to permanently hold, when they can’t buy 100% they will buy shares, and when they can’t find enough of these companies to soak up this cash pile they will look for rational investments to make in their infrastructure businesses, and if they can’t find rational investments in these 3 ways they will just stack up the cash waiting, hence the $100 Billion they are sitting on.

 

[Value Collector]

Yet again, it depends on your definition of the terms. I’ve come to accept that most don’t share mine.
Given that he has spent a lot of his life sitting in his office, reading financial statements, I think you would call him an FA’er, by your definition.

Added to that, given that his stock picking doesn’t load on momentum at all (meaning that recent price direction doesn’t seem to factor in) I think you’d definitely call him an FA’er.

Also, Warren doesn’t even have a computer in his office, he doesn’t even have a calculator in there, and has said he doesn’t look at charts because he doesn’t want the chart to influence his valuation of the stock.

He has actually said that when he is valuing a business he doesn’t even want to know what the share price is until after he has done his valuation.

 

[Value Collector]

The First and Only Broker I worked for came into the office at 8.30am Read 3 pages of the Financial Pages of the AGE and Then told us to ring our clients to sell XYZ and Buy ABC
Would you call that FA ?

No, that’s probably not FA

I would call that “Trading the news”

 

[systematic]

The First and Only Broker I worked for came into the office at 8.30am Read 3 pages of the Financial Pages of the AGE and Then told us to ring our clients to sell XYZ and Buy ABC
Would you call that FA ?

I’d call that sales prepping ?

Unless he was studying the numbers and not the stories? Maybe he was just a brilliant quant!

 

[divs4ever]

The First and Only Broker I worked for came into the office at 8.30am Read 3 pages of the Financial Pages of the AGE and Then told us to ring our clients to sell XYZ and Buy ABC
Would you call that FA ?

not unless he had a 'photographic memory ' and already had memorized all the important stats of the companies concerned ( or had spent the early morning reading and reading various yearlies/quarterlies etc ) and only used the newspaper for current trends and sentiment ( he may have already slimmed the moves to say six candidates before arriving at the office )

but then the only broker i knew was an odd old guy who didn't give a toss what YOU ( or i ) thought about HIS personal investing decisions but then he was a ( live)stock broker with a keen eye for a block of land and decent beast

( the family and neighbours ribbed him for over a decade about his retirement shack , and he is still probably laughing at all them 70 years later )

 

[systematic]

Also, Warren doesn’t even have a computer in his office, he doesn’t even have a calculator in there, and has said he doesn’t look at charts because he doesn’t want the chart to influence his valuation of the stock.

He has actually said that when he is valuing a business he doesn’t even want to know what the share price is until after he has done his valuation.

Yeah, didn’t he say something about valuing a company on the back of an envelope, so to speak?

I was initially surprised...I thought he’d tend toward recently beaten down prices, given he is valuing companies (i.e. a ‘negative loading’ on trend/momentum)...but nope, nothing there. What the price has been doing (at least in recent times) - up or down - doesn’t factor in.

 

[divs4ever]

Also, Warren doesn’t even have a computer in his office, he doesn’t even have a calculator in there, and has said he doesn’t look at charts because he doesn’t want the chart to influence his valuation of the stock.

He has actually said that when he is valuing a business he doesn’t even want to know what the share price is until after he has done his valuation.

i differ from Warren there i ALWAYS double ( or triple ) check my numbers on a calculator , the calculator might be 60 ( odd ) years old , but can handle all the decimal places i need , the computer has it's uses but i can ( and have ) decided on moves without it

i spot an interesting share price in a company i have basic understanding of and THEN do deeper research ( say the initial buy of FMG ) ,

charts ?? sometimes yes sometimes no that great depends on the time before making a buying/selling decision ( sometime i have days , sometimes minutes )

 

[Value Collector]

Yeah, didn’t he say something about valuing a company on the back of an envelope, so to speak?

I was initially surprised...I thought he’d tend toward recently beaten down prices, given he is valuing companies (i.e. a ‘negative loading’ on trend/momentum)...but nope, nothing there. What the price has been doing (at least in recent times) - up or down - doesn’t factor in.

I think he would be constantly valuing businesses, and figuring out what price he is willing to pay, and if the market price is more than that then he would just sit his notes aside and wait for the price to drop.

So he might load up on a stock that has dropped in price, but only because he had valued it earlier and had been watching it for a long time, not because he just got excited seeing a drop.

 

[Captain_Chaza]

Keep your eyes on the little Aussie Battler tonite

We will all be a lot richer in the Morning

 

[Value Collector]

i differ from Warren there i ALWAYS double ( or triple ) check my numbers on a calculator , the calculator might be 60 ( odd ) years old , but can handle all the decimal places i need , the computer has it's uses but i can ( and have ) decided on moves without it

i spot an interesting share price in a company i have basic understanding of and THEN do deeper research ( say the initial buy of FMG ) ,

charts ?? sometimes yes sometimes no that great depends on the time before making a buying/selling decision ( sometime i have days , sometimes minutes )

I agree, I can’t live without a calculator either.

But I have heard Warren say that if something needs to be worked out to decimal places, then there isn’t enough margin of safety for him, so I guess he is looking for deals where the bargain is leaping off the page.

He did also say though that some of his best investment have been where he was just so confident in the product and the “durable competitive advantages” that he could see, that it was just obvious to him that sales would continue to grow at rates that made the current numbers look cheap.

 

[divs4ever]

I agree, I can’t live without a calculator either.

But I have heard Warren say that if something needs to be worked out to decimal places, then there isn’t enough margin of safety for him, so I guess he is looking for deals where the bargain is leaping off the page.

He did also say though that some of his best investment have been where he was just so confident in the product and the “durable competitive advantages” that he could see, that it was just obvious to him that sales would continue to grow at rates that made the current numbers look cheap.

i wasn't hiding behind the shed when they were handing out greed ( have one heck of a time trying to control it )

but sometimes i NEED to see those decimal places as well ( that half a percent might be a deal breaker for me ) especially yields on hybrids

sometimes 'competitive advantage ' doesn't work well for me ( say Newsat or Gunns ) maybe with another 10 years experience i will make more good choices

'leap off the page ' sure , but i want to double-check first , sometimes deals ARE to good to be true

 

[Value Collector]

i wasn't hiding behind the shed when they were handing out greed ( have one heck of a time trying to control it )

but sometimes i NEED to see those decimal places as well ( that half a percent might be a deal breaker for me ) especially yields on hybrids

sometimes 'competitive advantage ' doesn't work well for me ( say Newsat or Gunns ) maybe with another 10 years experience i will make more good choices

'leap off the page ' sure , but i want to double-check first , sometimes deals ARE to good to be true

What I mean by a deal that leaps of the page is, if you know for example that your cost of capital is 4.5%, and see a share worth $72 paying $3.50 dividend you will probably need a calculator to know that that’s a 4.85% return and so is technically 0.35% above your cost of capital.

But, Buffett doesn’t want a deal with such a small margin of safety, he wants one that doesn’t require a calculator, eg if that $72 stock paid $9 dividend he would quickly be able to work out in his head that $7.2 is 10% of $72, and the $9 divvy is much higher than the 4.5% cost of capital, so it’s “leaping of the page” so to speak.

Obviously there is more to it that just dividend yield, but what I am saying is that he wants numbers that are obviously good, not just so small that you need a calculator to figure out they are positive or not.

Especially because at the end of the day valuations are estimates, you might be wrong by 30% and if you are relying on 0.35% profit margin, and are 30% wrong, it will end badly, but if the profit margin is well over 10%, say 12% of so that you can work out in your head you will still be fine.

 

[divs4ever]

What I mean by a deal that leaps of the page is, if you know for example that your cost of capital is 4.5%, and see a share worth $72 paying $3.50 dividend you will probably need a calculator to know that that’s a 4.85% return and so is technically 0.35% above your cost of capital.

But, Buffett doesn’t want a deal with such a small margin of safety, he wants one that doesn’t require a calculator, eg if that $72 stock paid $9 dividend he would quickly be able to work out in his head that $7.2 is 10% of $72, and the $9 divvy is much higher than the 4.5% cost of capital, so it’s “leaping of the page” so to speak.

Obviously there is more to it that just dividend yield, but what I am saying is that he wants numbers that are obviously good, not just so small that you need a calculator to figure out they are positive or not.

Especially because at the end of the day valuations are estimates, you might be wrong by 30% and if you are relying on 0.35% profit margin, and are 30% wrong, it will end badly, but if the profit margin is well over 10%, say 12% of so that you can work out in your head you will still be fine.

but i am dyslexic ( among other quirks ) , double checking works for me in money matters , instinctive reactions worked for me on the cricket field

at that div. yield is usually the number that STARTS the deeper research and CALCULATE a maximum target price after checking some other metrics ( and recent news )

 

[divs4ever]

it looks complicated but avoids a yield trap

 

[Mohammed Hazabig'un]

and has said he doesn’t look at charts because he doesn’t want the chart to influence his valuation of the stock.

That is GOLD.

Chartists don't like looking at Fundamentals and Fundamentalists (like Buffett) don't like looking at Technicals.

Buffett's Mother was a Teachers wasn't she, his Father a Stockbroker. He had the two essentials things for great success in place - Nature and Nurture.

 

[Captain_Chaza]

Sailing for GOLD is one of the greatest challengers any Sailor will have
Especially when Sailing Against the Worlds Best

They set sail from the Great Lakes out of Chicago "The CBOE"
and it is always a good idea to see what they are up to

I would put this chart on the GOLD thread but it would probably inspire the Yahoos and Twits
To go off topic with their multitudes of One Liners and fill our Mail boxes with Nuisance

For those only in the Business of Sailing for GOLD In a TA perspective

Sailing for GOLD One Day at a Time



From Memory The Oracle Of Omaha Bought lots of GOLD @ $2000 ~ a 1-2 years ago preaching $5000?
Does anyone know if He is still holding?

As you can all see
There are lots of COLD FRONTS ahead to sail through to get back to $2000
For his sake I hope it happens in his Lifetime
We all KNOW
INFLATION will do What INFLATION does and yes he will be right
But will it be quick enough for the Legendary Oracle?