Technical Analysis vs. Fundamental Analysis

[Knobby22]

Fundamental analysis does work but...
-does the average Joe have enough time and knowledge to properly research?

I think many fundamental investors compare themselves to Buffett and Soros to their ultimate detriment.

That said you can as a fundamental investor become an expert in two or three poorly researched small companies and do quite well. As I think Padley said if you spend a good hour researching some of these companies you can become 99.9% more informed than all the other investors. Doesn't work for top 100 companies though.

Personally I mix fundamental investing with technical and do quite well. Technical is a good way to get an edge and a hell of a lot easier. Fundamental allows you to make the big bets that can
really make a difference and avoid the duds. You got to know your stuff though. I'm always learning and I have an MBA.

 

[Value Hunter]

As for posting the same or similar comments on five similar threads that was just a texhnique to stimulate debate.
And maybe a little bit of pott stirring too.

Craft, I am surprised as the most successful fundamental analyst in this forum I thought you would be on our side.

 

[craft]

Craft, I am surprised as the most successful fundamental analyst in this forum I thought you would be on our side.

You don't know everybody's level of success. I built my woefully inadequate initial capital trading technically. I don't mix the two. I prefer F/A. For me the core ingredient to success is universal, just the tools change.

 

[McLovin]

Craft, I am surprised as the most successful fundamental analyst in this forum I thought you would be on our side.

Why does it need to be about taking sides? Why not just accept that what works for one person may not work for you.

 

[CanOz]

Why does it need to be about taking sides? Why not just accept that what works for one person may not work for you.

Simple explanation everybody - Value Hunter is not interested in debate.

Troll

In Internet slang, a troll (/ˈtroʊl/, /ˈtrɒl/) is a person who sows discord on the Internet by starting arguments or upsetting people, by posting inflammatory, extraneous, or off-topic messages in an online community (such as a newsgroup, forum, chat room, or blog) with the deliberate intent of provoking readers into ...

 

[systematic]

Initially didn't respond as I thought there was something strange going on with the multiple repeat posts.

Will add my two cents to the topic itself, rather than reply to Value Hunter's post.

I don't even think of it as, "F/A vs T/A" or even "F/A with T/A". I think I even said once - that I don't like either terms.

We all have different perspectives about investing in the markets.

When it comes to "Analysis" (the key term in the F/A or T/A phrase) mine, for better or worse, is this:

There are 2 types of analysis to pursue in the market - Quantitative analysis, and Qualitative analysis.
You either use one, the other, or both (or none, I guess!)

Therefore, the terms "fundamental" or "technical" don't really mean anything to me.

Many use qualitative analysis - many (most?) who say, "I'm an F/A guy" or "I'm a T/A" guy...are using qualitative analysis. I lump them in the same boat.

It wouldn't be surprising that, for me personally - I'm a "Qant versus Qual" guy, not a "quant AND qual" guy...and that in the Quant versus Qual debate, I go with quant.

That has a foundation in my philosophy that I'm just not good enough to be a qualitative analyst. Not in the markets, anyway. Or at least, I'm not willing to bet, in advance, with my life savings, on the possibility of being good enough!

That's just me.

Fundamentals or technicals? Again, means nothing to me.

Data is data.

If it's price data or financial statement data or news data or whatever that can be used successfully (and in a quantitative fashion), I'm all for it.

I know a lot of people / author's etc don't see it this way. Most see it still as an "F/A" vs "Q/A" thing...including some who should know better.

Side note: it's possible to quantify a qualitative approach, but that's not for me, either.

 

[tech/a]

Data is data.

Some one gets it!!

 

[Value Hunter]

Some one gets it!!

There is useful data and then there is noise. Squigly line voodoo (to me its not analysis) is just noise, not data.

 

[skyQuake]

There is useful data and then there is noise. Squigly line voodoo (to me its not analysis) is just noise, not data.

Depends if the squiggly line stands up to vigorous backtesting

http://www.automated-trading-system.com/evidence-based-technical-analysis-aronson-book/

Also, what is noise to us lowly mortals might be clear signals to the algos at Renaissance Tech

 

[ukulele]

More importantly.

Is Tech Back?

 

[tech/a]

More importantly.

Is Tech Back?

No a one off---well two off.

https://works.bepress.com/bruce_vanstone/

Some excellent reading.

 

[pixel]

Simple explanation everybody - Value Hunter is not interested in debate.

Troll

CanOz, you got most likely closest to the mark.

Initially didn't respond as I thought there was something strange going on with the multiple repeat posts.

Same here, Systematic.
VH might have misunderstood Joe's requests to post more : But I don't think that's what Joe had in mind. Pasting the same controversy into a number of long-dead threads may be a lazy way to double one's post count, but if anything, it's a distraction.

Data is data.

If it's price data or financial statement data or news data or whatever that can be used successfully (and in a quantitative fashion), I'm all for it.

Exactly. There is one advantage that price and related trading data have over a company's accounts and related news reports: Quantitative (OHLCV) data can easily be accessed by software systems which, in turn, allow fast processing and comparative analysis of entire markets, resulting in a manageable selection of likely candidates for manual, qualitative consideration.
One must, however, know in both phases what one is looking at, what one is looking for, and how to spot the differences. Claiming to follow one or the other doesn't make one an Einstein nor a Buffett.

 

[cynic]

No a one off---well two off.

https://works.bepress.com/bruce_vanstone/

Some excellent reading.

Do I spy, with my little eye, something beginning with a breakout?

 

[Joules MM1]

in my letter

Dear Paul ....look, i know we dont know each other but gotta say
you kept mixing up tech analysis with some fundy stuff and now your worth (googles) hmmm, some 4.7BB USD ?

mate, i mean really....and why do you have to use three names, why not just Paul T. Jones ?

wait.wot! 4.7BB?!! .....WTF !! from technical analysis and a bit of fundamental analysis !!

yours, insincerely,
some tosser in a chat room (that's a 6-barrell name, ok, so there!)

:headshake

we conclude: from this double-blind study that double the blind people follow some ideas, well, blindly
(no placebo could be used....not a sausage!)

 

[barney]

Every trader is different yet likely very similar in their differences (its Friday, I'm thinking deeply)

Personally I like the Spec end of the market so talking Fundamentals might be an oxy moron of sorts

My most profitable trades have all had the same set of criteria, which basically are:-

1) I look for "fundamental" potential

2) I accumulate (1) when its had the "technical" bee gees belted out of it

Not rocket science but it works a high percentage of the time.

 

[Boggo]

Depends if the squiggly line stands up to vigorous backtesting

The squiggly line that is confusing VH is reality.
I wonder if he changes channel on the tv when the weather comes on, all that TA would be offensive to him

Below is an old example of reality vs the theory that is peddled by the "experts" and we all know how well that went

 

[barney]

mmmm .....

 

[Value Hunter]

Boggo I never pay attention to weather forecasts as they are not accurate enough. What is yout point with that chart? There are plenty of instances of technical anlaysis being wromg. What does it prove by taking one example? Besides everyone knows broking analaysts have vestwd interests whixh cause them to be perpetually over bullish.

 

[Triathlete]

Whats important is to find an investment or trading strategy that is a good fit for your personality and that you are comfortable wearing day in day out, through volatile sideways, bull and bear markets - and that in the long run provides an acceptable rate of return!

Have to agree with you on that galumay...!

 

[Boggo]

...
My most profitable trades have all had the same set of criteria, which basically are:-

1) I look for "fundamental" potential

2) I accumulate (1) when its had the "technical" bee gees belted out of it

Not rocket science but it works a high percentage of the time.

Same here. Sticking with just The All Ords constituents (about 480 stocks) and "belting" them has worked well for for a few years now.

Been around long enough to have seen too many Harris Scarfe's, Onetel's, Billabong's, ABC Learning and Dick Smiths etc to ever let my future be totally dependant on the opinions of some number cruncher who is basing his calculations on the BS of someone who has their own prosperity in mind instead of reality.

Some light reading in this link
http://www.smh.com.au/business/lessons-to-be-learnt-from-abc-learnings-collapse-20090101-78f8.html

PS - VH, its going for 35 degrees in Adelaide tomorrow