Which one do you use? Technical or fundamental analysis?

[ducati916]

Re: Which one do you use? Technical or fundamental analysis

Code of conduct breach

Jog on!!


But seriously, here are some *professionals* and their publically traded results over the last 6mths including that rather nasty May break.

Final Portfolio Totals
10/31/2005 - 6/1/2006


Global Investor
$116,174.17 16.17% * Fundamental Analysis

All-Star Team
$127,436.80 27.44% * Fundamental Analysis

Trend Trader
$103,939.60 3.94% Technical Analysis

Quite Contrary
$86,826.41 [-13.17%] Technical Analysis

Rational Investor
$109,033.89 9.03% * Fundamental Analysis

Model Behaviorist
$110,618.08 10.62% * Mixture of the two methodologies
* out-performed the S&P 500

So with some real evidence, from the world of *professionals*.........doesn't look that easy to me.

jog on
d998

 

[bullmarket]

Re: Which one do you use? Technical or fundamental analysis

Hi eddievanhalen.....no problem

I agree in general with what you posted and obviuosly there are traders/investors out there who do generate large returns.......but given that anecdotal evidence suggests less than 10% of traders are profitable to any great extent in the long run I simply choose to not blindly believe any unsubstantiated/unverifiable claims of returns/profits etc in chatrooms like this, especially when there is no way of verifying with 100% certainty who is actually sitting at the keyboard of the chatter making the claim

Imo, people mostly post alleged profits etc in chatrooms in an attempt to big note themselves in the hope others will follow their recoomendations or whatever in the future and from my point of view all they are doing is leaving themselves wide open to being laughed at by those who are much more successful and profitable than they are

cheers

bullmarket

You're right bullmarket ofcourse. That's the problem with these discussions and I acknowledge the logic behind what you say. Having said that I'd like to think what I posted has a bit more substance than "Buy XYZ..whoosh ..going to the moon". Hard to see how I could possibly benefit from what I posted.........the so-called "agenda" I only pop into this forum occassionally and not looking to build (or destroy ) my reputation here.

I never normally get involved for that very reason. I was just a bit frustrated with how some people are limiting their own progress based upon conventional wisdom. Obviously some of the contributors to this thread have a lot of experience and their beliefs are based upon that experience...........fine. It's more the newbies who read this that I'm worried about.

The only reason I posted at all was to try (in vain probably) to maybe influence some of those who refuse to believe that returns greater than 10-20% pa are possible to think outside the square a bit.

I see no reason for anyone to believe me any more than those who claim that nobody (trading smaller amounts) can beat Buffett. This thread will never get anywhere in my opinion and I almost regret posting in it.

Back to work.

I'll come back in a few weeks and see how may more times we've gone around in circles

Ed


PS the only real "claim" I made to illustrate a point was that I currently hold 70 positions and TURN OVER 1m/month. When I say turnover I mean total sales. I could do that buying in and out of BHP 50 times for the month using only $20,000. It doesn't imply a level of profit at all.

 

[tech/a]

Re: Which one do you use? Technical or fundamental analysis

I agree in general with what you posted and obviuosly there are traders/investors out there who do generate large returns.......but given that anecdotal evidence suggests less than 10% of traders are profitable to any great extent in the long run I simply choose to not blindly believe any unsubstantiated/unverifiable claims of returns/profits etc in chatrooms like this, especially when there is no way of verifying with 100% certainty who is actually sitting at the keyboard of the chatter making the claim

Who cares wether they are Daffy Duck---as of course I am.
If a methodology is shown particularly over a prolonged time, both the "Motor Bike" and myself will have furnished the masses with information based upon the methodologies we use. What they do with it in full or in part is up to them.

Imo, people mostly post alleged profits etc in chatrooms in an attempt to big note themselves in the hope others will follow their recoomendations or whatever in the future

Those who simply ramp stock with no discussion on methodologies I tend to agree.
However those who participate in the general discussion directed from other who are interested in their results and methodologies are generally I have found people who are passionate about their trading and how they do it.
Exchanges are both ways I have learnt a great deal from others during discussions related to my own methods.
Leading me to trade 2 others which have been refined from these collaberations.

and from my point of view all they are doing is leaving themselves wide open to being laughed at by those who are much more successful and profitable than they are

Other than the obvious rampers and those who copy other published forms of trading and pass it off as their own---hence no discussion on their form of trading--
People who "Laugh at others" specifically those genuine people who enjoy helping others achieve success,are purely pretentious human waste,who cant fathom that there are people who actually dont give 2 sheets about reward---THEY DONT NEED IT.

Those that pontificate in circular non informative pompus babble are worth a good giggle though.

 

[MichaelD]

Re: Which one do you use? Technical or fundamental analysis

Try entering once the stock resumes its uptrend after a retracement. Chances are that the stock will accelerate away from your entry point and your stop won't be in danger. No guarantees, but that's the most likely scenario.
That's why I like entering from a trend resumption immediately after a retracement.....it puts the odds in your favour that you'll get an immediate move in the right direction.

This entry gives you a 50% or less chance of a profitable trade. i.e. A coin toss is just as good as this entry. At the end of the day, it's the expectancy of a given entry in a given trading system that is relevant, not whether it moves up/down in the next day or two.

We'll have to agree to disagree I'm afraid. My backtestable belief is that restricting entry to something such as that outlined above lessens system expectancy. Your non backtestable belief is the opposite.

i.e. you think you are making a positive difference with your entry strategy. I don't agree. Neither do Van Tharp or Le Beau.

 

[bullmarket]

Re: Which one do you use? Technical or fundamental analysis

Hi MichaelD

I prefer to buy stocks that have begun to trend up after a retracement or sieways consolidation.......the tricky bit, of course, is developing a strategy (charts, indicators etc etc) that help you determine if a stock is trending up.

Imo if a stock is trending up then, although there are no guarantees it will continue to trend up after buying, there is a better than 50% probability that it will continue to trend up.......the aim here is to develop a trading plan (which includes risk and capital management) and TA skills that will enable you to interpret charts that result in continuing uptrends at least 2 times out of 3.......hence the need to keep losses small for the times you inevitably get it wrong.

cheers

bullmarket

 

[bunyip]

Re: Which one do you use? Technical or fundamental analysis

We'll have to agree to disagree I'm afraid. My backtestable belief is that restricting entry to something such as that outlined above lessens system expectancy. Your non backtestable belief is the opposite.

i.e. you think you are making a positive difference with your entry strategy. I don't agree. Neither do Van Tharp or Le Beau.

Yes Michael...we'll just have to agree to disagree. I'll keep using what has worked for me. Incidentally, I do have a couple of entry setups.

Can you give us a brief rundown on what Tharp and Le Beau are using as entry signals. And what you're using yourself?

Bunyip

 

[bunyip]

Re: Which one do you use? Technical or fundamental analysis

Hey Duc

I've had a pretty good run with real estate.....by my calculation my portfolio would be up aprroximately 100% in the last five years, plus about 5% per year dividends in the form of rentals.
Oh dear.....another claim by me! Now you'll be demanding that I supply evidence. Let's see.....I could start with the contracts of sale from when I bought the properties, then I could follow up with some documentation from the Lands Department to prove ownership, and finally I could get Herron Todd White to do some valuations to prove the worth of my properties. Oh, and I almost forgot the rentals.....no problem, I could put together my rental statements of the last five years.
And having got all this documentation together, I could probably scan it and attach it to a post and fire it off to this forum just to pacify my old mate Duc who harbours the misguided notion that I am under some obligation to supply him with details of my private business dealings.

Duc, I have reason to believe that you're sailing dangerously close to copping some sort of disiciplinary action on this forum. In some ways it would be good to see a boring, repetitive trouble maker get his just desserts. On the other hand there are some of us, myself included, who would miss the outstanding entertainment you provide. Trading is a serious and at times a lonely business. It's not such a bad thing to have a forum clown who provides us with plenty of laughs.

Bunyip

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

That's because the world's greatest investor would focus on undiscovered, lightly traded small caps -- the area of the market where individual investors have an advantage over the pros.

Wayne, that is from the Motley Fool, and is perposterous.

Warren Buffett would not invest is small undiscovered lightly traded small caps. The very notion is laughable.

The Motley Fool is a joke, a scam and a spam generated nuisance, anyone that takes any advice from them is asking for trouble.

 

[ducati916]

Re: Which one do you use? Technical or fundamental analysis

bunyip

Hey Duc

I've had a pretty good run with real estate.....by my calculation my portfolio would be up aprroximately 100% in the last five years, plus about 5% per year dividends in the form of rentals.
Oh dear.....another claim by me! Now you'll be demanding that I supply evidence. Let's see.....I could start with the contracts of sale from when I bought the properties, then I could follow up with some documentation from the Lands Department to prove ownership, and finally I could get Herron Todd White to do some valuations to prove the worth of my properties. Oh, and I almost forgot the rentals.....no problem, I could put together my rental statements of the last five years.
And having got all this documentation together, I could probably scan it and attach it to a post and fire it off to this forum just to pacify my old mate Duc who harbours the misguided notion that I am under some obligation to supply him with details of my private business dealings.

Oh dear, yet another peanut.
I do not require proof in the form of documentation.
I do not require proof or disclosure of your methodology.
What I would like to see is you place your trades, or a selection thereof, in real time.

Why?

Simply because trading is difficult.
Claiming high returns is one thing, any peanut can claim a high return.
Delivery of high, consistent returns is quite another matter you see. Sure you claim XYZ, but I see no evidence to support your assertions currently.

Duc, I have reason to believe that you're sailing dangerously close to copping some sort of disiciplinary action on this forum. In some ways it would be good to see a boring, repetitive trouble maker get his just desserts. On the other hand there are some of us, myself included, who would miss the outstanding entertainment you provide. Trading is a serious and at times a lonely business. It's not such a bad thing to have a forum clown who provides us with plenty of laughs.

Of course.
But you see not every peanut has a sense of humour, as you undoubtably do.
Enzo Peanut, takes it all so personally.
I shall continue to castigate the peanuts, for their totally fabricated claims until the peanuts throw me off, or continue the censorship to a level that nothing remains.

jog on
d998

 

[bullmarket]

Re: Which one do you use? Technical or fundamental analysis

Hi ducati

Since I and most probably you and everyone else have no way of verifying with 100% certainty who is sitting at a chatter's keyboard at any particular time I'm not sure what anyone posting alleged 'real time' trades, as you request, will prove unless they also provide their real name and sufficient details to enable you to verify the trade.

Now of course no-one in their right mind will post their name and pesonal details to a stranger in a chatroom like this and if they do then they have only their immaturity and stupidity to blame if their personal details end up in the hands of someone they would prefer not to.

So in my case, I just adopt an overall policy of not blindly believing unsubstantiated/unverifiable claims made in chatrooms and leave it at that......if people get upset and abusive at me justifiably not believing them then so be it.

cheers

bullmarket

 

[ducati916]

Re: Which one do you use? Technical or fundamental analysis

Mr bullmarket

You are just too harsh.
If someone is willing to demonstrate their trades live, I always accept it at face value, as to do so invariably demonstrates strength of character.

Strength of character, after adequate knowledge, tempered with experience, is the most important ingredient to consistent market success.

As for the peanuts, well they have endless excuses as to why it's all just not possible..............my favourite............it interferes with my psychology.

jog on
d998

 

[bullmarket]

Re: Which one do you use? Technical or fundamental analysis

no problem ducati

I don't believe I am being too harsh at all........from my point of view I am just being realistic and maybe erring on the side of caution.....but that's just the way I am........I'm a like it or lump it deal

cheers

bullmarket

 

[bunyip]

Re: Which one do you use? Technical or fundamental analysis

What I would like to see is you place your trades, or a selection thereof, in real time.

Duc, you continue to miss the point..... We.....Don't....Care...About....What....You'd.....Like.....To.....See....Or.....Not....See.
Got it? Most of us on this forum just don't care about you!
You're forever telling us what you'd like to see. But you fail to come up with any compelling reasons why the rest of us are supposed to care about what you'd like to see. You fail to convince us that we should feel obliged to comply with your requests.

I'll say it again, this time more strongly. Most of us on this forum couldn't give a toss what you'd like to see or not see. Most of us couldn't care two hoots for your opinions. Most of us are not the slightest bit concerned whether you do or don't believe us. And because we're not concerned about your opinions, we feel no need whatever to convince you of the truth of what we're saying, we feel no need to try and talk you into believing in our trading methodology, we feel no need to do anything where you're concerned, except maybe read your posts and have a good laugh at you.

I wonder what would happen if you and I met each other face to face. Would two peanuts start punching each other on the nose, or would we slap each other on the back, head for the nearest bar and have more laughs over a few cold ones.

Bunyip

 

[bunyip]

Re: Which one do you use? Technical or fundamental analysis

I support Bull in his tendency towards taking with a grain of salt what he reads on a forum.

With regard to a trading system or methodology that someone shares, I say don't believe it or disbelieve it until you've extensively tested it yourself...then and only then are you in a position to comment on its strengths and weaknesses.
Too often you see someone who is generous enough to share a system that he says works well for him, and next thing he cops a barrage of scorn and sarcasm from morons who don't even have enough get up and go to thorougly check out the system, before passing judgement on it.

Bunyip

 

[cuttlefish]

Re: Which one do you use? Technical or fundamental analysis

I believe that both approaches - technical or fundamental (or a combination of both) will work if applied correctly.

My own preference is a fundamentals, basically ben graham with a bit of buffet, approach. But I've seen quite a few comments about Buffet and Graham from both the fundamental and technical side of the debate that mismatch with my own impression of their philosophies.

At the moment I'm wanting to get a better understanding of technical trading and also use of leveraged instruments to improve on my underlying approach.

I think both approaches are not mutually exclusive.

My thoughts on the two approaches:

A fundamental investor is trying to pick assets that compare well to other assets that are available (including other stocks, bonds, property, cash etc.)
They do this based on looking at the income that can be received when compared to the cost of the asset (income doesn't have to be dividends - the profitability of the company is income), and the potential growth of that income compared to income growth that can be achieved from other assets.

Capital gains are not a strong focus for a fundamentals based investor, but often are a by-product of fundamentals based investing.


A technical trader is trying to pick the current market sentiment/psychology surrounding a particular stock or sector. All people that have bought shares are aware of the power of emotion, and as a result 'crowd' behaviour is to some extent predictable and follows repeatable patterns. These are the patterns that chartists look for. They then try to capitalise on a particular psychology by either backing a trend (e.g. identifying a breakout and running with the herd untill it runs out of steam), or trading against the psychology of a trend (e.g. selling at the top of a range bound stock and buying at the bottom of that range -i.e. against the psychological trend).

There is plenty of room for both techniques - one is a more active process and more akin to running a business. The other is a more passive approach.

The things that both require are:

* Doing your own hard work - either in trend analysis or fundamental analysis and making your own decisions and being prepared to back yourself.
* Having the discipline to formulate and stick to a plan. A plan needs to have metrics. Buying because it looked good that day or didn't isn't a plan. That doesn't mean the approach can't be discretionary, but there still needs to be a plan for entry and exit.
* Investing or trading to a plan is essential otherwise you are investing based on emotion and that is almost guaranteed to fail.

From my own perspective I think a good understanding of both will benefit any trader or investor.

 

[nizar]

Re: Which one do you use? Technical or fundamental analysis

Capital gains are not a strong focus for a fundamentals based investor

Yeh?

Peter Lynch was very FA based; looking at the company; management; sector...and he focussed on 10-baggers when he was running Fidelity Magellan Fund 1977-1990...

But i know Buffet did say something along the lines of: "Dont buy for capital appreciation. Be patient and the growth will come. In the meantime, collect the yield"

 

[It's Snake Pliskin]

Re: Which one do you use? Technical or fundamental analysis

Bull,

I prefer to buy stocks that have begun to trend up after a retracement or sieways consolidation.......the tricky bit, of course, is developing a strategy (charts, indicators etc etc) that help you determine if a stock is trending up.

It`s not that difficult to see if a trend is in motion!

Imo if a stock is trending up then, although there are no guarantees it will continue to trend up after buying, there is a better than 50% probability that it will continue to trend up.......the aim here is to develop a trading plan (which includes risk and capital management) and TA skills that will enable you to interpret charts that result in continuing uptrends at least 2 times out of 3.......hence the need to keep losses small for the times you inevitably get it wrong.

Nothing of value here!

Snake

 

[ghotib]

Re: Which one do you use? Technical or fundamental analysis

...I've seen quite a few comments about Buffet and Graham from both the fundamental and technical side of the debate that mismatch with my own impression of their philosophies.

I agree with nearly all of the rest of this post too, but I've pulled this bit out because I'd like to ask the moderators if we can pull the "Buffet would / Buffet wouldn't" posts into a separate thread. Seems to me there's a few of us trying to use Buffet and Graham as a model and there are a lot of different ideas about what that means.

Ghoti (feeling like this is the longest learning curve since preschool)

 

[It's Snake Pliskin]

Re: Which one do you use? Technical or fundamental analysis

Can you give us a brief rundown on what Tharp and Le Beau are using as entry signals. And what you're using yourself?

Van Tharp`s book is a good introductory book, nothing more. Not too much the serious trader can work with.

 

[It's Snake Pliskin]

Re: Which one do you use? Technical or fundamental analysis

Do you think I could be stuffed posting my trades (around 70 positions currently) and trying to prove myself to some people on the internet I don't know.

And it is this comment here that is intriguing.