Which one do you use? Technical or fundamental analysis?

[bunyip]

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

Ok realist, contrast the following selected quotes out of this thread by your's truly with the final one.

Nice one Cuttefish. As you say, the lad is all over the place. Trader one minute, investor the next. Not that there's anything wrong with him taking profits (and to the best of my knowledge, nobody on this thread ever suggested there was), and there's nothing wrong with him bailing out if his view of a stock changes, either.
But he's definitely contradicting his original assertion of 'buy and hold for 30 years, don't be a trader, etc etc)

He'll need to be real careful.....if he keeps taking profits and dumping the dogs, he could find himself doing what he and a few pals claim is impossible.....outperforming the market!

 

[cuttlefish]

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

Cuttlefish, thanks for spending hours searching through my posts.

haha - it didn't take hours they're all from this one thread

Anyway - I can't talk I make all sorts of decisions that I can't explain - but then again I don't put 10 posts saying one thing then do the exact opposite

anyway I've said my bit now.

 

[Realist]

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

He'll need to be real careful.....if he keeps taking profits and dumping the dogs, he could find himself doing what he and a few pals claim is impossible.....outperforming the market!

God forbid.

Anyway - I can't talk I make all sorts of decisions that I can't explain - but then again I don't put 10 posts saying one thing then do the exact opposite

anyway I've said my bit now.

Fair enough, at least I put my thoughts and my "trades" on here for all to see - warts and all. I could easily log on, and harp on about how great I am and tell everyone I bought PDN 3 years ago, ZFX last year and BHP 2 years ago and I know it all.

Maybe CDO will go up further or come up with some fantastic offer to its holders and I'll look and feel quite stupid, hopefully it'll drop back down - I'll look smart and maybe buy them again. Time will tell...

 

[bunyip]

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

Well I'll say one thing for you Realist...at least you have some sort of plan about how you'll go about creating your wealth. You change your mind to some extent, (don't we all at times) and your 'buy and hold for 30 years' philosophy is not quite as set in concrete as you were telling us a week ago. You've given us some good laughs but you're having a go, and that's more than a lot of people ever do in life.

I believe that the plan of buying quality companies, holding them for the long term, reinvesting the dividends, adding to the portfolio every year, is quite a sound wealth creation strategy, and one that will enable a person to build considerable wealth if he starts young enough, and has sufficient surplus income to allow him to constantly increase the size of his portfolio.

In fact I started out doing the same thing myself for the first couple of years, until Stan Weinstein put me wise to the advantages of finding the strongest sectors, and focusing on the outperforming stocks in those sectors.
After I started putting Stan's methodology into practice I found that outperforming the market, although not easy, is not as hard as everyone seems to think.

Every trader and investor needs to settle on a strategy/s that fits in with his life, suits his personality, and accommodates his long term objectives.
If your trading methodology achieves all of that, then all the best with it. I hope you achieve everything you aspire to.

Buyip

 

[BSD]

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

Out of interest Bunyip, on how many years outperformance are you basing your assumption that you can outperform the market?

2 years, 5 years, 20 years?

Also, what is the extent of the outperformance?
2%, 5%, 20%

What is the annualised volatility of your returns?
5%, 10%, 20%


I am not being critical.

I am making the point that you need to have such data to be able to have a level of confidence that it is your strategy and not the effect of randomness creating the outperformance.

 

[tech/a]

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

BSD

I would suspect that very few traders would have the sort of information you ask for beyond 10 yrs. If at all.
Even that small % that do are subject to Statistical Significance in their testing. Indeed their testing in itself. Particularly Fundamental theories.

If even a minority of people did have the evidence which you are asking for there wouldnt be threads like this one.

Discussion would be on an entirely different level.

P.S
With regard to the last question you asked me on this thread.
The answer is obvious which you knew anyway--hence my silence.

 

[BSD]

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

Well if we dont have such information, we are talking rubbish when we say we are beating the market.

Wasting our time...

I figured people running such mechanised systems based on statisical advantage would have spreadsheet showing their monthly balance? Or would at least be able to quantify their returns and risk. I dont want to see the data (i couldnt care less), I just would like to understand the basis for their claims.

Managing money for a living, I am always interested in new strategies. I get paid to do so - but I also need to understand where the performance is coming from.


My critisism throughout this thread started from and relates to the outlandish claims of people saying that beating the market relates to XYZ theory.

Whether it relates to a pretty chart or buying dog stocks and not selling, I don't think any of this stuff is actually significant enough to 'beat the market'.

Let alone easily.

As for this comment:

On the other hand young in experienced people are chest beating --look at me look at me I'm clever.
Experience---zippo it shows in the posting.
Again of no value.

As I will with kids who are simply wanna be's.


If I was one to be critical, I would say it is pretty funny coming from someone running a **** ************* through a four year bull market.

But I am not one to be critical.

 

[tech/a]

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

But I am not one to be critical.

Clearly a diplomat.

Managing money for a living, I am always interested in new strategies.

Nor am I one to comment on the pretentious arrogance of most *professional* Pundits who by majority can only dream of the successes of those who's money they are entrusted to manage.

Normally very well in a Bullmarket and poorly in most other conditions.

But Diplomacy is also one of my forte's

 

[saichuen]

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

i use both. i think it will probably be hard pressed to find anyone thay uses either one exclusively. that's just my guess.

that said, i tend to rely on fundamentals for selecting any potential stock and uses technical to trade it. however, this may not always be true and sometimes it is hard to keep one from the other when looking at a particular stock.

at the end of the day, what ever you have decided to use (likely both together), the end result you will be trying to achieve is almost certainly the same like anyone else. this is to make a profitable investment/trade.

 

[bunyip]

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

Out of interest Bunyip, on how many years outperformance are you basing your assumption that you can outperform the market?

2 years, 5 years, 20 years?

Also, what is the extent of the outperformance?
2%, 5%, 20%

What is the annualised volatility of your returns?
5%, 10%, 20%


I am not being critical.

I am making the point that you need to have such data to be able to have a level of confidence that it is your strategy and not the effect of randomness creating the outperformance.

Another barrage of questions eh....the underlying message of your post is that you want me to supply facts and figures to convince you of the validity of my approach.
I'll tell you the same as I told you in a previous post....I have no interest in trying to convince you. I don't really care what you think, in fact I hope you go on doing exactly what you're already doing.
To supply you with figures would be meaningless. You many never achieve the same figures yourself, even if you made a conscientious effort to learn and implement my approach. You might perform a lot better than me, or a lot worse.
When I sent in my original post to this thread and outlined my approach, you replied with a post that was scornfully dismissive. That one post showed me that you're one of those people with a closed mind who has difficulty thinking outside the square. You dismiss other people's ideas even though you've never tried them. You want others to supply you with answers but I doubt if you have what it takes to put in the hard yards and discover the answers for yourself.
You regard something as impossible to achieve, simply on the basis that you've never managed to achieve it yourself. If you can't outperform the market, then in your mind nobody else can do it either. You stick with the outdated theory that if it could be done, everyone would be doing it. Your attitude is very naive, to say the least.
No offence intended, but I really don't feel inclined to lift a finger to help someone like you.

But maybe I'm wrong - maybe you really do have what it takes. Maybe you really are prepared to put in the hard yards to learn a different way of investment that could boost your returns. Maybe you really are worth helping. If so, then I suggest you start with Weinstein's book which does an excellent job of explaining in clear language how to apply the concept of relative strength to find the outperforming sectors and the outperforming stocks in those sectors. Then you could read Frank Watkins book - he's another educator with the ability to explain simple, effective concepts and setups and show you how to incorporate them in your trading.
After that, you could spend a few quid and buy yourself some decent technical analysis software that can scan for the setups outlined by Weinstein and Watkins. Then you can spend the next 18 months looking at thousands of charts of stocks, futures and currencies going back 15 or 20 years, or preferably longer, and learning how to reconnise the setups, just like I did. Then you can spend another 6 to 12 months paper trading to see if you can make these concepts work for you.
And after you've done all that, then and only then might you be qualified to comment on whether or not the market can be beaten by using the approach I've outlined.

Do you have enough 'get up and go' to do all that? Most people don't. Judging from your attitude so far, I doubt if you're any exception.

Bunyip

 

[BSD]

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

.
I'll tell you the same as I told you in a previous post....I have no interest in trying to convince you. I don't really care what you think, in fact I hope you go on doing exactly what you're already doing.

You regard something as impossible to achieve, simply on the basis that you've never managed to achieve it yourself. If you can't outperform the market, then in your mind nobody else can do it either.

You stick with the outdated theory that if it could be done, everyone would be doing it. Your attitude is very naive, to say the least.

No offence intended, but I really don't feel inclined to lift a finger to help someone like you.

But maybe I'm wrong - maybe you really do have what it takes. Maybe you really are prepared to put in the hard yards to learn a different way of investment that could boost your returns.

And after you've done all that, then and only then might you be qualified to comment on whether or not the market can be beaten by using the approach I've outlined.

Do you have enough 'get up and go' to do all that? Most people don't. Judging from your attitude so far, I doubt if you're any exception.

Bunyip

Forget it mate, we are not on the same page.

You don't understand what I am getting at and seem to take personal offence.

I am personally chuffed with the performance of portfolios this year, but I am not stupid enough to believe the massive outperformance of my trading portfolio in the last year is anything but the result of randomness and taking a heap of risk.

Please dont insinuate you are in a distinctly learned position because you have read a couple of books off Amazon. You have no idea regarding how much I study, how much time i devote to markets/risk management and how many various strategies I have tested and monitored.

You will actually find the more you study, the more you realise you don't know.

But heck, ignorance is certainly helping you at this point, why change?

 

[tech/a]

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

is anything but the result of randomness and taking a heap of risk.

how much time I devote to markets/risk management

Ill take a guess---Not a lot.

Seriously though Bunyip its good to know the stats.
I honestly think BSD was passing comment rather than demanding proof.
Which in general I agree with most traders have no stats!

 

[BSD]

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

It isn't a contradiction, Tech, when you only apply 10%-20% of your investments to trading/punting.

It does become a problem, however, when the allocation does so-well it becomes 80% of your portfolio.

A quandary for both the fundie (it is still cheap), the techo (its going up), the portfolio manager (it is getting too risky) and the wifie (lets pay-off the house)!

 

[tech/a]

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

If you consider your trading results to be tantamount to Gambling then
I'll go with

the portfolio manager (it is getting too risky)

as

the wifie (lets pay-off the house)!

implies you could be within the majority when I refered to

can only dream of the successes of those who's money they are entrusted to manage.

Id go with

the wifie (lets pay-off the house)!

Absolutely no question

Theres also the availability of a drawdown facility once your gambling has been controlled.

 

[Realist]

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

Realist

Outlook is more important than historical performance

A perfect example is BlueScope Steel

Former market darling; earnings heaps of cash

Then u get zinc spot price increasing and iron ore price increasing and they are finished; and will not earn another NPAT of $1billion for a long, long time

Nizar, Bluescope is absolutely roaring along since I bought in March. Up alot today thanks to OneSteel taking over Smorgon.

I'll get a huge dividend in October as well.

 

[ghotib]

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

Hi Realist,

This is my stab at a summary of Graham investing:

At the heart of Ben Graham's philosophy is the unarguable fact that a stock represents a part share in a business. He then argues that the value of a share is directly linked to the value of the business, but that the price of a share when it's traded on the stock market is not necessarily the same as the value because many of the people who buy and sell stocks do assess the value on some other basis. He also argues that the value of a business is determined by assessing its probable future return on shareholder's equity, based on returns over past years and on opinions and projections about economic and other operating conditions.

At any given moment, the price of a share in a business might be less or more than it would be based on the value of the whole business, but over time (i.e. years) they tend to run together. Therefore a safe and profitable way to invest through the stock market is to buy shares in sound businesses when the price of a share is substantially below the value it represents for the entire business. The size of "substantial" is a margin of safety, because if the business continues to trade profitably for years its share price will return to and trend similarly to value.

Fair enough? Then here's where I'm confused:

When I read back through your posts, the only numbers I see are share prices. You've mentioned receiving dividends, but I don't recall anything about return on capital or return on equity. You've talked about price movements, but not about value movements (they tend to be slower and I don't know how long you've been at this; maybe they haven't changed in your investing lifetime, but you haven't said anything about looking at them). You've talked about buying undervalued stocks and selling stocks that are over value. What about companies that lose value as well as price after you buy them? Have you had any? (I have. HLD was one of my first buys and the only thing I did right with it was to take the loss) How did you identify them?

Remember the bit where Graham talks about giving the investor something to do? I laughed at loud at that: very sound psychology. It's really hard to stick with a plan when you can watch share price movements by the minute (even tho they're only a small part of the data for your investing system) and read Other People's Opinions 24 hours a day.

Anyway, I guess I'm asking you about the I Got It Wrong side of your investment plan. How often do you test your portfolio? If you find something wrong, how do you decide what to do? When prices go below what you paid, how confident are you in your assessment of value?

I'm certain sure that Ben Graham had answers for those questions. I'm getting towards them for some companies (small companies BTW; I find them much easier to understand than big Blue Chips). From this thread, I don't see that you've given them much thought at all.

Cheers,

Ghoti

 

[bunyip]

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

Forget it mate, we are not on the same page.

You don't understand what I am getting at and seem to take personal offence.

I am personally chuffed with the performance of portfolios this year, but I am not stupid enough to believe the massive outperformance of my trading portfolio in the last year is anything but the result of randomness and taking a heap of risk.

Please dont insinuate you are in a distinctly learned position because you have read a couple of books off Amazon. You have no idea regarding how much I study, how much time i devote to markets/risk management and how many various strategies I have tested and monitored.

You will actually find the more you study, the more you realise you don't know.

But heck, ignorance is certainly helping you at this point, why change?

That's right...........mate. We're not even on the same page. And unless you change pages you'll continue to believe that outperforming the market is impossible. Meanwhile, there'll be traders who'll keep doing it anyway.

For the record, I understand perfectly well what you're getting at. It's just that I don't feel obliged to supply you with details of my private business, for the purpose of answering your questions and providing the figures you're looking for. My business is private, not for disclosure on an internet forum. My choice. If you disagree with my choice, tough luck.

As for the rest of your post.....mostly claptrap and baseless assumptions.

 

[tech/a]

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

Sorry missed this

I figured people running such mechanised systems based on statisical advantage would have spreadsheet showing their monthly balance? Or would at least be able to quantify their returns and risk.

Bunyip may not choose to post his but some of mine has been public knowledge for 4 yrs on a weekly updated basis.

Knock yourself out.

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000029

 

[BSD]

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

Thanks Tech, I look forward to doing some numbers! I hope we all learn something.

From Reefcap:

Although you have registered, your registration has not yet been approved by our administrators. Thus, we can not give you access to the forums at this time. You will be notified by email as soon as your registration has been either approved or declined.
Thank you for your patience!

As for this:

If you consider your trading results to be tantamount to Gambling then
and
Theres also the availability of a drawdown facility once your gambling has been controlled

Maybe we should define what I determine punting?

Remember, I am a stats nerd.

From my figures (garnered from a very limited 3 years of stats) when I bet on League, Test Match Cricket and Poker (limit) - I have a positive expectancy of around 4% of turnover. This is good considering you can turn over a punting book multiple times per year if you have enough opportunities. (Sadly I dont)

I do not touch any games in which I am guaranteed to lose like poker machines, lotto or roulette. I stopped betting on horses after two years because my stats showed a loss in the vicinity of 6% of turnover. I have no interest in losing money for fun and I obviously didnt have enough time and contacts to succeed on the ponies.

You should see the daily graphs of my book - you might even be able to predict the success of my next five bets by drawing a few lines and proclaiming I have reached a "double chock-top with reverse pennant flags set to become a bull reversal" - but I fail to see how this will effect the Cowboys performance on the weekend.

The 'trading' portion of my share portfolio displays far greater volatility than my gambling book.

Do I still have a gambling problem in your view?


Despite this analysis, I still do not feel I have enough data to declare a statistical advantage in these pursuits.

Last year's League results stank and the Ashes punched a 15% hole in my book, but I prevail when viewed over a three year timeframe

You guys (I assume) have beaten the stockmarket over a couple of years and proclaim dominance.

I someone backs black on a roulette wheel five times in a row, are they smart?

Or did they just land a 32-1 shot?

My point remains a point of statistical proof and has nothing to do with tech versus fundamentals.

Please stop assuming things about my personal and professional life. You are very wrong on most accounts.

Then again, some think it is claptrap and baseless assumptions - but some people didnt finish high school, let alone study statistics

 

[Hopeful]

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

Back to the OP's oringinal Qn: As for myself, it's tech anal all the way. Looking at the funny mentals drives me nuts, there just too much to be considered for it to be viable. But I can look at a chart for less than a minute and determine if I should buy, short, or hold.

"The chart, ma'am, Just the chart".