Which one do you use? Technical or fundamental analysis?

[Realist]

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

Wayne,

How would you suggest someone starts to get into trading then?

What should be the steps...

Books?
Seminars? (or save your money and stay away)
Set up a commsec account?
Free evaluations of Ezytrade or whatever it's called?
Buy a few shares magazines and study teh paper, internet etc.
Create a plan and backtest it?
Paper trade for a while?
Then trade with small amounts on what you perceive to be "certain" trades?
Learn from your success and mistakes?
Constantly improve your plan and methodology?


I don't know, I'm just guessing, is that about right?

 

[wayneL]

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

Serious question. Does that manufacturing plant still exist Wayne?

Or has it closed down, because it is cheaper to import the goods from China than manufacture them here?

Their costs would be much lower of course.

High overheads will get you eventually.

Sold it when Messrs. Hawke & Keating (may their chooks turn to emus and kick their dunny down ) started (un)levelling the playing field.

Import duty was slashed on finished product, yet was maintained on imported raw material, much of which is NOT available in OZ... The gummint ensured we were at a severe DISadvantage. At that point the exit strategy was triggered. It is still going but at a much smaller level and greatly metamorphosized.

The chinese et al were (and still are) incapable of reproducing our quality, however the imported cr@p does set a price point and the gap became too great to justify in the minds of many consumers.

 

[wayneL]

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

Wayne,

How would you suggest someone starts to get into trading then?

What should be the steps...

Books?
Seminars? (or save your money and stay away)
Set up a commsec account?
Free evaluations of Ezytrade or whatever it's called?
Buy a few shares magazines and study teh paper, internet etc.
Create a plan and backtest it?
Paper trade for a while?
Then trade with small amounts on what you perceive to be "certain" trades?
Learn from your success and mistakes?
Constantly improve your plan and methodology?


I don't know, I'm just guessing, is that about right?

Nicks book/course would set anyone on the right track IMO.

In addition, "some" of the above, being very careful to avoid hype... and treat mags, newspapers as highly suspect; they are only journalists for the most part. One must have a functioning BS meter

Tech/A and others have some fantastic material on this site on precisely this subject, that go into great depth... my little corner is derivatives mainly, so others have better answers there.

Cheers

 

[professor_frink]

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

One happy punter is single mum Cydney O'Sullivan, who started out developing property, but found it was too hard to make money - and to keep it, when she did.
"I decided to try share traing and I absolutely loved it", said the Kenthurst resident, who makes about 100 trades a month on E*Trade.
If you are a successful trader, the tax system is quite geared towards investors. You can keep more of the money you make," she said.
"In business, or in being a real estate investor...it's very difficult to make a profit"

The first three words of that article pretty well sum it up.

 

[cuttlefish]

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

Most follow brokers and analysts opinions thoough.

I was originally going to elaborate a little on what I meant by fundamental investing in the post this was in response to, but I took it as a given that when I meant a fundamentals based approach I didn't mean following broker and analyst opinions.

This debates starting to annoy me - both approaches have merit and can be combined succesfully. I really don't understand the level of animosity from one side to the other.

I think Realists inconsistent and shifting presentation of the fundamental side of the debate, as well as his lack of understanding of the technical approach is probably part of the cause of the frustration.

Realist - you mentioned Commonwealth Bank as solid and not going anywhere - so I assume you don't remember what happened to Westpac in the late 80's/early 90's.

You may also recall an incident with NAB where some 'rogue' traders not too long ago lost several hundred million dollars trading - lucky for NAB it wasn't more.

Remember a very old and reliable British bank called Barings - they were founded in 1762 - solid as granite - err woops.

No company is a guaranteed safe investment. No business is guaranteed to be around for 30 years. No brand is invincible.

I'm out of this debate, we're going around in circles so much I'm getting dizzy.

 

[Magdoran]

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

Seeing as this is sitting in the beginners' thread, can I ask what if for argument's sake we say that technical analysis provides the greater returns, but the investor is not confident/competent enough to use it and is happy with the returns from some solid research and a more conservative buy-and-hold strategy that produces good dividends but a slower capital growth. Isn't it better to be in the market in this capacity than not at all?

Would I, for example, be foolish to gear into some blue chip stocks, watch the market to the best of my ability, make a few mistakes along the way but hopefully come out on top in the end; or, if this is the limit of my current abilities, salary sacrifice into super with the knowledge someone else has the expertise to make it work? Although the second option doesn't sound as much fun.

Hello dallee,

The comment below may address some of the points raised in your question:

Wayne,

How would you suggest someone starts to get into trading then?

What should be the steps...

Books?
Seminars? (or save your money and stay away)
Set up a commsec account?
Free evaluations of Ezytrade or whatever it's called?
Buy a few shares magazines and study teh paper, internet etc.
Create a plan and backtest it?
Paper trade for a while?
Then trade with small amounts on what you perceive to be "certain" trades?
Learn from your success and mistakes?
Constantly improve your plan and methodology?


I don't know, I'm just guessing, is that about right?

Now this is actually quite a good question…

The answer to some extent is yes – but each answer really depends on the individual. It is actually quite difficult to learn effective trading methods since there is such a diversity of approaches and there are so many variables, both in materials/approaches/concepts/systems, not to mention the uniqueness of each individual.

Basically the idea is to study as much as you can with an open, but discerning mind. Trading is like obtaining a medical degree to become a neurosurgeon. There are 4 key aspects to it –

• Psychology, (e.g. Douglas’ “Trading in the Zone”)
• Analysis (fundamental/technical/other),
• Strategy (which market, which instrument, hedged or not, diversified etc…), and
• System (when to enter, when to exit, and all the rules for locating and executing market decisions - like trading plans).

This site is full of alternative approaches. Probably the best way for a new trader to start is cautiously look at the styles that seem emotionally the most attractive and comfortable, and start there. Especially start in areas you have some existing knowledge, and incrementally bolt on new concepts.

Sure, paper trading is a good idea initially, then very small positions since trading with real money is nothing like paper trading. In all trading approaches, looking back to examine the past history in markets is worthwhile to help to formulate approaches for the future. As you can see though from the diversity of approaches on this thread, let alone this site, that there are many roads to choose from, each with their virtues and drawbacks.

The key is to develop your own style that you understand and are comfortable with. Trade your own knowledge, and be prepared to accept that mistakes are part of doing business. It is the capacity to learn from these mistakes and grow and improve that separates the amateurs from the professionals.


Regards


Magdoran

 

[Joe Blow]

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

The first three words of that article pretty well sum it up.

Yes, but how long will she be a 'happy' punter I wonder.

 

[professor_frink]

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

Yes, but how long will she be a 'happy' punter I wonder.

If this happy punter couldn't make any money out of property in recent years, then you wouldn't expect her to do much better in the sharemarket

Here's the whole story-
full article

The whole article is pretty scary!

A WHOPPING 145,000 Australians have set up share trading accounts in the past year, the highest number since the dot-com boom.

Of these, 91,000 had never traded a share before.

I wonder what kind of shares they are buying
I reckon the end result will be pretty similar to the tech boom as well!!!!

 

[Porper]

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

Nicks book/course would set anyone on the right track IMO.

Tech/A and others have some fantastic material on this site on precisely this subject, that go into great depth... my little corner is derivatives mainly, so others have better answers there.

Cheers

I totally agree.The course by Nick Radge is excellent for the beginner or intermediate i.m.o.

His book is even better, and the Chartist better still.There is good advice to be found on ASF, but it is mixed in with some garbage, some of the comments on this thread prove that.

It depends how serious we want to be.We can either play at it or treat it very seriously, whether that be as a fundamentalist or in a technical capacity.

 

[wayneL]

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

Of these, 91,000 had never traded a share before.

Oh My!!!

The top is in folks!

 

[Joe Blow]

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

Oh My!!!

The top is in folks!

Wayne, we better batten down the hatches. Sounds like we're gonna have an influx of newbies. Or maybe they're already out there... lurking. Mwahahaahahahahaha!

 

[professor_frink]

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

Oh My!!!

The top is in folks!

We may have a little bit more to run, Realist mentioned the article was on page 20 or 25, when this kind of story makes it into the first 5 pages then we'll have to look out!! In the meantime, all these newbies should add plenty liquidity to the 'speccie' end of the resource market.

Wonder how many of them were buying AUM as an "investment" last week

 

[Realist]

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

Oh My!!!

The top is in folks!

Indeed.

When single mums and 91,000 other completly new punters jump in and some of them start trading over 100 times a month it is time to be extra careful.

I read that article and thought oh boy I better be carefull, I'll sit and watch for a while (not sell) and buying property is sounding better all the time.

If punters are leaving property to "invest" I should do the opposite.

Will the next significant downturn in the ASX be the signal to buy proprty do you think? Punters will no doubt follow later once they've been stung sufficiently trading.

 

[Realist]

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

No company is a guaranteed safe investment. No business is guaranteed to be around for 30 years. No brand is invincible.

I know, I know. Hence why I diversify.

But jees if the CBA aint safe I do not know what is.

The sun may not come up tomorrow, and the CBA may go under overnight - both are quite unlikely though.

The very fact Westpac, NAB and Barings had 'issues' makes the CBA that little bit safer in my opinion. Once bitten, twice shy.

 

[Realist]

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

"In business, or in being a real estate investor...it's very difficult to make a profit"

This is a great comment as well.

She may as well have said -

"It is extremely easy to make lots of money on the sharemarket, everybody can be rich"

 

[cuttlefish]

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

Wonder how many of them were buying AUM as an "investment" last week

ok there were plenty of punters jumping into AUM last week that didn't have a clue, and there will be plenty more jumping in and out of it as well, but I'm curious:

how many TA's on here went with the breakout and rode it till trailing stops got hit?

how many FA's, due to the attention it was receiving, had a stab at putting a valuation on it based on the reserve estimates/grade, even if just out of curiousity?

 

[wayneL]

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

Indeed.

When single mums and 91,000 other completly new punters jump in and some of them start trading over 100 times a month it is time to be extra careful.

I read that article and thought oh boy I better be carefull, I'll sit and watch for a while (not sell) and buying property is sounding better all the time.

If punters are leaving property to "invest" I should do the opposite.

Will the next significant downturn in the ASX be the signal to buy proprty do you think? Punters will no doubt follow later once they've been stung sufficiently trading.

I'm waiting for the capitulation selloff in property before I go anywhere near it. If there is one area where I believe in "Buffettology" is property.

Buy value!

We are a freakin' long way from anything that even resembles value in the property market IMO( the res. market anyway) !

 

[Realist]

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

I'm waiting for the capitulation selloff in property before I go anywhere near it. If there is one area where I believe in "Buffettology" is property.

Buy value!

We are a freakin' long way from anything that even resembles value in the property market IMO( the res. market anyway) !

Well, I can't see a capitulation happening in the near future.

The Aussie economy is doing well, recent tax cuts are fairly significant, and we've had falling house prices for the past 3 years (in Sydney), along with rising rents.

Residential poperty in Sydney is getting closer to fair value I think.

Another 5% fall in Sydney over the next year, a 0.5% increase in interest rates, and a 10% rise in rents to me would signal an opportunity to look to buy again.

You of course would want to be fussy and bargain damn hard to get a good deal.

 

[wayneL]

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

Well, I can't see a capitulation happening in the near future.

The Aussie economy is doing well, recent tax cuts are fairly significant, and we've had falling house prices for the past 3 years (in Sydney), along with rising rents.

Residential poperty in Sydney is getting closer to fair value I think.

Another 5% fall in Sydney over the next year, a 0.5% increase in interest rates, and a 10% rise in rents to me would signal an opportunity to look to buy again.

You of course would want to be fussy and bargain damn hard to get a good deal.

What do you perceive as fair value... how would you quantify that?

 

[cuttlefish]

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

If you're a hard core counter cyclical you wouldn't buy property until it was neutrally or positively geared. And let me laugh when someone pipes up and say's that couldn't happen in the Sydney market ... they'd be the same ones that five years ago were saying property never goes down.

That being said, there's always that old saying - "whens the best time to buy property? .... now!". And the expression 'safe as houses' didn't come about for nothing either lol