Which one do you use? Technical or fundamental analysis?

[Julia]

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

Well, Condog, I'm really happy for you that you can regard WDC with such affection.

Personally, I'm in the share market to make money and have no interest holding onto a dog while I wait for it to actually start growing the SP.

Especially when there are plenty of sound, well managed companies out there with rising share prices and reasonable dividends. I simply find your position baffling.

But that's fine.

 

[chrislp]

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

Personally, I'm in the share market to make money and have no interest holding onto a dog while I wait for it to actually start growing the SP.

So true. If you have done that much theoretical work on a company you may best be served by spending some time on when the share price might reflect that "value" & keep your money elsewhere until then.

 

[nomore4s]

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

When you buy a stock like WDC you do not buy it to compare with the likes of JBH, MND, BHP or WOW....

LMAO. You're right you wouldn't compare it with those stocks because those stocks would have actually made you money.

It is a dog if your only considering share price...

 

[bunyip]

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

See my post above.

It is a dog if your only considering share price...

But consider it had Net profit of 5.58 Billion in 2007 and only 300M in 2009 with negative 2Bn in 2008.... Largely caused by write downs.... caused by fire sales of competitors properties.


When 2009's $300M profit bounces or climbs steadily back to 2007 levels of $5.6 B , this income is an increase of almost 2000%.... over any time frame that will look good.

What do you think the value of the stock might be.....

I agree in the short term its a dog.....but in the long term it would seem likely to be an incredible buy......

If one viewed the property sector as a slow moving titanic compared to the bust and boom of 09 on the equity markets, I think many people will look back and see Late 2009 / early 2010 as the chance of a life time on WDC......

Clearly not all commercial property will be as good.... but with WDC we are talking about many of the best managed centres in the best parts of the world, with the best tennants at unsustainable bargain basement prices....

OK Condog - you've come up with a host of fundamental reasons why WDC should perform well in the future, with a corresponding performance (perhaps) in its share price.
I don't disagree with you, although personally I wouldn't know as I don't study fundamentals. In fact I don't even trade stocks - I did for ten years or so, but I've phased out of stocks since discovering the currency market a few years back.
But in my stock trading days, I looked at current performance rather than possible future performance based on an assessment of the fundamentals.
My method, which incidentally was very profitable, was to find the strong sectors and the strong stocks in those sectors when the market was bullish.
And when the overall market was bearish, to find good shorting candidates in the weakest stocks in the weakest sectors.
For entry setups into these stocks I used simple technical analysis strategies such as buying after temporary retracements during bull markets, and shorting after temporary rallies during bear markets.
Basically, I used the same approach that's outlined in that video link I provided a couple of posts back.

It's a rare blue chip that puts in strong price performance while it has lousy fundamentals. If a blue chip stock is being bought up by eager investors who are pushing the price higher, you can in most cases correctly assume that these investors have studied the fundamentals and found them to be very positive.

While I have no doubt that your approach works over the longer term, and will more than likely work sooner or later with WDC if you were to buy it now, the problem I see with it is that sometimes your capital will be tied up for prolonged periods while your stock goes nowhere.
We've seen a good example of this happening with Realist's recommendation to buy WDC more than three years ago when it's price was almost 30% higher than it is today.
Like you, Realist came up with various reasons why WDC was a great buy back then. And yet, the stock has lost considerable ground over that three and a half years.
Certainly, the global meltdown is a big part of the reason. But the point is that while Realist has been waiting for the stock to come good, he's had his capital stranded in a non-performing stock instead of having it gainfully employed in the many stocks that would have given him several hundred percent profit over the same period.

In my 15 years of involvement in the financial markets I've met hundreds of traders and investors through organisations like the ATAA. Time and time again I've seen them sitting on a dead stock for months and sometimes years in the hope that it will come good and start making some decent price movement. The interesting part is that they can always come up with convincing fundamental reasons why it should come good.
Meantime, they miss out on harvesting big profits from performing stocks while their money is tied up in a dog.

I don't expect you to think the same way as me. I'm pleased that different people have different ways of investing in the market, as it's these different strategies that make the market what it is.
The primary reason any of us play the markets, whether it's stocks or Forex or whatever, is to make money. My view is that the most money is made by getting on stocks or currencies that are moving solidly right now, rather than looking for something that may move at some time in the future, and having your money tied up with little or no growth for prolonged periods if the expected price growth takes much longer to eventuate that you anticipated.

Thank you Condog, for your post. I enjoy discussing these issues - in fact our discussion has brought out the poet in me.
I wrote the following poem to summarise my thoughts about trading the market.

If bullish fundamentals cause
Upward stock price movement
Then surely all we need to do
To guarantee improvement
In our accounts, is find the stocks
With fundamentals glowing
This surely is the way to keep
Our money ever-growing


We'll look for value while they're cheap
It sounds so good in theory
And yet in practice, not so great
It gets a little dreary
To watch a stock stagnate for years
Against our expectations
It should be moving strongly up
Not causing us vexation

Their value's right - they must go up
Is nothing but conjecture
A better bet is look for stocks
That form the strongest sectors

"But fundamentals", you may say
"We really must examine
Otherwise we can't be sure
That we won't buy a lemon"

Well fair enough, but don't you think
That sectors which are climbing
Are full of stocks that shape up well
Their fundamentals shining?

A stock with fundamentals great
Can still spend years in slumber
I see no point in holding stocks
With unimpressive numbers

We're in the game to make some dough
To keep our money moving
We need to buy performance stocks
Whose value keeps improving

And when they stop
We sell them out
And find the next contender
In stocks and sectors climbing hard
We've no time for pretenders

For every stock that goes to sleep
For years, with little movement
A score of others offer us
Substantial price improvement
Our cash is put to better use
By feeding these strong movers
Than feeding dogs who've lost their bite
Why put our cash in losers?

 

[skyQuake]

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

Thank you bunyip for your insights. Interesting read.

Just like to add Keynes's quote

"Markets can remain irrational longer than you can remain solvent."

 

[Timmy]

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

Bunyip, great work with the poem. That deserves its own thread.

 

[bunyip]

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

Bunyip, great work with the poem. That deserves its own thread.

Thanks Tim. I'm an old poet from way back - written quite a few over the years.

 

[Out Too Soon]

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

Well done Bunyip Very well done

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

Do you cover one eye when you drive your car?
Do you use only one pedal when riding a bike?

Why not use all the tools at your disposal?

Technical analysis is a good way to find new stocks/ companies that you may not have been aware of & get in ahead of the crowd.
Finding new companies with good Fundamentals often means reading a report ie- the sheep are already aware of it.

TA is good for making entries & exits ie making a buck shorter term
FA is the retirement accumulation way of patiently building a nest egg.

Different strokes for different folks.

Personally I am much more dependant on TA because I don't have a steady income stream for investing long term but I never buy a share without checking the basic fundamentals.

 

[condog]

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

Hey Bunyip great arguments.....makes a lot of sense and I totally agree with your way of thinking about being stuck in dogs whil you could have the money working.....

It was challenged that WDC is a dog and it clearly is not.......Its a fantastic stock in a rut, currently massively oversold.....but oversold on a short term good reason....

Love your poetry......you have too much time...

 

[$20shoes]

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

Gees, just took a look at WDC's chart. It's clearly one of those buy and pass on to the grandkid type stocks. Just ranging for the last 6 years with a little bit of a run as the market peaked - mostly sideways and down. I don't care what the fundamentals are, the chart is sh!!te.

 

[skc]

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

Over what time period do you think WDC has 'proven to be a fantastic long term asset'?

I read Frank Lowy's biography and an early investment in Westfield has returned some staggering percent. Sorry I don't have the book and can't recall exactly, but it's a figure that is STAGGERING... if someone has access to that book please look it up.

So at some time in history WDC has proven to be a fantastic long term asset. But as the company has grown to a certain size the same growth rate cannot possibly be sustained.

 

[$20shoes]

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

I read Frank Lowy's biography and an early investment in Westfield has returned some staggering percent. Sorry I don't have the book and can't recall exactly, but it's a figure that is STAGGERING... if someone has access to that book please look it up.

So at some time in history WDC has proven to be a fantastic long term asset. But as the company has grown to a certain size the same growth rate cannot possibly be sustained.

It should be mandatory for Aussies to read his story...legend

Westfield Development Corporation
Ltd floated in September 1960. The issue was for 300 000
ordinary shares priced at 5/–, half of which was payable on
application, so raising £75 000, with a further £75 000
payable by January 1961. There was also an issue of 300 000
unsecured convertible notes at 5/– each. About 38 per cent of
the stock went to the public, 20 per cent went to Kent, with
Saunders and Lowy each owning half of the remaining 42 per
cent. The board comprised founding chairman Don Stephens,
Paul Kent, Saunders and Lowy.

-----------------------------------------------------------------

In the summer heat of early February 1969, Westfield’s directors
made an attractive offer to shareholders. As the company had just
experienced a 45 per cent jump in net profit for the half-year to
December 1968, they were offering a one-for-six issue to
shareholders.
Shareholders registered by the end of February were invited to
take up one new 50 cent share for every six shares held.

 

[condog]

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

Its to my pleasure that you LMOA , glad i could entertain you.....

Just hope i can return the favor ....... as Im cashing in the profits...

 

[Julia]

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

I read Frank Lowy's biography and an early investment in Westfield has returned some staggering percent. Sorry I don't have the book and can't recall exactly, but it's a figure that is STAGGERING... if someone has access to that book please look it up.

So at some time in history WDC has proven to be a fantastic long term asset. But as the company has grown to a certain size the same growth rate cannot possibly be sustained.

Well, I suppose there will be hundreds of companies which - in the vague terms above - could be considered to have provided staggering returns.

You don't give any indication of how many years "an early investment" indicates.
And "staggering" to some people would be thousands of % over a few years, but to others as little as 100% over ten years.
One person will say "I did really well out of XXX" when to another person that amount would be way below expectations.

And Westfield in its present form has only been around for five years.
Prior to that I had shares in its previous entity for a couple of years.
Sold them because they were doing nothing much and there was decent money to be made elsewhere.

If you're talking cradle to grave investing, then yes I suppose WDC like many other companies might be OK. But unless you can quote X% over X years, then I just don't find such a claim very meaningful.
I'm not trying to be obstructive or difficult: just wanting some clarification if the discussion is going to be useful.

 

[skc]

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

Well, I suppose there will be hundreds of companies which - in the vague terms above - could be considered to have provided staggering returns.

You don't give any indication of how many years "an early investment" indicates.
And "staggering" to some people would be thousands of % over a few years, but to others as little as 100% over ten years.
One person will say "I did really well out of XXX" when to another person that amount would be way below expectations.

And Westfield in its present form has only been around for five years.
Prior to that I had shares in its previous entity for a couple of years.
Sold them because they were doing nothing much and there was decent money to be made elsewhere.

If you're talking cradle to grave investing, then yes I suppose WDC like many other companies might be OK. But unless you can quote X% over X years, then I just don't find such a claim very meaningful.
I'm not trying to be obstructive or difficult: just wanting some clarification if the discussion is going to be useful.

I know it was a terrible example because I couldn't quote the exact figure. But it was staggering...

And by staggering I mean numbers that are comparable to people quoting $1 invested in Microsoft or Berkshire Hathaway type return... I will try to look up the book in our local library.

 

[awg]

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

I know it was a terrible example because I couldn't quote the exact figure. But it was staggering...

And by staggering I mean numbers that are comparable to people quoting $1 invested in Microsoft or Berkshire Hathaway type return... I will try to look up the book in our local library.

fwiw, just to help you out SKC, I believe the figure was about 42% annual compound growth with reinvestment, from inception, up until the change of entity some years ago.

Outperformed Berkshire, not sure about Microsoft,

Also fwiw, dont think they have compelling fundamentals from either a top down or bottom up perspective atm, although they may well be undervalued and offer reasonable income, so does Telstra.

They have also underperformed their sector recently, for which they account 38%

disclaimer: dont hold

 

[skc]

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

fwiw, just to help you out SKC, I believe the figure was about 42% annual compound growth with reinvestment, from inception, up until the change of entity some years ago.

Outperformed Berkshire, not sure about Microsoft,

Also fwiw, dont think they have compelling fundamentals from either a top down or bottom up perspective atm, although they may well be undervalued and offer reasonable income, so does Telstra.

They have also underperformed their sector recently, for which they account 38%

disclaimer: dont hold

Thank you awg.

Found the real answer here... http://westfield.com/corporate/pdf/history/chapter2.pdf Top left corner of page 6.

Anyone who invested $500 (actually pounds in those days) in 1960, reinvested for 40 years, would by 2000 made $109m. That's 36% compounded annual return.

It fits my definition of staggering.

Anyhow... enough of history lessons. I doubt WDC in it's current form has the same growth profile. The trick is finding the next Westfield... and my guess is only fundamental analysis can do that.

 

[condog]

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

Mature businesses will never grow at the rates from its infancy..... The simple reason is they are to big and have too many parts of the business to keep ticking and growing organically .....

The second reason is often managment of mature companies gets lazy and becomes acquisitive buying existing businesses at market rates plus premiums..... and although they may find ways to increase ROE, they ultimately can never get the ROE's accross the entire business that they attained in there early years....when they where successfully growing a new concept or capturing rapid market share in under-competitive markets...

 

[lukeaye]

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

Thank you awg.

Found the real answer here... http://westfield.com/corporate/pdf/history/chapter2.pdf Top left corner of page 6.

Anyone who invested $500 (actually pounds in those days) in 1960, reinvested for 40 years, would by 2000 made $109m. That's 36% compounded annual return.

It fits my definition of staggering.

Anyhow... enough of history lessons. I doubt WDC in it's current form has the same growth profile. The trick is finding the next Westfield... and my guess is only fundamental analysis can do that.

Can i just say **** ME. That is an amazing example. I think you would find the problem these days is people are interested in what can happen in 2 days not 40 years. But man o man, what an investment.

I am not schooled in fundamentals. I wonder how easy/hard it is to pick up on something like that. I imagine it would take alot of research and following the companies in speculation on there progress.

 

[alphaman]

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

I doubt WDC in it's current form has the same growth profile.

What was WDC's ASX code before it merged with its trusts? Was it WSF?