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Fat Prophets - opinions?

Discussion in 'Trading/Investing Resources' started by Mega, Aug 12, 2004.

  1. captain black

    captain black

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    :iagree:

    I noticed that these 2 posts above are your first 2 posts here Bunyip. All I can say is keep it up, great deal of common ("uncommon" ;)) sense.
     
  2. RichKid

    RichKid PlanYourTrade > TradeYourPlan

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    Yes, I agree, great posts, and very clear too, keep it up Bunyip!
     
  3. RichKid

    RichKid PlanYourTrade > TradeYourPlan

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    just as an aside It's important to note (imho) the ones that go bust as they do count, that's the ultimate bottom dweller imho. Thanks for the stats!
     
  4. Julia

    Julia In Memoriam

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    Hello Bunyip,

    Well, aren't you a breath of fresh air! What basic common sense. Hope you stay with us.

    It will be interesting to see if your oh so sensible post meets with opposition from those who feel they have to justify their decisions with vast amounts of complicated TA or detailed reading of every last word in a company report.

    Thanks and good wishes.

    Julia
     
  5. michael_selway

    michael_selway Coal & Phosphate, thats it!

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    hehe nice, u forgot current and forwad P/E, EPS, and forecast EPS.

    Eg NCM had a great trend until the results came out recently.

    Basically the P/E wasnt justifyable at current prices.

    If u used "trend analysis" u may have lost some money. But it may do well in the future if Gold prices continue to climb.

    [​IMG]

    thx

    MS
     
  6. wayneL

    wayneL Rotaredom

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    we getting a bit:topic ....but regarding NCM.... err... we were speaking of trends, yes?

    Taking a few step back and having a look at the big picture, we've only really gotten back to the mean of the trend. We can afford to go all the way down to $16 and still be "in the trend"

    Thats if we're looking at that time frame :eek:

    But for the mercenary ST trader, NCM could be offereing a "buying opportunity" (GAWD I HATE THAT OVERUSED CLICHE') at the lower extremities of the regression channel. That's if POG still wants to boogey.

    :2twocents
     

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  7. bunyip

    bunyip

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    Michael has stated......."if u used "trend analysis" u may have lost some money."

    ................................................................................................

    On the contrary, the competent trend trader could have nailed a nice 23% to 25% profit from NCM between early November and mid January or mid February, (depending on which exit strategy was used) and then dumped the stock before the rot set in.
    Here's a trend trader's perspective on how NCM could have been traded.

    On 25/10/05 NCM bottomed out at $16.86, then began a new uptrend on the daily chart. This brought the daily trend into harmony with the weekly trend, which was already up. One thing I've learned about trading trends is that you go a long way towards stacking the odds in your favour if you trade when both daily and weekly trends are heading in the same direction.
    NCM ran up 16.6% over the next couple of weeks before a bout of profit taking caused a pullback that wiped 5% off the stock over the next few days, creating a perfect buy setup, but NOT a buy signal. The actual buy signal was given at around $19.35 on Nov 14th once the pullback ended and the uptrend resumed.

    How to manage the trade from then on?........
    1. Place a stop loss order to ensure that your trading account doesn't suffer major damage if the trade doesn't work out as expected.
    2. Move your stop to break even as soon as your open profit equals twice your initial risk.
    3. Trail your stop progressively higher to lock in profit as it accrues.
    4. Let your trailing stop take you out of the trade when the trend has run it's course.

    How to trail your stop?
    I'm yet to discover the perfect strategy for trailing the stop. There are however a number of techniques that work quite well. Trend lines are one of them......draw a line under the price action, make sure this line connects at least three troughs, move your stop up to within a couple of percent of the price action if the trend line is breached.
    On the NCM daily chart the trend line connects the troughs that occured on Oct 25, Dec 16, and Jan 30.
    This trend line was breached when price traded below it on Feb 13. The breach of the trend line was a warning that the trend was getting weary and might be about to end. In which case, the prudent action was to raise the stop loss to within a couple of percent of the current price. This would have resulted in your stop taking you out of the trade at a touch below $24.
    Profit - 23% in 3 months.

    An alternative trailing stop strategy would be to move the stop up to just under the troughs of Dec 1, Dec 16, and Jan 6. This would have resulted in an exit a month earlier and at a slighlty better price.
    Profit - 25% in 2 months.

    In mid February when the trend line was breached and the stock was making lower peaks and lower troughs, it told us that the many thousands of investors who researched this stock had found reasons to doubt that it had further upside potential.
    I don't know or care what these reasons were......as a trend trader I don't need to concern myself with specific details of the reasons behind every move in a stock or market. I can't make any money out of reasons, but I can definitely make money out of trends. Therefore the most productive use of my time is to analyse trends, not the reasons behind the trends.
    I couldn't care less about PE's or projected PE's or earnings forecasts or new pipeline deals or new gas discoveries or any of that stuff that you fundamentalists spend so much of your time researching. Sure the fundamentals are important and they have a big bearing on the behaviour of the stock. But why should I spend one minute of my time researching the fundamentals when thousands of you have already done the research for me. To get a summary of what your fundamental reseach has told you I can simply look at the chart.

    If the consensus opinion among you is that the stock has brilliant fundamentals, chances are that you'll all be piling into it and pushing it higher and higher. And I'll just wait for a bit of a dip in the price action, then I'll climb aboard and go for a ride. At the same time I'll place a stop loss so that my worst case scenario is a small loss if the trade doesn't go as planned

    If the consensus opinion of your research is that a company has awful fundamentals, (e.g. AMP a few years back) then you'll all be dumping the stock like its got the plague, causing it to downtrend. Some of the more switched on traders among you may even be selling it short or buying put options so you can profit from the declining prices.
    As a trend trader I'll have many opportunities to sell the stock short each time it puts in a brief rally against the downtrend.

    If your research finds that the stock has mediocre fundamentals, then chances are that you and all the other fundamentalists won't have much interest in it, and your lack of interest will be reflected by the stock drifting sideways on the chart.
    As a trend trader I'll leave that stock alone because it won't interest me either - I'm only interested in those that are trending strongly either up or down.

    Regardless of whether we use fundamental analysis or technical analysis, we're all trend riders by virtue of the fact that we want our stocks to trend strongly in the right direction, and we want to ride that trend at least until we make a decent profit.....we want to be trend riders.
    Considering that nearly all of us want to be trend riders, it seems only logical that we should put our efforts into studying trends, rather than what causes the trends, or what might cause them in future.

    By studying trends you learn......
    *How to recognise them as they're beginning.
    *How to guage their strength so you trade only in the strongest trends.
    *How to identify simple entry setups so you can safely enter the trend.
    *How to limit your loss if the trend fizzles out shortly after you enter.
    *How to progressively lock in your profit as the trend moves in your favour.

    And perhaps most important of all, you learn to recognise when there is no trend in place. This enables you to avoid stocks that are drifting aimlessly, going nowhere. Its these sort of stocks that tie up your capital for months at a time, costing you money not only in holding costs, but worse still, in lost opportunity costs.
    Kerosam said earlier in this thread that he bought GGN for 33c on the recommendation of Fat Profits, then sat in it for 2 months before it went his way.
    I'd have a lot more respect for Fat Profits if they'd recommended GGN as a buy on 28/11/05 as it came out of a pullback a couple of weeks after beginning a new uptrend.
    This buy signal was, incidentally, one of the simple setups you can learn in about 10 minutes from "Dave Landry On Swing Trading", and his other book "Dave Landry's 10 Best Swing Trading Patterns And Strategies".
    Buying GGN on Nov 28th at around 35 as the stock powered upward would have been a far better strategy than buying it months ealier at 33 and tying up money in a non performing stock.....money that could have been put to better use by investing it in a strong trender.
    Be assured that I'm in no way meaning to criticise Kerosam here - I'm simply pointing out how simple trend analysis could have could have enabled him to avoid the pitfalls of tying up his money in a non performer for months at a time, and how it could have given him an entry at the perfect time just when the stock was taking off.
    The lost opportunity cost of buying stocks that are going nowhere is enormous. In this business its critically important to have your investments performing strongly for you, and if they're not, then quit the trade and redeploy your capital in a more productive stock.
    As U.S. billionaire Donald Trump said....."Limit the downside - the upside will take care of itself".

    I'm strongly opposed to Fat Profits and other newsletters that put you into stocks that are directionless, or worse still falling, and they tell you nothing about how to control losses.
    The money spent on newsletter subscriptions could be better utilised on some decent books that teach you how to recognise the setups for yourself. And on some decent charting software to help you more efficiently operate your trading business.
    The temptation is strong to try to cut trading costs by using free chartng software such as that offered by online brokers like Comsec or Westpac.
    I think this is false economy. Could your free software run a scan to find that perfect buy setup on GGN in late November?
    If not, then maybe you need to consider how much this 'free' software is costing you in lost opportunities. This trade could have yielded you a profit of well over 50% in just over two months if you knew how to ride trends. A 50% profit on a trade of just 3 or 4 grand would have more than paid for decent charting software and a couple of good trading books. This would have been money better spent than a subscription to a trading newsletter written by people who are happy to recommend stocks that are downtrending.

    If anyone is wondering if I got on that NCM trade - no I didn't.....although I'm an Australian living in Australia, I don't trade the Australian market.
    But I do get on many others just like NCM. My objective as a trend trader is to take bites out of strong trends, and just keep repeating the process over and over again, trend after trend after trend.
    Sometimes the market bites me back, but by using stops loss orders and strict money management I ensure that I only get nipped rather than seriously bitten.

    Bunyip
     
  8. voigtstr

    voigtstr

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    Fat Prophets

    I'm thinking about subscribing to pat prophets to assist with selecting stocks to invest in. What are the pros and cons (apart from the initial outlay obviously).

    Cheers
    Simon
     
  9. disarray

    disarray

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    i am close to wrapping up my first year with fat prophets on their general advice (ie. not mining). i initially went with them because a piece of their free advice in the sunday telegraph performed well and this was my first toe into the waters of investing.

    12 months later i am unimpressed and i won't be renewing. the advice i have received on this board has been far better than some of the rubbish fat prophets have offered up. the continue to harp on about how they are awesome contrarians and all you have to do if you are mired in some of their bad advice is to just buy more and await the turnaround (ala NEM). then they put sell advice on stocks that have not had their fundamentals change and continue to increase in value.

    i am also extremely unimpressed with the fact their mining section is seperate from their general stock section, were they combined for the same price then i might consider it more reasonable but as it is i think their general offering is lousy. maybe their mining offering is better but seriously, if you couldn't make money on the commodities boom you don't belong in the market in the first place.

    i am also noticing a bias creeping into their advice so as far as i am concerned they are no longer trustworthy. i am getting a vibe some of their recommendations totally ignore both fundamental and technical analysis to the contrary and instead they are more interested in pushing their products and by extension other pies that they have their fingers in.

    if you are a new investor, looking for long term holds (which means you will ignore all the rest of their advice after the initial piece) then maybe they are a reasonable introduction to the market based on their fundamental analysis. if however you have found this board, are willing to do a bit of reading on how to understand charts, then you can do a better job yourself.

    should you wish to join then i think their mining section advice is probably better to take advantage of the commodities boom, but after a bit of t/a study and reading threads on this board you'll be able to figure it out yourself and probably do a better job. but if you do join, at least its a tax deduction.
     
  10. voigtstr

    voigtstr

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    I'm planning on investing 2k every month or two months (depending on shift penalties at work). I figure I'll get to act on at least some of their "buy" recommendations.

    How many buy recommendations were there per month by the way?

    Were the recommendations practical? ie was it like buy at $xx.xx when the price was already $xx.xx + $yy.yy?

    Cheers
    Simon
     
  11. explod

    explod explod

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    Yes my experience was similar, prescribed for three years and have been out two years now. Continued to watch recommended stocks trend down. I also had the Mining Subscription in unison for 12 months with similar results.

    I changed for the better when I picked up a very good text on tend following, had already been through tech analysis and that learning combined has made all the difference.

    I now hold a small porfolio, never more than five stocks, and I study the bejesus out of them before I take on board and then watch them like a hawk. You cannot do that with a lot of stocks, and I put in at least 30 hours a week, 20 of that during trading time.

    I follow the hottest trends and fundamentals in the product, the market and the stock. And any doubt at all and I get out. A good trender though eg AVO would stay put unless it was to fall in two days below the trading channel. Some say Trading Range or similar.

    Learn to do your own thing, but dont' do it at all till you feel certain in your own mind. Anyone elses opinion is risky (that's the Warren Buffet way) And if you have not read some of him you should not be in the business

    Anyway, just my slant and I'm not perfect by any stretch
     
  12. disarray

    disarray

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    they release a newsletter with about 5 - 6 items on it. maybe a piece about the state of a bit of the economy (and credit given here, their analysis is insightful) and 4 or so stocks that are on high rotation. maybe a new stock will be entered into the portfolio from time to time. you can sign up for a free copy of their newsletter to see what its like (and if you're going to the that sign up for the chartist newsletter as well).

    they were pretty slow to spot a trend imo. they would set usually say around when to buy / sell but it was usually too late.

    coincidentally AVO is what introduced me to them. bought my first parcel at 73c based on their sunday telegraph piece and i watched with excitement as it grew. i went and signed up but unfortunately didn't know about mining being seperate so that was a negative from the outset.

    i found out later from my rep that they had a sell recommendation on it in the $1 - teens. i continue to hold and accumulate.

    another good point - my rep was pretty good. he would ring every now and then to check up on me and he didn't attempt to sell any more products (unlike some of the other brokers / commodities traders i have enquired about) and he would give me info on AVO even though it was in mining. that is a tick for them.

    as always i'm not an advisor, do your own research, follow your own path, take responsibility for your own destiny etc. etc.
     
  13. Miner

    Miner

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    My experience with Fat Prophets is not good.
    They push very hard to sell and bragging master.
    The sale reps are intimidating.
    Point is to recommend Blue Chips you do not need to pay $995 for a newsletter. They do not brag when their recomm fail.
    So do your own research and ASF forum is one of the best.

    Regards
     
  14. beatrice

    beatrice

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    My expierience with Fat Prophets is similar to others. I can truly say that there is more insightful information on ASF.
    I did have a win on their initial Bannerman recommendation. Bought at .68 sold at $2.00 and got my wife a new Raymond Weil watch on signing up.

    ( I think the brownie points for the watch were a bigger win than Bannerman!)

    I also agree that the extra subscription for the mining report was a waste of money.

    As Bunyip says, watch the trends, look at the charts and research, research,research.

    To all ASFers, keep up the good work.
     
  15. voigtstr

    voigtstr

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    I was planning on the one year sub for both the regular stocks and the mining stocks, so there is no surprise re the mining stocks being separate. What would they be trying to upsell me on top of that? I dont really need a watch (got a nice little Seiko perpetual caledar a few years back and I'll treat myself to a Rolex when I turn 50)

    The main reason for signing up is to be made aware of companies that otherwise wouldnt have been aware of (eg Paladin, if I hadnt seen it on one of their sample sheets)
     
  16. Nick Radge

    Nick Radge

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    voigtstr,
    One of the main reasons I visit ASF is because it alerts me to stocks that I wouldn't normally look at. I come here to see what stocks people are talking about then I go away and look at the charts to see if anything suits me.

    My 2c...

    Nick
     
  17. Nicks

    Nicks

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    Fat Prohpets - be careful of their great promises, like many others whom emerg promising so much on the stock market (Optionetics anyone??).

    Quote Fat Prophets newsletters:
    "Hurry - rush me without delay the name this Chinese gold miner, and ALL 16 current Fat Prophets Report buy recommendations so that I can start on the road to stock market riches. I understand I'll also save almost $400 off the usual price, an offer that may never be repeated.
    Start Now"


    hmmm starting on the road to riches just by signing up. It will certainly make Fat Prophets rich.

    and marketing tactics like this to appeal to novices:

    "Take a look at the next three examples, all stocks which we've previously recommended as buys to our Fat Prophets Australasian Report and Mining & Resources Report Members…

    QBE Insurance - up 600%*, not including dividends

    Terramin Australia - up 540%*

    SP Telemedia* - down 45%*

    (Based on prices taken on 3rd September 2007)

    Whoops. So we got one wrong… so far at least. As we said earlier, our stock recommendations are not perfect.

    But, critically, as you can see from the above small example, the gains far outweigh the losses."


    So novice John Doe thinks he is smart and says, hey they are being honest and admitting losses, but I can see that their gains far outweigh the losses, so i'd still be very smart to sign up, they cant be dodgy if they admit the truth when they make losses. Remember, these are only selective examples they are quoting. You dont hear much about their stock picks with massive losses. Notice how they selectively pick 2 stock with 100s % gains and one with 45 % loss.

    I find FAT PROHPETS are VERY selectiive in what they claim of their success, and very cunning at spruking their product. For example I read their newsletter this week and it raved on something to the words of how they recommended PDN which has traded over $10, and at that price their members would have been sitting on a 900% gain or something.
    It is misleading in my opinion to quote high points on potential gains one could have had, as they are quoting a shares high point for 'what you could have had' if you were with Fat Prophets. Its easy to focus on the shares high point when raving about how much you would have made, not the low point on how much you could have lost! For example, I wouldnt have liked to be one whom bought PDN at $10 now.

    For the amount of money I would have had for all my shares high points... I could have had Warren Buffet and Gordon Gecko around for a dinner party.

    AVOID things that always spruik themselves as fantastic and focus on select examples.

    Stick to ASF!
     
  18. Julia

    Julia In Memoriam

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    Nicks,
    Do they give the buy dates of those quoted success stories, e.g. QBE?
     
  19. kgee

    kgee

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    After Gavin Wendt ? Put out a mid week bulletin to its members to hold BMO and 2 days later BMO goes down the toilet.....well I don't spose they like being reminded of that call
     
  20. Nicks

    Nicks

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    Hi Julia, not in the newsletter they dont.
     
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