Which one do you use? Technical or fundamental analysis?

Realist · 17 June 2006

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

Buying and holding undervalued but good companies, with good management, and retaining that management to manage the business as they always have, seems to be more aligned with his strategy.

YEP.

You are correct.

Realist · 17 June 2006

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

You could have easily outperformed the All Ords if you'd only bought stocks that were outperforming the All Ords, and you'd hung on to them only as long as they continued outperforming.

I might try this at the horse track.

Bet on the horse that is winning the race and change my bet if another horse takes the lead.

I'd never lose!!

tech/a · 17 June 2006

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

BSD said:
Ho Ho, I hope nobody paid for that 'advice'.

I will put my 2 cents into this discussion later, but Icouldnt help but laugh reading this.

Well its easy to judge and have a laugh when you havent experienced EXACTLY wht the guys talking about.

I HAVE---I DO

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

Ive been trading like this for 4 yrs. The results are public and have been all that time.

12 mths ago the portfolio was $220,000 today and during this corrective phase the portfolio balance is $305,000 which is 38% growth on portfolio.
AllOrds 20/6/05---4262 All Ords 16/6/06---4932 Growth----15.72%

http://tools.afr.com/apps/mkt/indexHistory.ac?idx=XAO&sy=afr

If you wish to check.
So thats a 142% out performance.

Pretty funny.

I have a Laugh myself

And its at all the thorists who have nothing more to offer than hypothesis and "this is how it should be" with no evidence to their theoretical trading practices.

There is a lot of hot air on forums and very little practical hard core case studies to verify theory.
Duc's doing his best to show his Fundamental approach which is full of IF's Could be's and maybe's,the results at this point show a nett loss.

Very few have the guts to do what Duc and I are doing---simply failure in the public forum environment isnt palatable.
I say if your so sure then RUN IT and SHOW all how smart you really are!!
You may well learn something in the process.

Bet on the horse that is winning the race and change my bet if another horse takes the lead.

Funny as hell on a racecourse,yet you CAN do exactly that on the stock market
But people laugh like hell and never do it!!

Experts---drips under pressure!!

Realist · 17 June 2006

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

12 mths ago the portfolio was $220,000 today and during this corrective phase the portfolio balance is $305,000 which is 38% growth on portfolio.

Well done. Do you do this fulltime or you work as well?

But how much tax do you owe on it, and how much time and effort have you spent?

What are your brokerage fees and other related expenses? Were they taken out?

Have you taken every possible expense and tax out yet?

And do you believe you would have done better had you just spent $22000 on each of the ASX top 10 and reinvested the dividends and not sold any?

You get the year off from even bothering to look at the market if you do that.

I think you would have come close (don't forget dividends)....

Realist · 17 June 2006

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

And its at all the thorists who have nothing more to offer than hypothesis and "this is how it should be" with no evidence to their theoretical trading practices.

Well I have no new theories or hypothesis myself, I've not ever discovered anything truly successfull that was not known before. I just spout Ben Graham's theories, because I believe in them so strongly.

Have you invented any truly successfull theories yourself?

As for evidence whether my (Graham's) theories work or not? stupid question.

tech/a · 17 June 2006

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

Realist said:
Well done. Do you do this fulltime or you work as well?

But how much tax do you owe on it, and how much time and effort have you spent?

What are your brokerage fees and other related expenses? Were they taken out?

Have you taken every possible expense and tax out yet?

And do you believe you would have done better had you just spent $22000 on each of the ASX top 10 and reinvested the dividends and not sold any?

You get the year off from even bothering to look at the market if you do that.

I think you would have come close (don't forget dividends)....

I dont trade full time. I have 2 companies (One Civil Construction and one Property developement) and trading is part of my investment strategy.

As part of the whole tax is calculated upon the total business/s I have an Accountancy firm look after this. I dont mind tax as its a cost of being profitable,profit allows me to be in the position to employ professionals to minimise tax.

If you wish to answer questions like brokerage and dividends then take some time to trawl the site all info is disclosed in the 100s of pages.

Time spent-- around 10 mins a day on the 3 portfolios I trade---only one is public all are performing similarly.

Other methods---I dont know or care as I'm happy with the way i trade---however constantly looking at ways of improvement. Being a systems trader there are a few of us working on minimising drawdown--an on going challenge for all traders.

I trade margin so dividends pay the interest and levergae on initial capital fades the nett return on portfolio dramatically.
3 yrs ago I started with $30K on margin as you will see if you read the link.

Have you invented any truly successfull theories yourself?

As for evidence whether my (Graham's) theories work or not? stupid question.

No only placed in practice what really makes profit in any business and its NOT ANALYSIS fundamental OR technical

Grahams theories,Darvas's,Williams,Buffets all work for them but Ive not yet found one other who is applying any of these "FACTS" in live trading which allows verification of results.
Easy as hell to say your profitable because you mimick another traders success. Thats their success yours isnt guarenteed.
I dont see 100s of Buffetts,or replications of Darvas sucess---

Stupid question???
Stupid response.

MichaelD · 17 June 2006

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

bunyip said:
It is simply not possible to underperfom the market if you buy only stocks that are outperforming the market, and sticking with them only as long as they continue outperforming the market.

I'm interested in a bit more precision here - could you define your entry/exit methodology more precisely. Since my backtesting of this proposition was based on a trailing ATR exit, it is certainly possible that a different exit methodology could produce significantly different results.

Realist · 17 June 2006

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

Hey tech/a - your link goes to a weird page - is it Reefcap.com your website?

Do I have to login or something?

tech/a · 17 June 2006

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

No Its not my site its Nick Radges.

Yes you'll have to log on.
Its a very knowledgable site with some no nonsense contributors.
More for the serious established trader/investor.

Ive just directed you to the Tech Trader site which Nick separated from main stream about a year ago.

Realist · 17 June 2006

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

It is simply not possible to underperfom the market if you buy only stocks that are outperforming the market, and sticking with them only as long as they continue outperforming the market.

Okay Bunyip, or anyone else that agrees with this theory...

To prove this please advise me of the last share you bought, or the next you intend to buy. Assuming I buy it this Monday morning 11am.

I'll tell you 2 ASX shares to buy on Monday morning and we'll see what happens.

Okay my shares are FGL ($5.55) and WDC ($17.20) - and I recommend you hold them for 30 years minimum and reinvest dividends.

Why buy them? Great companies, great brands, they pay dividends, worldwide market leaders, property and wine is a bit out of fashion at the moment but will surely be back in fashion sooner or later. They are fairly valued. And I firmly believe people (mainly Aussies but worldwide as well) will shop at Westfield and buy beer and wine in 30 years time.

It'll be interesting to see what you recommend.

We'll meet back here on June 17th 2036 to compare. (just kidding )

But I am keen to see what you would recommend. As I've said before here I am not even adequate at trading or charts and don't try so I'd be interested to see what stocks traders are recommending and buying right now. I don't want to hear about the past I want to know about now!

What can I buy Monday morning that is trending up?

tech/a · 17 June 2006

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

What can I buy Monday morning that is trending up?

This is part of the equation.
Seriously I suggest you FIRST look at and understand how to run a Trading or Investment business. No matter how small it is. If you dont look at how you place your hard earned in this manner (as a business) then you'll have a similar dis jointed result.
Do you think Buffet or Graham approach their finances any different?

Why wouldnt you or anyone else?
Would you rather spend time building a sound boat to cross the Pacific or just dive in and swim---without even a life jacket!

Not a simple task but one which will ensure your around (financially) to compare your successes in 30 yrs!!!

You asked for an opinion--often the unexpected is worth more than the (seemingly) obvious.

Realist · 17 June 2006

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

Tech/a - did you think I was actually going to buy your stock recommendations?

It is amazing that whenever you ask a tech what to buy they can't tell you.

Yet they can review historical price changes so expertly. They all have 20/20 hindsight

All I was doing is proving a point. Anyone who thinks they can buy stocks that are outperforming the market, and sticking with them only as long as they continue outperforming the market is quite simply wrong.

If you or anyone disagrees then please tell me what stock I can buy on Monday that is outperforming the market and will continue to do so for a week or so at least?

If you can't tell me what to buy how can I use this theory, and if I can't use this theory what is the point of it?

tech/a · 17 June 2006

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

Im only to happy to play.
Your however missing the whole point of the post.
Doing so is only part of the equation.

Its about running a profitable portfolio over as long a period as you can.
One stock and its trading over the next week or month is hardly a full investment business stratagy.

Now if you wish to prove the point with a group of stocks (portfolio) starting as of Monday similar to that which has been run on Reefcap for the last 4 yrs then I'm happy to do that.

I'll simply start trading one of the mechanical methods I currently use from scratch.
So past performance will mean zip.

I will disclose the trade (when it triggers),the stop and the exit (when it triggers).
What I use technically to determine the trade I will not disclose---one is enough already on Reefcap.It will be similar though.

I will however disclose the methodologies (Systems) parameters.
IE
R/R,expected initial drawdown,position sizing,leverage (I trade margin at 2:1)
Plus anything else seen as relevant. Like universe used to trade.
All relevent as part of "the Business"

Dont expect it to be a power packed presentation as its as boring as hell and takes a few minutes.longterm methods trade like elephants.

Actually it would be best started when I get back from the UK.

I leave in 4 weeks for 6 weeks so would be a little pointless and to difficult to do properly now.

Let me know and Ill get it going say September.
Perhaps I could run it parallel to duc's!

Julia · 17 June 2006

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

Realist

You mention WDC. I also hold this but not for much longer.
It started the year at around $17.50 and is currently below that.
If you have a 30 year time frame as you have suggested, then the odds are that this company will make you money, but where are your profits coming from in the meantime?

Could I suggest that you are being a bit too black and white in your definitions of trading vs investing. My own preference is to own stocks which will show steady and sustained growth. I'm not interested in short term trading, partly because I lack the necessary technical skills, and I'm also conscious of the increased costs of brokerage etc. Consequently my portfolio is mainly blue chips across all sectors.

However, if a stock is simply not performing, i.e. Westfield Group, it will be sold and the funds used to buy something which IS going up. Why? Because I am in the market to make money and I am not making money holding stocks which are standing still or decreasing. This doesn't make me a "trader".

In the end, surely it just comes down to whether or not your philosophy is allowing you to actually make money, as Tech and Bunyip and others have suggested.

Julia

ducati916 · 17 June 2006

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

tech/a

I will however disclose the methodologies (Systems) parameters.
IE
R/R,expected initial drawdown,position sizing,leverage (I trade margin at 2:1)
Plus anything else seen as relevant. Like universe used to trade.
All relevent as part of "the Business"

12 mths ago the portfolio was $220,000 today and during this corrective phase the portfolio balance is $305,000 which is 38% growth on portfolio.
AllOrds 20/6/05---4262 All Ords 16/6/06---4932 Growth----15.72%

Which of course means that TT results mimic almost exactly the ALLORDS, okay, you added 0.28%

Let me know and Ill get it going say September.
Perhaps I could run it parallel to duc's!

jog on.

With regards to buying undervaluations very rarely will you find the so called "blue chips" selling at a *true* undervaluation.
I would suggest that currently there is nothing on the ASX that is a blue chip designate, that even remotely approaches an undervaluation The only times tend to be at the bottom of Bear markets.

However, if other *fundies* wish to examine this closer, we can all *value* say BHP and place a price that represents an undervaluation, and the techies can identify *support* points if they choose.

It would be interesting to me anyway, to see the results.

jog on
d998

MichaelD · 17 June 2006

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

Realist said:
If you can't tell me what to buy how can I use this theory, and if I can't use this theory what is the point of it?

You do not make money buying stocks. You make money when you sell them. Working out what to buy is the least part of the equation. It's how you manage the trade from there onwards that makes the money (or otherwise).

There is much experienced wisdom in this thread for those that wish to see it.

Any technician could offer you a list to buy on Monday. 50% of these trades or more would be losing trades, however, the technician would still make money because they know what to do after buying. The short-sighted would point at the 50% losers and proclaim the list a failure.

ducati916 · 17 June 2006

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

Michael

Any technician could offer you a list to buy on Monday. 50% of these trades or more would be losing trades, however, the technician would still make money because they know what to do after buying. The short-sighted would point at the 50% losers and proclaim the list a failure.

Fundies actually have a much clearer understanding of the selling part of the equation.

Techies rely upon *the market* to exit them.
We, conversely do not. We have an exit at *fair value*
Should you be a little greedier, after fair value is reached, just trail a technical stoploss.

The advantage of the fair value+ exit, is that to truely qualify as *undervalued* your purchase price must be 50%+ below your fair value calculation.

jog on
d998

tech/a · 17 June 2006

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

Which of course means that TT results mimic almost exactly the ALLORDS, okay, you added 0.28%

Duc you disappoint me.

Same period All Ords rose 15.72%
TT out perfromed the ords by 100%+ --A little better!

Have a closer look I even posted the link.

MichaelD · 17 June 2006

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

ducati916 said:
Fundies actually have a much clearer understanding of the selling part of the equation.

I see very few indications in this thread of the importance of the exit (with several exceptions), regardless of the entry methodology.

Techies and fundies will disagree on the details of the entry and the exit, but on the necessity of having a pre-planned management and exit strategy BEFORE a trade is entered there is agreement.

No pre-planned exit strategy = inconsistent profits = loss in the long run.

ducati916 · 17 June 2006

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

tech/a

You must compare apples with apples.
If you use leverage, which you do,[2:1] then you must compare the unleveraged return. Of course, your return, when you eventually realize it, will reflect the leverage.

Therefore, TT's unleveraged return,[19%] is more or less the same as the ASX. Again this does not truely represent the return, as the losses realized, and the #of trades in total are not reported. Therefore, based on "open equity" which I disagree with, your results are circa 19% as of the closing prices
This simply demonstrates that outperforming the Averages is no mean feat, and why so many people struggle.

This is the underpinning of my questioning your methodology.
In a Bullmarket, yes, you see good results, but, nothing much more than the market return.

In a Bearmarket, would you outperform, or return much the same?
In the recent correction....drop, TT dropped almost the identical % as the ASX.

jog on
d998

Which one do you use? Technical or fundamental analysis?

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