FA vs TA

Re: FA vs TA

Postby winston » Fri Oct 28, 2011 6:47 am

Investing 101: The 1 Dumb Mistake to AvoidPby Tech Insidr

As I’ve studied the markets intensely over the past several years, I have come across a variety of mistakes that plague most investors.

Some investors rely too much on imaginary patterns in charts… or listening too much to the investing ideas of so called “experts”.

However, the single, most common and dumbest mistake that most investors make is not studying the financial statements.

It always amazes me how some investors will blindly buy shares in a company without even looking over the financial statements.

If you don’t even understand the raw numbers, income statement, cash flow, or balance sheet behind a company.. how can you possibly feel confident in your investment thesis?

http://techinsidr.com/investing-101-the ... -to-avoid/
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Re: FA vs TA

Postby winston » Mon Dec 17, 2012 7:19 am

Would You Invest in “the Math of God?” by Alexander Green

It’s something millions of investors wish for, a man with a system that tells you exactly when to buy stocks… or bonds… or commodities… or currencies – and when to sell them.

Many big name money managers claim that they have found just such an individual in Tom DeMark, founder and president of Scottsville, Arizona-based Market Studies.

DeMark claims he has a system for predicting where markets will move, based, in part, on mathematical relationships that underlie the design of the Parthenon in Athens and the Great Pyramid of Giza.

Markets, he insists, are moved by waves that crest and fall based on a series of numbers called the Fibonacci sequence and the closely related golden mean.

A bit of explanation is in order here. Fibonacci numbers appear in an infinite sequence… 0,1,1,2,3,5,8,13,21,34 … where each number is the sum of the previous two. Divide any Fibonacci number by its predecessor and the quotients will cluster around 1.618 – the golden mean or, ahem, “the divine proportion.”

Sounds a bit nutty, right? Except a lot of entirely sane people are along for the ride. Subscribers to his service include some of the biggest names on Wall Street, including Leon Cooperman and Paul Tudor Jones.

De Mark is consultant to Steven Cohen, founder of SAC Capital Advisor, which manages $14 billion. David Goel, managing partner at hedge fund Matrix Capital Management, says “When I use DeMark’s work, I feel like I’m wielding Thor’s hammer.”

Cynthia Kase of Kase & Co, a firm that offers trading and hedging advice, is even more enthusiastic. “This mathematics is embedded in the structure of the universe,” she says. “It’s one of the reasons I believe in God.”

When the Creator of the Universe offers trading advice, who doesn’t take it? Michael Shermer, for one.

Shermer, publisher of Skeptic magazine, columnist for Scientific American and author of The Mind of the Market, would call this “patternicity,” the tendency to find meaningful patterns in meaningless noise.

In almost every aspect of our lives, we try to connect unrelated dots to create meaning. But sometimes random dots – as on a technician’s chart – are just that, random dots.

“There’s a golden-ratio mania, and most of it isn’t based on any kind of fact,” says George Markowsky, a computer science professor at the University of Maine who holds a Ph.D. in mathematics. “It’s amazing to me that adults take this stuff seriously.”

Warren Buffett is another skeptic: “I realized that technical analysis didn’t work when I turned the chart upside down and I didn’t get a different answer.”

Of course, the real reason pure technical analysis can’t tell you when markets are about to rally and when they are about to fall is because the future, surprise, is largely unknowable. Yes, anyone can make predictions and point to successful outcomes. But what system predicted market-moving events like Saddam Hussein’s invasion of Kuwait, the blow-up of hedge fund Long-Term Capital, or 9/11?

None.

What’s more, when you ignore or discount company fundamentals you tend to run off the tracks. For example, DeMark recommended a buy on Research In Motion (Nasdaq: RIMM), the Blackberry maker, on February 18, 2011 as it hit $70.54. It started to drop. Yet DeMark recommended it again in May and then again in June, July and October.

Today the stock sells for less than $13. Anyone can make a mistake, of course, but this drop was no surprise to anyone who bothered to look at Apple’s crowded retail outlets and RIMM’s empty ones. While DeMark was busy studying his charts, the iPhone was having the Blackberry for lunch.

The takeaway from all this? Markets are unpredictable. Technical trading systems always fail in the end.

… And there’s a sucker born every minute.

http://www.investmentu.com/2012/Decembe ... f-god.html
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Re: FA vs TA

Postby winston » Tue Feb 12, 2013 12:20 pm

Fundamental Analysis in 60 Seconds

"Charts Are Great for Predicting the Past"

SINGAPORE--(Marketwire - Feb 11, 2013) - Whatever type of trader you are, it's crucial to gain as wide and accurate a picture as possible, before opening a position in your chosen market.

Where technical analysis looks at price movement and patterns in the charts, fundamental analysts aim to ascertain the overall value of a market by looking at the surrounding factors.

This article aims to give you a 60-second brief on the basics of fundamental analysis.


Determining value

Fundamental analysts pay close attention to news briefings, economic data and earnings reports, as these types of information help them to determine the value of a particular market. Typically, they'll want to know how much a company earns, whether it's in debt, its dividend structure and profit forecasts.


Earnings

In order to determine the true value of a market and to better understand the potential movement of its price, fundamental analysts hold earnings in important regard.

If a company earns more than it originally projected, its market price is likely to rise. Once these earnings figures are released to the public, positions can be opened to take advantage of any uptrend that emerges. Higher earnings figures mean a higher intrinsic value of a market which is of interest to fundamental investors.


Economic Health

The health of a nation's economy is crucial to fundamental analysts, particularly for those trading foreign exchange.

If a country announces higher than expected unemployment figures, market prices typically take a tumble. If a Government announces measures that may affect GDP, spending, interest rates or other economic factors, prices may also make big moves.

Fundamental analysts keep thoroughly up to date with broader global commercial events, and often use them in conjunction with basic technical analysis to ensure they're opening the right positions.

Unfortunately, there are times when the market moves against us. Never invest more than you can afford to lose, employ tight risk management and never let your emotions get the better of you when trading CFDs or forex.

http://www.marketwire.com/press-release ... 755458.htm
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Re: FA vs TA

Postby winston » Mon May 18, 2015 8:16 pm

Which Investing Strategy Is Better: Value or Momentum? By Dr. Steve Sjuggerud

It's hard for me to find true friends among my investment buddies…

You see, I believe that both "value" and "momentum" work in investing – and you're not allowed to do that. You have to pick teams…

In the investing world, saying you believe in value AND the trend is like saying you are part of more than one political party… You simply can't do that!

For example, I have friends who are diehard "value" investors. These guys bow at the altar of Ben Graham and turn their noses up at any mention of "momentum" as if it's beneath them. They look at me like I'm foolish for thinking that any degree of "trend following" could possibly be useful.

Then I have friends who are "trend" guys, who quietly think the value guys are complete fools – totally barking up the wrong tree. They wonder how I could possibly waste my time concerning myself with value.

I believe in both, though…

As regular DailyWealth readers know, my ideal investment has three characteristics…
1. It's cheap (value)
2. It's hated
3. And it's in an uptrend (momentum)
So, which works better, value or momentum?

Portfolio manager Patrick O'Shaughnessy recently crunched the numbers on individual stocks, going back 50 years.

His simple study showed that both value AND momentum strategies beat traditional buy and hold.

But that wasn't the most interesting result of his study…

You see, even though strategies built on value and momentum both beat the market over the long run, it turned out that both value and momentum had huge periods of underperformance.

So now, which is better? Which one is right?

It turns out, combining the two strategies together is best. O'Shaughnessy says…

The most powerful combination is a strategy that measures both value and momentum at the stock level. Both value and momentum have had three-year periods where they underperformed the market by more than 10% annualized. But the worst case for a 50/50 combination of value and momentum? Just 5.5% annualized underperformance over three years.

By combining the two strategies – in a 50/50 mix of value and momentum – you dramatically improve the periods of underperformance, as O'Shaughnessy explained. And by combining the two strategies, you improve the risk-versus-reward ratio versus either strategy by itself – which is the ideal result.

Why does combining the two work so well? It turns out that value and momentum strategies are not especially correlated. In short, one often zigs while the other zags.

O'Shaughnessy summed up his results…

Bottom line, the tortoise and the hare both have their merits: cheap valuations rule AND the trend is your friend. Look for stocks that have both.
In short, the best strategy over the last 50 years has been to own cheap stocks that are in an uptrend…


Source: Daily Wealth
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Re: FA vs TA

Postby winston » Mon Aug 15, 2016 7:00 pm

This One Easy Trick Can Limit Your Losing Trades

By D.R. BARTON, JR.

Once you've identified your value stock, only buy it if today's price is higher than the price six weeks ago.


Source: Money Morning

http://moneymorning.com/2015/10/16/this ... ng-trades/
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