Do you use Fundamentals

[ducati998]

charliechan

when i hear about fundamentals, all i think of is enron, world com, and other failures with oh so great balance sheets. yes these are extremes, but it is true that sometimes not everyone is as honest as should be

To anyone bothering to look at the financials, WCOM, was spottable in the first pass of analysis, Enron, would have taken some much deeper checking to uncover the fraud, however, within the footnotes the "off balance sheet entities" were disclosed, along with the huge conflict of interest....................you certainly would not have proceeded based on that, even if you knew nothing else.

With Enron, a dead giveaway, as a warning sign, was the loading of earnings for Q4 in every report.

SOCCY

You have to put your attention on the topic.The topic will never arrive and put its attention on you. Therefore, like everything else in trading, investing and speculating, you, have to make the effort.

You are gravitating dangerously towards the true darkside, the Fundamentals hold you in their thrall....................................

That naughty pig stole your thread.
I told her you would love it, but she was having no bar of it!

I notice also that the Fundamental count is up to 4............................( I have Soccy as 1 )
Declare yourselves chaps, LION63 & I need to swell the #'s

cheers d998

 

[LION63]

A few days ago someone said that you can tell the individual by the nick that they have chosen; that most be one of the truest statements on these boards. Some of those that venture opinions about fundamental analysis have not even read one set of company accounts, how else can they keep coming up with Enron and WorldCom? It is very easy to spot them after they have collapsed but how about giving us a couple of names that are currently heading in the same direction.

It is a bit difficult is it not? The charts that you peruse are probably still telling you to pile into airline stocks despite oil reaching new highs, consumer spending on the wane and unions flexing their muscles.

A couple of sharp traders on these boards were busy boasting about how they were going to short General Motors because the shares were heading for the abyss, no fundamental argument could sway them in the other direction. Then like a thief in the night, up pops Kirk Kerkorian and these pistoleros ride off into the sunset leaving their cash on the table for the shrewdies to devour. Did they learn their lesson? Of course not, the charts then spoke to them with a loud voice...."Pile in pile in and do not get left behind". Remember the charge of The Light Brigade? No sooner had they piled in and the stock reversed again, leaving them with yet more losses. Talk about suckers for punishment.

That is one of the main reasons we keep seeing threads about miracle systems, super techniques and hard luck stories...People chasing fast bucks without labour. Yet they have the cheek to chastise those that bet on horses, what is the difference?

 

[roguetrader]

they keep coming up with Enron and WorldCom? It is very easy to spot them after they have collapsed but how about giving us a couple of names that are currently heading in the same direction.

As one of the people who brought up Enron recently I will take that as an invitation to defend myself. The point I was making was exactly as you have said, you can't tell for sure. You are preaching to the converted. My point therefore and |I'm glad you agree is that Fundamental analysis is not this great know all tool that protects you and allows you to throw away things like stoplosses, because you've read the balance sheet and you just Know this puppies a winner.
Oh and no, I don't make a habit of reading balance sheets

Oh and my nick, since it was linked to a movie about someone who lost an awful lot of money in the markets I didn't think arrogance would have allowed it to be popular. As to what others make of it I have no idea.

 

[roguetrader]

A couple of sharp traders on these boards were busy boasting about how they were going to short General Motors because the shares were heading for the abyss, no fundamental argument could sway them in the other direction. Then like a thief in the night, up pops Kirk Kerkorian and these pistoleros ride off into the sunset leaving their cash on the table for the shrewdies to devour.

No defence on this one, wasn't me, but perhaps those sharp traders were listening to the same fundamental analysts on bloomberg over the last couple of weeks, who one after another have paraded on and said "GM, no I would'nt buy that stock, companies in a lot of trouble here, looking at a lot of downside potential. They really need to do a lot of radical thinking to get back on track." Both before and since KK stepped up. My point? Well if they were as proficient at fundamental analysis as those experts, that wouldn't have saved them now would it?

 

[LION63]

Surely you know that it is not all sheriffs that can shoot straight. The people that popped up on Bloomberg saying what you said are the cousins of those that try to copy other people's TA without doing their own homework, you know how good they are.

There is good and bad in everyone and some analysts cannot tell apples from oranges which is why people like you do your own homework.

 

[roguetrader]

Surely you know that it is not all sheriffs that can shoot straight. The people that popped up on Bloomberg saying what you said are the cousins of those that try to copy other people's TA without doing their own homework, you know how good they are.

There is good and bad in everyone and some analysts cannot tell apples from oranges which is why people like you do your own homework.

LOL very true Lion very true.

 

[charliechan]

there is no way that you can collect the same fundamental information as the institutions lion63. i doubt you have their money, or their contacts and relationships with the company whos shares (?) you are thinking of buying. no way jose! this is the only information though that will yield an edge.

so the information you base your decision on is going to be the same as everyone else - bloomberg tv (lol - bunch of suckers), web reports etc etc.

the markets discount all of this you know. this is how markets often operate.

perhaps you should come down off your high horse.

if thinking of a long term holding (months+) then perhaps fundamentals should be considered - just as technicals should - just as other things should. it is short sighted though to belittle other approaches though as you seem to. to me, you dont seem to have reached the conclusion that maybe all the information is relevant - but at the same time it can also be quiet useless. although knowing which and when is a few rungs up the ladder yet - for some of us.

 

[LION63]

CharlieChan,

I require one of your ladders in order to get off the high horse that I am sitting on. Whilst you are at it would you kindly send me a pair of spectacles or some contact lenses to correct my short sightedness.

You Sir are free to believe all you want and if you choose to walk through life with limitations, who am I to judge. There are two sayings that come to mind -

"There is no shame in being a follower, but there is no pride in remaining one."

I bargained with life for a penny,
And life would pay no more,
However I begged at evening
When I counted my scanty store.

For life is a just employer,
He gives you what you ask,
But once you have set the wages,
Why, you must bear the task..

I worked for a menial's hire,
Only to learn, dismayed
That any wage I had asked of Life,
Life would have willingly paid.

 

[ducati998]

charliechan

I liked this one so much, I have kept it as a signature,

Quis custodiet ipsos custodes

And that would seem to be the underlying concern,

there is no way that you can collect the same fundamental information as the institutions lion63. i doubt you have their money, or their contacts and relationships with the company whos shares (?) you are thinking of buying. no way jose! this is the only information though that will yield an edge.

Only in the event of true "insider" information is this true, but then I doubt very much that the Institutions would have it either.

The fact remains that through diligent, intelligent, and penetrating analysis, all the information is contained within the SEC 10K filing.

so the information you base your decision on is going to be the same as everyone else - bloomberg tv (lol - bunch of suckers), web reports etc etc.

No, most definitely not.

the markets discount all of this you know. this is how markets often operate.

Sometimes yes, many times absolutely not, the market is blissfully unaware.

if thinking of a long term holding (months+) then perhaps fundamentals should be considered - just as technicals should

There seems to be a very prevelant attitude that Fundamentals = Investment = Long holding Period.

This is a very false assumption.
.

cheers d998

 

[charliechan]

CharlieChan,

I require one of your ladders in order to get off the high horse that I am sitting on. Whilst you are at it would you kindly send me a pair of spectacles or some contact lenses to correct my short sightedness.

You Sir are free to believe all you want and if you choose to walk through life with limitations, who am I to judge. There are two sayings that come to mind -

"There is no shame in being a follower, but there is no pride in remaining one."

I bargained with life for a penny,
And life would pay no more,
However I begged at evening
When I counted my scanty store.

For life is a just employer,
He gives you what you ask,
But once you have set the wages,
Why, you must bear the task..

I worked for a menial's hire,
Only to learn, dismayed
That any wage I had asked of Life,
Life would have willingly paid.

?

how am i walking through life with limitations? i pointed out how fundamentals could be used in conjunction with other factors, so it would seem that you indeed do need the ladder and glasses in order that you learn to read!!

doh!

 

[charliechan]

charliechan

I liked this one so much, I have kept it as a signature,



And that would seem to be the underlying concern,



Only in the event of true "insider" information is this true, but then I doubt very much that the Institutions would have it either.

The fact remains that through diligent, intelligent, and penetrating analysis, all the information is contained within the SEC 10K filing.



No, most definitely not.



Sometimes yes, many times absolutely not, the market is blissfully unaware.



There seems to be a very prevelant attitude that Fundamentals = Investment = Long holding Period.

This is a very false assumption.
.

cheers d998

sorry, but everything here is incorrect.

institutions dont necessarily have insider info, they just have better insight. please tell me how you can obtain this insight? go on. i dare you!!

if you think the markets are unaware, then you have much to learn. dont you think the institutions are continually adjusting their positions according to technical and fundamental info?? tiny minnow retail traders are probably unaware. dont make the common mistake of assuming everyone sees what you see.

perhaps you can explain why fundamentals are not only used is long term buy & hold?

please dont come back with some intraday example of nfp figures or something because there we trade the volatility, not the figure itself. if we traded the report - price would just go one way off the release. very rarely does this happen.

so, rather than trying to **** on everything with remarks, perhaps you can give explanations for your thoughts??????

 

[ducati998]

charliechan

institutions dont necessarily have insider info, they just have better insight. please tell me how you can obtain this insight? go on. i dare you!!

From my previous post,

Only in the event of true "insider" information is this true, but then I doubt very much that the Institutions would have it either.

So, in regards to part one of your query, we are in agreement that it is "unlikely" that the Institutions possess "inside" information.

As regards the "obtaining of insight", again from the previous post, this query has already been addressed,

The fact remains that through diligent, intelligent, and penetrating analysis, all the information is contained within the SEC 10K filing.

if you think the markets are unaware, then you have much to learn. dont you think the institutions are continually adjusting their positions according to technical and fundamental info?? tiny minnow retail traders are probably unaware. dont make the common mistake of assuming everyone sees what you see.

Also from the previous post,

Sometimes yes, many times absolutely not, the market is blissfully unaware.

As you can see, I said it will vary, there is no hard and fast rule. At times the market is efficient, at other times it is grossly inefficient. It is when the market is grossly inefficient that Fundamental analysis comes into it's own.

perhaps you can explain why fundamentals are not only used is long term buy & hold?

please dont come back with some intraday example of nfp figures or something because there we trade the volatility, not the figure itself. if we traded the report - price would just go one way off the release. very rarely does this happen.

Arbitrage.

so, rather than trying to **** on everything with remarks, perhaps you can give explanations for your thoughts??????

It would seem to require a certain level of intellect to understand that the explanation was already in place. It was simply that you were incapable of understanding said explanation.

cheers d998

 

[charliechan]

rotflmao-

so you think all the over paid research toadies & investment bankers spend their time thumbing through 10k filings (let me guess - on yahoo.com right!! or barons.com). hahahaha.

as for market efficiency - well again you still have not given anything other than an opinion. academic study of market efficiency has little bearing on the realities. perhaps you could explain how/when a market becomes 'inefficient' as you call it, and how/why fundamentals are more useful under these circumstances - as you clearly state?

can you also tell me then how this would relate to something like a fixed income market? this would be a very 'efficient' market (i assume - not sure what you think efficient means yet). fundamentals are probably quite useful here due to the longer term effects of economic business cycle & fiscal controls. yet this is obviously in contradiction to your ideas. perhaps you could explain. please?

finally, you mention that arbitrage is used to exploit fundamentals in the short term. please could you also explain what you mean by arbitrage? my definition of arbitrage is exploiting price anomalies in two similar and related markets (eg ny silver v london silver). i am totally ignorant to how this is a condition based on fundamentals. it would (if we have to pin labels here) be technical - as the price of one market becomes out of line with the other - usually based on the order flow differences between the markets. do enlighten me.

i am looking forward to your answers and the enlightenment they will surely bring!

happy days.

 

[SOCRATES]

Checkmate in five moves...Ha ! Ha ! Ha !..

 

[ducati998]

charliechan

so you think all the over paid research toadies & investment bankers spend their time thumbing through 10k filings (let me guess - on yahoo.com right!! or barons.com). hahahaha.

Whether I think they do the research or not is irrelevant. Your original question was, "how to obtain the insight"?

institutions dont necessarily have insider info, they just have better insight. please tell me how you can obtain this insight? go on. i dare you!!

That you don't like the answer is irrelevant.

as for market efficiency - well again you still have not given anything other than an opinion. academic study of market efficiency has little bearing on the realities. perhaps you could explain how/when a market becomes 'inefficient' as you call it, and how/why fundamentals are more useful under these circumstances - as you clearly state?

My original statement, while written in the form of an opinion, could be verified by reference to statistical studies, two researchers that have done statistical studies over the last 60yrs are FAMA & FRENCH. There are many others available.

But you see, that is the reality. Discrepancies, or inefficiencies crop up all the time. Fundamentals highlight through a "valuation" this inefficiency.

The inefficiency is caused by "emotional" or "psychological" extremes, caused in large measure by foolish technical traders such as yourself.

can you also tell me then how this would relate to something like a fixed income market? this would be a very 'efficient' market (i assume - not sure what you think efficient means yet). fundamentals are probably quite useful here due to the longer term effects of economic business cycle & fiscal controls. yet this is obviously in contradiction to your ideas. perhaps you could explain. please?

The "FIXED INCOME" market is segregated into broad categories.

1.....Sovereign Debt
2....Corporate Debt
3....Municipals
4....Foreign Debt

Each sub-division will carry varying degrees of "Credit" rating from FITCHES, S&P, MOODYS.
This credit rating will influence their price and yield characteristics.

Interest rates are the other component that will effect changes in price and yield levels.

The area in which "Fundamental analysis" will be exceedingly useful, is within Corporate credits, where due to possibly a very low Credit rating, the yield, and potential for Capital gains exist, due to an undervaluation of the business, and an overvaluation of the risks.............an emotional extreme.

Therefore perfectly consistent with my methodology.

finally, you mention that arbitrage is used to exploit fundamentals in the short term. please could you also explain what you mean by arbitrage? my definition of arbitrage is exploiting price anomalies in two similar and related markets (eg ny silver v london silver). i am totally ignorant to how this is a condition based on fundamentals. it would (if we have to pin labels here) be technical - as the price of one market becomes out of line with the other - usually based on the order flow differences between the markets. do enlighten me.

Then your understanding is rudimentary at best, and really almost non-existant.
Arbitrage is mathematical in it's construct, which is based on fundamental calculation of values that exist in reality.

They are not based on some fuzzy concept of a chart, and what might happen.
Arbitrage, is a 0% risk, 100% profit proposition. Which is why I like it so much.

i am looking forward to your answers and the enlightenment they will surely bring!

Well I have serious doubts on this one.

SOCCY

Really thought you would have learned to stay out of the kitchen, and not play with sharp knives, you always end requiring first-aid and a trip to the ER.

cheers d998

 

[SOCRATES]

Yes, never mind the kitchen, but the more I read of what you post and what you venture to offer as replies
the greater the hardening of my view that what you know about all of this is the square root of bugger all, ducatti.

You do not correctly address the questions and ideas that charliechan puts to you, because, despite your bluster and rudeness, you have no answers, because he's got you. I know that, and so do you.

It is all very well to regurgitate the contents of voluminous textbooks and whatever other irrelevant bumff that has served to completely confuse you and obsess you, but the market in reality is very different to what you would like, with your ideas, for you to try to force fit for it to agree with your blinkered concepts.

I am not helping you ducatti, not because I cannot, but because I choose not to.

I view all of this in quiet contemplation and with wry amusement.

 

[pb]

Is it just me or does anyone else find charliechan's writing style familiar?

 

[ducati998]

Soccy

Poor old CC is as clueless as you yourself.
d998

 

[SOCRATES]

ducatti, answer his questions properly if you think he and I are clueless. I am not interested for myself, because I have the answers. I am interested to see how you handle your responses to really stinging questions. Go on then...because you must admit he's got you, he really has !...

He really, really has ! ....

 

[ducati998]

Soccy

I am interested to see how you handle your responses to really stinging questions. Go on then...because you must admit he's got you, he really has !...

Really you are a buffoon.
However, and you will need to do this all by yourself, no getting MrCharts to help you now.....
What stinging question have I avoided, save........how to do arbitrage, which is totally beyond you two clowns.

Every question has an answer.
If you feel, and you most patently do, that a question has been avoided, then identify the question, and you shall have an answer, save the, "how to do an arbitrage," as previously detailed, you do not have the intellectual capability to perform a successful one.

cheers d998