Forum Archive Index - June 2001

["Ian Rawnsley" <ianr@ie3.co.nz>]

I sent a copy of the message from Hugh Webber to Neil Costa for comment and
here is his reply sent via me. I have deleted my message to Neil and the
copy of Hugh's original message.

For those who are interested in Technical Analysis, Neil will be in Auckland
later this year for a seminar. Neil ran a very successful seminar last year
in Auckland.

Ian Rawnsley


-----Original Message-----
From: Neil A Costa [mailto:neil@marketmasters.com.au]
Sent: Tuesday, June 05, 2001 8:44 AM
To: 'Ian Rawnsley'
Subject: RE: [sharechat] analysis


Hi Ian

Thank you for forwarding the comments made by Hugh Webber to me.  It would
appear that Hugh is one of these people that engages in personal attacks
when they cannot put forward an intelligent and well reasoned argument.

>From my article, he has concluded that "obviously Neil A Costa didn't
understand it enough to make his fortune".  What is "obvious" Hugh?

I live in a nine bedroom, four bathroom house with heated pool and spa, on
1/2 acre of land 20 minutes from the GPO of a city of more than one million
people - if it wasn't for technical analysis, I would not be enjoying that
life style.  It would be interesting to see how well Hugh is doing!

He states:

"Who cares if the price continues to go down if you have bought for income,
simply because it is unfashionable (the Warehouse was unfashionable once).
Buy some more; get some mates together and take it over and realise the net
assets."

This is irresponsible, to say the least.  Many a stock has gone to zero -
and Hugh advises to "buy more"?????  Others have fallen for years and
continue to fall.  There is not much point in collecting dividends if you
lose all of your capital.

He accuses me of being a journalist - something I have never been.

It would appear that Hugh has spent so much time applying fundamental
analysis to hundreds of stocks that he has not had time to read articles
such as the one in The Economist, August 19th 2000, titled "Heads, shoulders
and broadening bottoms"  which begins "Economists used to dismiss as mere
snake oil salesmen technical analysts who use simple patterns in past data
to reveal future share prices.  Now, more think that stock charts can reveal
valuable information."

If technical analysis is akin to astrology, why do broking houses and funds
employ technical analysts along side their fundamental analysts?  Does Hugh
really believe that hard-nosed broking houses and funds, focussing on their
bottom line, want to pay these high salaries because their want to lower
unemployment levels????  If these technical analysts weren't paying their
way, they would be out the door very quickly - and not replaced!

When discussing fundamental analysis, the father of fundamental analysis is
usually mentioned with great admiration - Benjamin Graham.  Allow me quote
him shortly before his death in 1976 when he stated that fundamental
analysis could no longer be counted on to produce superior investment
returns:

"I am no longer an advolcate of elaborate techniques of security analysis in
order to find superior value opportunities...  This was a rewarding
activity, say, 40 years ago...  but the situation has changed..."  Hmmmm.
The problem was not fundamental analysis - it was the lack of ability to
time the purchases of stocks!

My opinion is that fundamental analysis has great value, when carried out by
a competent fundamental analysis - but if the aim is to make money, one then
needs technical analysis for the timing of the investment.

Ian, thank you again for the opportunity to reply.  I will not engage in a
ping pong match with this guy - it is difficult to muster much respect for
someone who plays the man and not the ball - while hiding behind a keyboard.

Kindest regards

Neil.

Neil A Costa

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