Forum Archive Index - November 2001

["hugh webber" <hugh.webber@clear.net.nz>]

A short comment - wouldn't entirely agree, some of the fundamental data
analysis is from the present rather than the past e.g. NTA/share from 
a recent report possibly updated by later info e.g. property valuations, price
increases on the major product e.g. rise in premiums announced, rise in
airport landing charges or whatever.
Also fundamental analysis is modified by recent announcements from
all sorts of sources. Sharebrokers do this for example JBWere & Son, but
they don't bother with this weird head and shoulders charts etc stuff, none 
of the brokers I've used since 1978 have gone in for the unfortunately named
"technical analysis". Sharebrokers publish future estimates of NTA/share,
P/E, gross dividend per share and other fundamentally useful material.

Companies can be valued either by NTA per share or by the discounted sum
of the future stream of earnings. The fundamental analysis I use takes into 
account the latest interest rates, inflation and announcements concerning the
future.
Chartism doesn't do this.
I guess the real explanation for "TA" is that normally one has long periods of
waiting on relevant news for companies of interest, "TA" provides the noise
to fill the gap until something meaningful happens.

Sometimes nothing happens for long periods of time after picking a value share
and investing, the market may even mark the share down. But eventually logic
prevails over fashion and the market moves. In the meantime one has made hay
from the cash flow of the dividend stream.

----------
> From: jerrold poh <jerm@musician.org>
> To: sharechat@sharechat.co.nz
> Subject: Re: [sharechat] Something to think about for all you newbie chartists
> Date: Saturday, 17 November 2001 10:46
> 
> Ok, just going to hit on two points here where funtamental (and
> technical) writers always hammer down on why "their" method of investing
> is better than the others.  Feel free to disagree :).
> 
> 
> > "However complete and recent statistical information may be, it always
> > remains information about the past, and does not assert anything about
> > the future." 
> 
> Note how the author here just put down both fundamental, and technical
> investing (and maybe even himself) with this one simple statement.  
> 
> Isn't all information attained, whether it be fundamental or technical,
> all past information?  How are you able to predict the future
> performance of a company, with the information attained the _last_ 4
> years worth of annual reports.
> 
> Same with TA, how are you able to predict the future shareprice with
> just price and volume information from the last 4 years?
> 
> <tongue in = cheek> The only way I can see around this is by getting
> information from the future, that's what he means isn't it </tongue>
> 
> 
> > But that didn't matter, the seminar presenters said. "All you need to
> > know is that when this number is above this line, and that number is
> > below that line, you should buy," or words to that effect. 
> 
> LOL, that's kind of like fundamental investing isn't it?  See this
> number, it's the increase in net profit for each year, if it goes
> below 25%, sell, and see this, it's the p/e multiple, if the multiple
> drops from one term to the next, buy. 
> 
> I think that's the reason they're called _indicators_ in technical
> analysis, and same with fundamentals.  They're only indicators, and not
> direct orders.
> 
> 
>  
> Jerrold.
> 
> 
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