Forum Archive Index - April 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Peter,
>
>
> Phaedrus: 
> My own feeling, as is yours it seems,is that fundamentals are of
> most importance,it shows what companies to look at,but TA tells 
> you when & what to do about them.
>
>
There is no rocket science, in suggesting that selling out at a 
share price peak and then buying back into the same share in a dip 
will see you better off in terms of number of shares held.   If the 
the share comes right (and you have used fundamental analysis to make 
sure you aren't trading a dog, so it will- eventually) there is no 
doubt that you will come out financially ahead.  The amount of wealth 
you create for yourself will depend on the difference between these 
peaks and troughs.

However, if you have a share that steadily increases in value over 
many years, with very little oscillation about an upward share price 
line that keeps going up you would be a fool to trade it.   You will 
be worse off if you trade it short term.  You will be worse off if 
you trade it medium term and you will be worse off if you trade it 
long term.  This is the case with RBD.  It is a fairly simple 
business.  The market doesn't get too many surprises and consequently 
share price volatility is low.   Why would you trade RBD when there 
are far more volatile shares about that you can do far better with 
(if you are a trader)?

I guess this was my point bringing up RBD.   Not all shares are 
suitable for trading.  The other example that springs to mind are 
shares that only trade in thin volume.  But are all these shares poor 
money making propositions?  Not at all.   There are many 
shares where buy and hold is a far more profitable strategy than 
buy/sell/buy/sell/buy/sell. In fact with managed funds there is a 
negative correlation between the amount of portfolio churn and 
performance.  I'm not saying you can't make good money out of 
trading.  I'm not saying it isn't useful for timing entry and exit 
points.  But the statement that using T/A will always give you the 
best investment performance isn't true for many shares. SNOOPY








---------------------------------
Message sent by Snoopy 
e-mail  tennyson@caverock.net.nz
on Pegasus Mail version 2.55
----------------------------------
"You can tell me I'm wrong twice, 
but that still only makes me wrong once."

----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/chat/forum/