Forum Archive Index - May 2002

[nickk@quicksilver.net.nz]

Second to last paragraph.........

"Great speculation as to how low these will trend down and whether or not
the US is indeed in a recovery."

DOW nowhere near falling yet.  You wait until it happens.  Recovery is
years away!

Nk


Brian & Fiona Brakenridge writes:

> Hi all,
> 
> Have any of you guys been in a situation where, in a public forum, you've 
>express absolute, undying belief in a stance or a philosophy you hold, only to 
>be presented with a level headed and logical alternative that deep down you 
>consider might have some merit? Because many of us Kiwis have healthy egos 
>it's a really difficult thing to do, ie. admit you might be wrong especially, 
>again, in a public forum. 
> 
> Well I've been through an enlightening exercise in the past couple of months 
>that has bought me to the conclusion that charts could well be a very 
>interesting tool to add to the investment tool box. In fact I have been 
>intrigued by what I have learned.
> 
> With the exception of an unfortunate and out of character message I posted 
>late last year I have often tried to figure out if there is a correlation 
>between the FA and the TA approach. In hindsight I am ashamed of that post 
>because it did nothing at all to contribute to my own or others learning.
> 
> The exercise I have done is to go back in the archives 12 months or so and 
>print out all the graphs Andrew C and Phaedrus have posted along with their 
>explanations and then go into one of the charting sites e.g. www.bigcharts.com 
> and have a play around with drawing trendlines and identifying potential stop 
>loss levels and then monitor the price and watch how the market reacts to 
>certain points on your trendlines.
> 
> This would be an especially interesting exercise for those of you who don't 
>have a strong view one way or another. I have in the past and still do, praise 
>the Buffett approach and that is to invest from a business perspective. My 
>philosophy has been to fundamentally identify a strong company, buy in and 
>hold, with the understanding that logically over time it will grow and if I 
>have analised it well enough logically it will grow well. That is the desired 
>purpose of any company after all. But I'm now asking the question, can charts 
>assist me with my buying decisions or possible situations where the stock has 
>moved into a serious down trend.
> 
> Be very careful you don't get hooked up in this thing and start day trading 
>tomorrow. It would be very easy to do and day tading with charts is a highly 
>complex "science". However I now believe there is merit in at least 
>understanding simple trends and applying stops even if like me you prefer to 
>buy hold and accumulate.
> 
> I have been thoroughly interested and encouraged as I follow the discussion 
>between Pahedrus and Gerry. My belief is that what motivates these guys is the 
>simple desire to grow and protect their capital and while they use different 
>approaches they both respect and accept the others view and don't concentrate 
>their valuable time on trying to disprove the other.
> 
> With the help of these two and any others I'd like to learn more from the 
>exercise I've just completed and see if I too can't figure out a better way to 
>build and protect my capital and I'm proposing to use a couple of stocks that 
>have been discussed in the past and ask Gerry and Phaedrus and others to 
>contribute opinions and comments as we follow the stock's progress. This is in 
>no way designed to prove one method or the other right or wrong. As Phaedrus 
>has said in the past he is only right 6 out of 10 times and Gerry has also 
>been openly frustrated when some of his stocks don't perform as he had hoped.
> 
> There are three stocks that have been well discussed and analyses both 
>technically and fundamentally in the past, CLI (AU), BCA(NZ) and WHS (NZ). 
>What I'd enjoy doing is keeping track of these three from a fundamental 
>perspective and trom a technical perspective and ask people to contribute 
>their thoughts as to what is happening with each stock maybe on a weekly 
>basis. CLI is interesting because it is a stock that seems to have been 
>grossly undervalued by the market for the wrong reasons but is fundamentally a 
>strong company. BCA is also arguably a strong company that has been on a long 
>term serious downtrend and it will be interesting to watch potential points 
>where that downtrend might be broken and what might be a good entry point. 
>Conversely WHS has been steadily climbing, is a strong company, but some would 
>argue now overpriced. Will the market reach a point where it becomes nervous 
>and the uptrend is broken downwards or will earnings catch up to where the 
>market has priced the company and will it continue to grow?
> 
> I think it will also be interesting to look at a significant index and I 
>propose the NASDAQ  or the S&P500. Great speculation as to how low these will 
>trend down and whether or not the US is indeed in a recovery.
> 
> Phaedrus and Gerry would you be willing to assist in this exercise? Phaedrus 
>whould you mind posting these charts with relative trendlines maybe with the 
>axis extended so we can plot potentially important points to watch out for? 
> 
> Sorry for this long post. It's been a while coming!
> 
> Look forward to positive and constructive comment.
> 
> Cheers
> Brian
>   

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