Forum Archive Index - February 2003

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

Hi Morgy,

>
>Yes you are correct,  this is a public forum and I for one certainly
>didnt mind you putting your spin on his words or any others for that
>matter, feel free my friend. My comment was & is that what you said
>sounded nothing like what he said, in my opinion.
>
>

Right.  Which is why I made my post.  I wouldn't waste bandwidth 
parroting what Travis said.  My post was additional material that did 
not follow on from what Travis said.  However, just because my post 
did not follow from what Travis said does not mean that I am not 
making the same point as Travis.

You criticised Travis for being 'two faced' by slagging off the 
concept of support and resistance as 'predictive' tools, while in the 
next breath mentioning he uses predictions up to ten years out in his 
fundamental approach.

I think that was a fair criticisim that required some answering.

I'm guessing that one of the reasons behind your criticisim is that 
you don't appreciate the distinction between Buffett style 
predictions verses the idea that support and resistance lines have 
value into the future.

To try and explain:

1/  Buffett type predictions are not precise, in terms of daily 
market price.  Buffett is not saying each daily price is 
significant, because that price may depend on the market perception 
of the day.  As a general rule Buffett isn't interested in market 
perception.  OTOH a particular price level may be very significant to 
a chartist.

2/ Buffett type predictions are based on what is happening within the 
business.   Charting style predictions are based on what the market 
thinks of that business.   Reality does not always directly 
translate to perception.  OTOH to a chartist perception is 
everything.

Morgy, you seem to have the idea that if a Buffetologist makes a 
prediction that an investment is worthy and the price goes down in 
the next month then that means the prediction was wrong.  But 
Buffetologists never claim to be able to predict short term share 
price movements.  The only prediction that Buffetologists make is 
that the further out into the future you go, the more likely the 
market will at some point reflect the true value of the underlying 
business.   But (and here is the important rider) *only* if that 
business is a 'consumer monopoly'.  For any other kind of business, 
predictions using fundamental anlysis are pretty much a hit and miss 
affair when the time horizon is more than two years out.


> 
>
> Phaedrus's total demolition of Travis's posts stands on its own as a
> wonderful work  of intellect over Bluster. 
>I note you did not rush to clarify matters then 
>
>

Phaedrus's points were that:

1/ You can use support and resistance over short time frames to 
select likely buying and selling prices when you are trying to 
enter/exit a share. 
2/ It is possible to devise a trading system with very low turnover 
(two transactions over five years). 
3/ That you can use a hybrid system where you use fundamental 
analysis to pick the companies to put on your radar screen.  Then use 
a T/A system to try and optimise your entry and exit points, AFTER 
you have determined that a share is undervalued or overvalued. 
4/  All traders should have a good risk management, exit/strategy in 
place. 

There is nothing to clarify here.  I agree with all of Phaedrus's 
points.

>
>
>and there but now once again as you have done  many times before 
> you now seek to alter the topic or divert attention away 
> from what was actually said 
>
>

The allegation (yours Morgy) was that it was hippocritical to 
criticise 'support levels' which may persist over several years as an 
investment tool, when in the next breath (Travis) says that he is 
making predictions ten years into the future to determine his own 
investment decisions.

I suggest to you that the reason you perceive I am going 'off topic' 
is that you do not appreciate the context in which Travis has framed 
his own comments on using predictions.   In short, the reason why you 
see my comments are off topic is that you choose to look at the topic
without an overview of Travis's perspective.

>
>
>to some obscure point clearly not intended in the original post. 
>
>

Anyone who has read any one of the Buffetology books around the place 
would know that all the comments that I made were indeed implicit in 
Travis's original post.  

I suggest that those who think that my 'support' of Travis on this 
post was somehow trying to twist his original meaning , have never 
read any of those Buffettology books.


> 
>Your obsession on Buffett reminds of my theory
>on religion, while I believe in god, catholics  make it hard to
>enjoy the experience !. 


Your idea that I have an obsession with Buffett simply shows that you 
do not understand the philosophy of Buffett.  In fact, I have 
discussed several investments over the last few months, (Wrightsons, 
Contact Energy and BHP Steel, are examples that spring to mind) that 
Buffett wouldn't touch.  



>
>all buffetologists seem to enjoy
>the pain as there shares go down on them but there religion is still
>almighty and they continue to buy into it because only they know
>true value. I would be extremely interested in your views on this
>particular subject   :-)
>



Shares I have selected using 'Buffettology' that go down in value 
cause me no pain.  A Buffetologist does base investment decisions on 
what the market may think over the next few months.   There is no 
guarantee that by using Buffetology you will buy in at the lowest 
share price.   The Buffetologist is only interested in the difference 
between the buy price the ultimate selling price and the dividends 
that are received along the way.  If someone else can buy in at a 
lower price than the Buffetologist that is fantastic for that 
person, but is of no consequence for the Buffetologist.   What other 
people do with their own investments doesn't matter to a 
Buffetologist. 

But then Morgy, if you had ever read any of the Buffetology books you 
would already know all of that.   Why not try reading one Morgy?  May 
I suggest "The Buffetology Workbook" by Mary Buffett and David Clark 
first published in 2001 as recommended by Gerry in the 'Learning to 
Invest' series.

SNOOPY 
---------------------------------
Message sent by Snoopy 
e-mail  tennyson@caverock.net.nz
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"Stay on the upside of the downside, 
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