Forum Archive Index - October 2003

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

Hi Woody,

I think the first point to clarify in your debate is that you seem to have 
lumped F/A investors together.

There are many forms of F/A.   Buying for yield is one.   Buying for 
growth another.   Buying situational shares (those involved in mergers or 
takeovers) another.    Buying GARP (Growth at reasonable price) 
another.  Buying an index another.    There are simply too many different 
kinds of F/.A to lump them all together.

> 
>If I was to purchase ASX AMP on fundamentals 2 years ago I would 
have
>lost thousands. At $36.00 it was considered the jewel of Aussie
>investments. A strong Aussie company with a great Future. At $25.00 it
>was still a fundamental Buy favoured by many FA traders and Brokers.
>At $15.00 Fundamentals were still telling us how strong a company 
AMP
>was and still BUY BUY BUY was the cry of all the experts.
> 
>HOWEVER!!!! at $25.00 my charts were giving me Major sell signals. I
>did not own the Stock but I then at $25.00 bought several contracts (
>Option PUTS )  and rode them down all the way to $5.00. I banked the
>TA story.
>

If all you heard was 'buy buy buy' from 'all the experts' then I put it to you 
that you were hearing what you wanted to hear.    I have done enough 
homework on AMP to know that valuing it is extremely difficult.   
Because of the kind of insurance bonds they sell, for example, the value 
of AMP is linked to the value of the FTSE in England.   Now how are you 
going to predict that?   That's right, you can't.

For those kinds of reasons, I personally have made a decision to stay 
well away from insurance companies in general.  Why invest in an 
industry that is so difficult to understand, when you can invest in an 
industries that are much easier to understand?

> 
>Chrysler was given up the ghost by every Fundamental expert in the
>states: The Chartists dissagreed while the TA were buying the FA were
>selling. within a couple of years Chrysler stock went thru the Roof.
>

As a result of the Daimler-Benz merger.   Nothing to do with the 
fundamentals of Chrysler itself.

> 
> Enron Fundamentally a great company However creative accountancy
> proved otherwise, the TA Traders were selling while the FA traders
> were buying.
> 

"Enron fundamentally a great company"

Please, you are making me laugh so hard it is difficult to type.     Enron 
was an extremely complex energy trading business, so complex it was 
possible to disguise massive losses as profits.   And the people who did 
it are facing criminal charges.  If  an F/A investor was to stick to what is 
easy to understand, they wouldn't have gone anywhere near Enron.  
Crooks will rob you blind.   Wearing a white collar doesn't change that 
fact.

>
>Even Warren Buffet got it wrong with the Tech stocks. He is great
>friends of Bill Gates However he holds no Microsoft stock. Because all
>the FA believed that a company selling only software for Computers
>that would be on desks!!!!! ho hum could not possibly make money. 
>

Warren Buffett did not invest in Microsoft because he doesn't invest in 
businesses that he doesn't understand.    Your 'reason' is just wrong. 

>
>Yet
>a 45o line drawn from the lowest low showed a steady rally from 1989
>till 2001.
>

And after 2001, when the price plunged?

> 
> Likewise WB holds no Intel stock, no Yahoo stock, no Microsystems
> stock, no IBM stock no Apple Computer stock and no Pixar stock, all
> for the same reasons, the Fundamentals were not good.
> 

No, Warren doesn't invest in these businesses because he doesn't 
understand the markets they are in.    Pick your area of expertise and 
become an expert in that.  I am sure there are specialist technology 
fundamentalist investors who have done very will investing in the basket 
of stocks you have listed.

Your presumption that there exists some kind of single F/A that is the 
one best way to invest is faulty.  The single F/A enemy you seek to slay 
with your T/A sword does not exist.

Even people like Buffett never claim they make 'optimum' returns, 
beating out all possible alternatives.   They are simply very good at 
following their own strategy, which works for them,  just you you appear 
to be with yours.

SNOOPY


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