Proof that Charts Don't Work ???

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Archive through 21 December, 2003 morpheus 25 1 21-Dec-03 09:55 am

Archive through 19 December, 2003 i_claudius 25 1 19-Dec-03 08:07 pm

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stevo

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Post Number: 90
Registered: 01-2003

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Sunday, December 21, 2003 - 06:29 pm:

"I exited One-Tel at 2.57 and 2.20 believing a blow out top was in place ... and doubting that the fundamentals were anywhere near the price"

Sounds like an old hand talking to me!

Steve

i_claudius

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Post Number: 1140
Registered: 11-2002

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Sunday, December 21, 2003 - 06:30 pm:

Hi New2

If you had the choice between investing 10 boring weeks to make a decision that would last you 10 years and make you a million

or 10 minutes to make a decision that might last 10 weeks and make you a thousand

Which would you prefer?

Buffett chose the first ... in general principle ... and for him it wasn't boring

He began his career with 2 newspaper rounds and by 1993 according to a biography I am reading he had a net worth of US $ 8.3 billion ...

He only used FA as far I can tell from the book ...

With Best Wishes

Claudius

i_claudius

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Sunday, December 21, 2003 - 06:41 pm:

Steve

Not a perfect call ... there were still a few left which I exited around 1.80 and at my original purchase price of 0.90, but most were sold at the prices stated above

Also I admit that later TA helped me buy a handful at around 60 and sell at around 65

Thank heavens for TA !!!

Claudius (old but not totally silly)

i_claudius

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Post Number: 1142
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Sunday, December 21, 2003 - 06:44 pm:

That's 60 and 65 cents !!

scarrie

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Post Number: 16
Registered: 08-2003

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Sunday, December 21, 2003 - 06:52 pm:

ALERT! ALERT!
THE HOLY GRAIL HAS BEEN LOCATED. WAIT FOR IT. HERE IT IS.
1. IF THE STOCK IS TRENDING UP, GO LONG.
2. IF THE STOCK IS TRENDING DOWN , GO SHORT.

THATS IT.

WE NOW RETURN TO OUR REGULAR PROGRAM.

deanrosario

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Post Number: 129
Registered: 11-2002

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Sunday, December 21, 2003 - 07:09 pm:

Claudius

I totally agree that fundamental analysis is the only way to try to establish the true worth of the business operations of a company.

However, I just don't see why traders need to be concerned with the value of business operations, which is why I ignore FA completely.

Theoretically, a trader should be able to look at ANY historical price chart relating to any company/commodity/financial instrument from any market in any country and be able to profitably trade that company/commodity/financial instrument.

I am intrigued by your One.Tel experience...

What fundamental analysis technique/s did you use to make the decision to purchase One.Tel in the first place?

It appears that you adhere to the Buffet-style of FA, however, I would assume One.Tel would have been a stock that Mr Buffett would have avoided, like he avoids all stocks that don't have at least 10+ years of positive earnings and a regular history of dividend payments.

I'm pretty sure One.Tel had negative earnings (if earnings weren't negative it was probably due to creative accounting) during its short and sorry life, and I'm sure Mr Buffett would have had very little regard for the management prowess of the "million dollar" executives like Keeling and Rich.

Regards
Dean

i_claudius

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Post Number: 1143
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Sunday, December 21, 2003 - 07:09 pm:

Scarrie

Great! Sounds as easy as falling off a log

Would you care to nominate 10 stocks in each category?

In the ASX100 please ... I'm a Deal 4 Free For Not Much Longer customer

Thanks

Claudius

(Message edited by I_Claudius on December 21, 2003)

i_claudius

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Sunday, December 21, 2003 - 07:21 pm:

Dean

I was fundamentally attracted by the business expertise that was backing One Tel and the track record of the backers

Buffett also liked to back good solid managers & bought into several businesses in the expectation of turning them around

So ... like many others ... I thought I had no problems in that area

It was not very deep or investigative FA ... but then a lot of FA suffers from that defect ...

The decision to enter is not one I am all that proud of, but my recognition of the absence of any clearly understandable developing fundamentals was classic Buffett

He too exited when he couldn't achieve his goals ...

Claudius

deanrosario

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Post Number: 130
Registered: 11-2002

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Sunday, December 21, 2003 - 07:30 pm:

Claudius

It would seem that a new thread is about to commence ...

"Proof that Fundamental Analysis Doesn't Work"???

I know you are desperately seeking statistical evidence to affirm the predictive value of TA; so, can you please provide your statistical analysis in relation to the predictive value of FA. Given your One.Tel experience, we know FA is not 100% accurate!

Dean

cjb

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Post Number: 26
Registered: 02-2003

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Sunday, December 21, 2003 - 09:13 pm:

Hi Dean,

I think a better topic would be

"Does Short->Medium term Trading Outperform an Index Fund"

In all the time I have been looking at this stuff I have not found any evidence that on average, Short -> Medium term traders can outperform an index. It is a zero sum game. For every winner there is a looser. The only advantage a trader has is leverage and derivatives.

I would be interested in the annualized gains for short to medium term traders taking into account all costs and taxes.

There have been quite a few research reports done in this area looking at 1000's of trading accounts and their performance over many years. It would be interesting to see how products like CFD's change the results. Maybe in that case it is now a positive sum game??

CB

i_claudius

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Post Number: 1145
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Sunday, December 21, 2003 - 09:44 pm:

Dean

I sort of agree with you

I use nothing but charts for short term trading

Then again I prefer trade in stocks with which I am comfortable on the basis of previously absorbed fundamentals, so where does the credit for selections rest?

Given that my fundamentally chosen stocks outperformed the index while I was away on holiday for over 2 months and WPL chosen on fundamentals is one of my best trades this year ... I am not sure what else there is to say.

For me the case is open and shut ...

Both TA and FA work ... and together, for me, they sometimes, but not always, work better than either alone ...

Yet short term I am happy to be abandoned on a desert island with a computer connection to a bunch of charts ... so your spirit is upon me ... at the micro level ...

Wishing you all the best for Christmas and 2004

Emperor Claudius

scarrie

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Post Number: 17
Registered: 08-2003

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Votes: 1


Sunday, December 21, 2003 - 09:50 pm:

Claudius,
No I wouldn't. The term of trend I trade may be very different to others, and I'm not interested in making stock recommendations to anybody, even if I was allowed to. What I may consider to be a good long trade now may not be at 11am tomorrow. My point is just look at the chart and trade in the direction of the trend in your time frame. Most importantly, don't expect TA to pick the very bottom of the move and the very top of the move. Just take the big chunk in the middle.
Cheers
David,

i_claudius

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Post Number: 1147
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Sunday, December 21, 2003 - 10:10 pm:

Come on Scarrie

If it's so easy it should be no problem to post a chart or 2 or 10 !!!

This is a caring sharing Forum ... we're all friends

Don't be shy !!!

Claudius

i_claudius

Member