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     deanrosario
Member
Username: deanrosario
Post Number: 1149
Registered: 11-2002Rating: N/A
Votes: 0
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| | Wednesday, November 15, 2006 - 09:45 am: |  
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I realise a "charting website & forum" is going to be heavily focused on TA.
However, I also know many on the Forum seem to use a bit of FA to add to their overall view of the market.
It seems to me, that we have recently been bombarded with significant news that should alter the fundamentals of many companies, so ...
How are Fundamental Analysts treating the news.
1. XJO is nearing a record high; and US is doing the same.
2. RBA is worried about inflation and is tightening monetary policy
3. Personal debt levels in Australia are at an all time high caused by people being over-extended on home mortgages and credit card debt.
4. The WBC Consumer Sentiment Index, which was just released at 1030 a.m., states:
Consumer Sentiment is at the 2nd lowest level since the 2001 Recession"
So, how should fundamental analysts treat these pieces of information when assessing their market strategy?
Regards
Dean
PS: I should also add that Labour Cost Index figures (Q3) and House Prices (Q3) are also being released today at 1130 a.m.
Intuitively, you would expect the LCI to have risen since employment is at record levels, which should add to the rising inflation.
(Message edited by deanrosario on November 15, 2006)
"Never commit yourself to anything you can't walk away from in 30 seconds." Neil McCauley (played by Robert de Niro) in 'Heat'.
"Hope is a dangerous thing. Hope can drive a man insane." Ellis Boyd "Red" Redding, played by Morgan Freeman, in 'The Shawshank Redemption'.
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hilarius
Member
Username: hilarius
Post Number: 1955
Registered: 04-2004
Rating: N/A
Votes: 0
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| | Wednesday, November 15, 2006 - 01:46 pm: |
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Dean
Even in a bear market some stocks rise
If you think the market might turn bearish you could have a look at those stocks whose Earnings Per Share are rising faster than the share price (I'm still working on a scan for this)
If that stock is also showing good TA the two sets of facts ought to confirm each other as a buy
Then again doesn't Weinstein say never to trade against the market trend?
Index trading is for those who dont want to be exposed to individual stock risks and rewards
I am sure you know more about how to recognise Index turning points than I do and I would think that sentiment has to outrun fundamentals strongly ... in the form of panic buying prior to a major Index down turn
However, there may well be examples in history where this condition was not met
As a trend follower I would suggest you do not confuse yourself with fundamentals unless you think a group of fundamentals is about to outweigh sentiment and even then sentiment can run counter to fundamentals for weeks or months before the truth kicks in
So while I believe fundamentals ultimately matter most, so does sentiment which can for periods be way out of kilter with fundamentals (eg the dot com boom)
Sentiment can also generate deterioration in fundamentals when fear grips the human mind
As President Roosevelt said "We have nothing to fear but fear itself" but fear can be devastating once mass psychology is gripped by it, just as mass optimism can outweigh fundamentals
Now you've confused me 
Hilarius
I come in peace to share my thoughts and to shine my candle light on possible long term opportunities
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deanrosario
Member
Username: deanrosario
Post Number: 1150
Registered: 11-2002Rating: N/A
Votes: 0
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| | Wednesday, November 15, 2006 - 02:09 pm: |
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Hi Hilarius
Thanks for taking the time to reply.
You know me - I never know which way the market is going other than for the 30-60 minutes that I have an open position (and even then I have no idea sometimes!!).
I've just been intrigued to observe the continuing upward move on the XJO in recent times, since as a novice Fundamentalist, I would have thought recent economic indicators are turning a tad bearish?
Best wishes
Dean
"Never commit yourself to anything you can't walk away from in 30 seconds." Neil McCauley (played by Robert de Niro) in 'Heat'.
"Hope is a dangerous thing. Hope can drive a man insane." Ellis Boyd "Red" Redding, played by Morgan Freeman, in 'The Shawshank Redemption'.
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hilarius
Member
Username: hilarius
Post Number: 1957
Registered: 04-2004
Rating: N/A
Votes: 0
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| | Wednesday, November 15, 2006 - 02:19 pm: |
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Dean
The Reserve Bank is hoping you are right and that spending especially on credit will be reined in
This means a downturn in retail trading and housing, but their reasoning is that the record boom can be sustained for longer if inflation is controlled
Raising the price of money means that most rising EPS results will indicate fundamental strength since most companies (though not all) have an interest bill to pay before announcing earnings for shareholders
If the economy survives these regular touches of the brakes it may be that the ultimate crash through the front windscreen when panic selling begins is delayed or minimised
That I believe is the theory
Anyone disagree?
With Best Wishes
Hilarius
I come in peace to share my thoughts and to shine my candle light on possible long term opportunities
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hailoh
Member
Username: hailoh
Post Number: 189
Registered: 04-2003Rating: N/A
Votes: 0
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| | Wednesday, November 15, 2006 - 08:30 pm: |
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G'day Dean
To put these comments in perspective, I trade CFDs on a medium term basis. Some days I can't get anywhere near a screen. I'm ahead.
An international funds manager the family uses has been on about the indicators you itemised with specific reference to the US for the past three years, and has been bullish about gold and silver for the same length of time.
I have fallen into the trap of shorting stocks like HVN and JBH when my own concerns about too much credit were reinforced by particularly pointed comments from the institution. It wasn't difficult at the time to see supportive bearish chart patterns that were quickly swamped by reality as the prices took off again.
Your fundamentals contribute to long term economic cycles that have their own inertia. I believe the inertia of economic policy is eventually changed by friction with other policies and responses, rather than an identifiable event; in much the same way that a tanker without power will stop as a result of friction with the water, currents and wind.
So, what will eventually grind down the need to buy computer games? or respond to the continuing TV ads for access to home mortgage credit to "enjoy the lifestyle you deserve"?
The current south west Sydney mortgage woes can be put down to an abysmal lack of knowledge of personal money management in the face of inescapable seduction for the good life, where it was implied that big time money management would look after itself. No need for friction there - those mortgages were anchors from the start. But then again, we are told that house prices are on the rise again.
The debt figures generated on a personal basis by retail consumerism aren't as individually big as those for housing. However,the same underlying weak money management skills may well trigger the ultimate panic that takes hold when there isn't anything left to spend.
So, back maybe to Mr.Weinstein. One of his indicators for a bull market top was extra-ordinary exuberance in analyst reporting in the face of underlying economic weakness. I haven't seen that yet, but the underlying doubts about how long the party will run is most certainly there. Keep in mind Keynes' saying that the market can stay wronger for longer than we can stay solvent.
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vermante
Member
Username: vermante
Post Number: 603
Registered: 11-2002Rating: N/A
Votes: 0
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| | Wednesday, November 15, 2006 - 09:12 pm: |
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Dean
Your best approach to finding a solution may be to maintain a record of market reaction to all announcements you consider major.Over a few years you may be able to detect a consistency to market reaction for certain types of announcements. Giving you an edge.
Cheers
Vermante
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deanrosario
Member
Username: deanrosario
Post Number: 1151
Registered: 11-2002Rating: N/A
Votes: 0
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| | Wednesday, November 15, 2006 - 10:32 pm: |
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Thanks for the input, guys.
I think FA is a very useful tool for valuations and earnings estimates, which is why I'm concerned about the current continuous exuberance in the face of an economy that has:
- rising interest rates
- higher labour costs
- reducing consumer sentiment
etc.
Should make for an interesting start to the new year.
Dean
"Never commit yourself to anything you can't walk away from in 30 seconds." Neil McCauley (played by Robert de Niro) in 'Heat'.
"Hope is a dangerous thing. Hope can drive a man insane." Ellis Boyd "Red" Redding, played by Morgan Freeman, in 'The Shawshank Redemption'.
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villageidiot
Member
Username: villageidiot
Post Number: 18
Registered: 06-2006
Rating: N/A
Votes: 0
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| | Thursday, November 16, 2006 - 12:41 am: |
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Hi Dean, you forgot to add the main fundamental reason to why interest rates and labour are costs are rising, that is, increasing company profits.
I would be far more concerned if labour costs, interest rates and profits were falling. The economy would not be running to well if that was the case.
Trying to predict the markets turning points is a mugs game. Are we at the turning point now or are we having a correction before the next leg up.
All we can all do is trade the market as we see it in our working time frame and be ready for the change in sentiment.
The views of the VillageIdiot are mine alone and if you act on them, who is the fool.
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wambam
Member
Username: wambam
Post Number: 60
Registered: 10-2003Rating: N/A
Votes: 0
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| | Thursday, November 16, 2006 - 10:49 am: |
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Dean
The three components you listed are also a concern in the US. US analysts are talking of a topping in the major US indices yet we have seen in the last two days further buying, or short covering.
Even though I read some fundamental news each day I don't base any decision on it...purely technical. The chart will tell me soon enough when we are on the way down, if at all.
I read somewhere yesterday that Oz is headed for the recession we can not avoid. Time will tell.
Wambam
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deanrosario
Member
Username: deanrosario
Post Number: 1152
Registered: 11-2002Rating: N/A
Votes: 0
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| | Thursday, November 16, 2006 - 10:50 am: |
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Hi Villageidiot
You're absolutely correct in saying, "the main fundamental reason to why interest rates and labour are costs are rising, that is, increasing company profits".
However, from what I know, analysts use a valuation methodology to price shares based on "future EPS".
And, I guess, my simplistic view is that I would have thought analysts would expect "future EPS" to be adversely affected by recent economic data released for FY2007.
I'm certainly not "trying to predict the markets turning points".
I'm strictly a daytrader and am therefore indifferent to longer term market movements.
(Message edited by deanrosario on November 16, 2006)
"Never commit yourself to anything you can't walk away from in 30 seconds." Neil McCauley (played by Robert de Niro) in 'Heat'.
"Hope is a dangerous thing. Hope can drive a man insane." Ellis Boyd "Red" Redding, played by Morgan Freeman, in 'The Shawshank Redemption'.
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hilarius
Member
Username: hilarius
Post Number: 1958
Registered: 04-2004
Rating: N/A
Votes: 0
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| | Thursday, November 16, 2006 - 01:54 pm: |
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Good Afternoon
It's strange how much less noisy the gold bugs have become
For donkey's ages they been moaning and groaning about how central banks can't control inflation
They should be happy that the Reserve Bank is applying the brakes to control inflation, but secretly of course they really want inflation so that paper money loses value and gold gains
One way or another, excessive inflation, or excessive interest rates they may still be able to produce the recession/depression we didn't need to have
They should applaud moderation in all things ... except their gold mongering scare tactics of course!
Perhaps they have just become confused about the best way to produce a downturn in everything except gold stocks
Hilarius
I come in peace to share my thoughts and to shine my candle light on possible long term opportunities
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captain_chaza
Member
Username: captain_chaza
Post Number: 2292
Registered: 02-2003Rating: N/A
Votes: 0
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| | Saturday, December 09, 2006 - 04:15 pm: |
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Ahoy Officer Deano
The Going rate for a Fundamental Analyst 4 years ago was $300,000 /Year
Do you honestly think anyone here on IC has the necessary
Qualifications and Number of LETTERS after their name to answer your call?
The best you will get here is what I call
"Sweet FA"
If you expect anymore than that, I promise
"You will be very disappointed"
Salute and Gods' Speed
PS There are many here who could demand great sums of money as a "Technical Analyst"
BUT NONE as a "Fundamental Analyst"
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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hilarius
Member
Username: hilarius
Post Number: 1968
Registered: 04-2004
Rating: N/A
Votes: 0 |
