If you are a trader, lean more on TA. If you consider yourself an investor, you'd be
foolish by not relying mainly on FA.

Steve Hawrth, this is the thread I am talking about

Last edited on: 03-29-2007 10:16 pm

Thus, in the end, if you want to be great and make lots of money running a mutual fund or
a hedge fund or something like that, av, you're gonna want to learn fundamental analysis.
I know I'd never put my money with a mutual fund that focuses primarily on technical
analysis...

Also, fundamentals allow you to figure out the LONG-TERM price... although I think that
technicals don't give you any future price, if it did, it'd just give you the very, very,
very short-term. Because technical analysis is so "short-term", it also carries greater
risk (b/c the market can be very innefficient over the short-run, but over the very
long-run, it's pretty darn efficient)...

Thus, if you can analyze the fundies right, the market should eventually turn your way,
although it's not perfect by any means (it's still easy to make subjective mistakes...).
Definately CANNOT say that about technical analysis...

AV, here's something to think about:
1. Pretty much all the best long-term money makers have been fundamental guys (Warren
Buffett, Bill Miller, etc...)
2. They have done studies on which is better, av, and - in most markets, and over teh
long-run - fundamental wins out. In very few instances did they find that technical
analysis actually outperform, and if it did, it was only over the very short term. Over
any significant period of time, fundies won.
Again, all the great stock pickers were fundi guys... that's not a coincidence...

You're right av, it is useful in the sense that TA can be an effective psychological tool
to get you to take action (alright pull the trigger here). But that's all it is. It's
really just superstition. It gives people "eyes" like Tarot cards give people "eyes". But
all it does is give you irrational confidence to take a particular action, and that's it's
only intrinsic value. However, the fact that so many people believe the superstition can
give it some credence in regard to how a stock trades, but only in a very short window and
only in a vacuum devoid of news and economic indicators. It's like what Cramer says, TA
works until it doesn't.

to me with fundamental analysis it doesnt give you a clear price target and its difficult
to find an entry point. Its like trying to fix a car without using your eyes only using
touch. Technical analysis gives me "eyes" and gives entry and exit points and helps
predict future price unlike fundamental analysis. It would be cool if we had a
competition techies vs fundies to see which really is better.

I often hear investors say that they use a combination of fundamentals and technicals with
success. It reminds me of the following story:
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When the physicist Richard Feynman was young, he met a painter who claimed that he could
make red paint by mixing only yellow and white paints. Feynman was skeptical, but since
he respected practical men, he set up a demonstration. The painter got a bucket and
poured in some white paint. Then he put in some yellow. No success. He put in more
white. No success. Then more yellow. Nope. Then he said, "Well at this stage, I usually
pour in some red paint. That really brings out the color."
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I don't doubt their ability to make red paint. But I suspect that the contribution of the
technicals is light yellow.

I believe that TA, fundamentals, quantitative analysis and momentum strategies all have
their value, strengths and weaknesses. I believe the effectiveness of any of the
particular strategies is enhanced/diminished by the type of market you are in and the
personality of the trader. Markets change continually and some of the strategies work
better in one type of market and not so well in another. I use elements of all of these
strategies or at least stay aware of them in my stock picks. I try to use the best tool
for the job at hand. I don't think there is a "best." Metaphorically, I might use a
circular saw most of the time, but at times a reciprocating saw or a table saw is better
suited for the job. I think that picking one school of trading to the exclusion of the
others only limits your opportunities.

Last edited on: 03-23-2007 11:45 am

I think that fat dividend will keep it from going too low, but if this thing approaches
$45 I'm gonna back up the truck. :oD