Daytrading vs. fundamental analysis

Quote from Tacsian:

Two thoughts...

MrMarket, you mentioned something on the theme of knowing more than the markets etc...I wonder if this is an impossibility tautologically...the markets have a price at close today for any stock you want to name...and the bottom line is, if you own that stock today, that's what you can get for it. Whether the prospects for appreciation are x or y for any given stock, the market is the final arbiter and the closing bell (disregarding afterhours trading of course) is the bottom line today. I understand FA and agree that finding "value" in a company and a high probability of a target in the future if everything goes as planned are skills to some extent, honed with experience and some hard work and yes, a bit of intellectual acumen necessary to Think ahead. But until any given stock truly does grow at such and such a rate, and produce earnings for this quarter or that quarter, it hasn't managed it yet and the market says: "here is what i'll pay you today for that company." In 4 to 6 weeks (your standard targeted time I *think* from your posts) the market may say different. But at no time in the 4 to 6 weeks, or before, or after, was the market ever wrong about the price or value of any company. Potential value is just that, potential....and Sept. 11ths, Martha Stewarts, Enrons and other sundry smaller incidents like the suicide or car accident claiming the life of a CEO can all impact Potential value, regardless of due diligence. You play probabilities well according to things that "make sense" to you. I just don't think its a matter of being ahead of or better than the market itself.

Second thought...whether its "average" or not, or involved "superior" intellect..a guy like John Henry, net worth 600 million to 1 billion, has used a very simple technical trend following system, as have many turtles. Whatever one thinks of the turtles, one can't dispute that a truly simple set of mathematical rules, (i.e. buy at new 40 day high, stop at last 20 day low, etc etc) hasn't produced signifant returns and fortunes for many. I'm not knocking your FA with a smidge of technical signals that are the precursor to you even engaging in the FA, but to say that TA alone is "lesser", well I think that's naively dismissive of what the power of TA, properly understood by some and applied by some, can achieve on its own. We all know the world of CNBC is populated by those who can't use either FA or TA very well quite often. Most traders can't either, no matter what their timeframe...but just as most people can't hit a bullseye with every dart throw, the flaw isnt in the dart, its in the people.

Just some thoughts...
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I like it...let's hear more!
 
I think that the reason that the majority of people here use TA of FA is the time frame. Most here (including myself) are looking for quick moves, in which case FA is not going to help you (unless you have deduced from your FA that corporate news in coming in the very near future). Anyway, they can both work, and I do look at both if I am actually going to INVEST in a stock for a longer time frame, but for short-term trading I could care less what the company does, just give me a juicy looking chart and I'm all over it !!

Vega
 
Quote from mrmarket:

In my opinion, daytrading is merely the recognition of patterns. A rat eventually learns to run the correct way in a maze.

Fundamental analysis is requires brainpower, for it is required by the analyst to examine the data and apply it to his own view of what is a successful business model. Making a proper call on the proper fundamentals means that the analyst actually knows more than the market. It's a great place to be.

So I summarize by saying===> average returns are for average investors, superior returns are for superior investors.

Your comments are welcome.
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+==============================
MrMarket;

I prefer IBD type trading;
includes fundamentals, includes daily ,
Bill O'Neill however valued technicals [price+ charts] more.

Lots like mutual funds managers do well with fundamentals;
and get paid on gross.

Generally technical traders do better [%];
and get paid on net.:cool:

''Be diligent''-Solomon,trader king
 
Quote from JT47319:

You're still comparing apples to oranges.

Traders are not investors and while many investors delude themselves into believing that they are "active" traders (something to do with the "thrill", the "glamour", and the "freedom"), it is a world of difference.

Do you really believe that those traders in the pit really give a flip about fundamentals? THEY'RE TRADERS. Geez, learn the difference. They aren't trading for their frigging 401K account in the hope of investment returns. They're making ACTIVE income by trading. Do you calculate your salary based on annualized returns? Sheesh.
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Don't know who the "you" is that you're referring to, and it's true that traders and investors do not share the same perceptions.

But unless one is clutching the stock certificates on his deathbed, he's a trader, regardless of what he calls himself. Do some traders incorporate fundamentals into their activities? Of course. That's what CANSLIM is all about, even though one may use it for nothing more than narrowing down the universe of potential trading vehicles. Other traders use TA only, but use so many indicators that price is an irrelevancy. And most traders have never set foot on the Floor.

Even though I no longer incorporate fundamentals into my trading since I no longer trade stocks, I find a greater difference between me and somebody who scalps off tick charts than I do between me and the trader who has eyeballed those fundamentals.
 
Quote from dbphoenix:



Don't know who the "you" is that you're referring to, and it's true that traders and investors do not share the same perceptions.

But unless one is clutching the stock certificates on his deathbed, he's a trader, regardless of what he calls himself. Do some traders incorporate fundamentals into their activities? Of course. That's what CANSLIM is all about, even though one may use it for nothing more than narrowing down the universe of potential trading vehicles. Other traders use TA only, but use so many indicators that price is an irrelevancy. And most traders have never set foot on the Floor.

Even though I no longer incorporate fundamentals into my trading since I no longer trade stocks, I find a greater difference between me and somebody who scalps off tick charts than I do between me and the trader who has eyeballed those fundamentals.
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Another great post...the eloquence of the ET veterans is starting to shine through. Maybe I should be a moderator?
 
Quote from mrmarket:

Another great post...the eloquence of the ET veterans is starting to shine through. Maybe I should be a moderator?
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As long as you continue to behave like a normal person, you'll get normal responses. Your comment above implies that you think I am now a fan. Believe me, I'm not. You have the same blind spot that Tom and David Gardner have, and I've been arguing that for nine years (actually, not so much any more). If I want to argue it further, I'll head to the MF site. I'm sure not going to do it here.

My post was directed toward the issue of whether one can incorporate fundamentals and still be a trader. If it stemmed from something you said at an earlier point, the link was purely coincidental.
 
Quote from dbphoenix:



As long as you continue to behave like a normal person, you'll get normal responses. Your comment above implies that you think I am now a fan. Believe me, I'm not. You have the same blind spot that Tom and David Gardner have, and I've been arguing that for nine years (actually, not so much any more). If I want to argue it further, I'll head to the MF site. I'm sure not going to do it here.

My post was directed toward the issue of whether one can incorporate fundamentals and still be a trader. If it stemmed from something you said at an earlier point, the link was purely coincidental.
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I am normal...the only thing different about me is my amazing stock picking record and my enormous biceps.
 
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