Hey, it's Sunday and I feel like starting some controversy.
Having been an employee in the corporate world for 13 years, I wanted to shed my opinion as to how I blend some fundamental factors into the TA equation.
First off, the main point is that there is no substitute for experience in understanding the weighting of TA and FA in the overall stock, market, and trade equation. I'm not trying
to rehash an age-old debate - the horse looks pretty dead to me.
However, back in the day I had to deal with hundreds of high-tech and lo-tech companies directly. I also knew hundreds of engineers from networking in the business and noticed many recurring themes. Combined with my own insider knowledge at the time, my opinion of fundamental analysis of tech companies boils down to the following:
1. At best, FA should be used to eliminate stocks, not buy them.
It's unlikely that a company would fraudulently report a 100% loss when in fact they tripled in growth. But the opposite is very possible. I was privy to the accounting info for a $billion+ company and I can't tell you how much BS was spewed throughout those reports. Politics infects most every company and skimming and fraud are the norm.
Everybody wants their job and home and is willing to lie to keep them, it's that simple!
2. It's real easy for a great company to turn to shit quick. I've
seen gratitude turn to attitude overnight. So even great FA doesn't telescope the coming trainwrecks brewing in the majority of corporate conference rooms.
3. The only halfway decent and reliable method I would suggest is this. Assuming a sophisticated analysis of the company and market conditions:
a. Call the company. If they don't answer in 3 rings, cross them off the list.
b. If they answer and put you on hold, axe them as well.
c. If the receptionist is not cheery and polite, hang up.
d. If you're still on the line, ask for a salesman. If you don't get one quick, see ya.
e. Call back another time and say you are a customer and need some troubleshooting on a product. If you're not treated well, redline them as well. If they quickly give you an application/service engineer with a good attitude, give them a star.
The leadership in a halfway decent company will demand nothing less than the above. If any of these elements are absent in the company, they suck.
Cheers and don't buy all the nonsense you hear on Bloomberg.
Having been an employee in the corporate world for 13 years, I wanted to shed my opinion as to how I blend some fundamental factors into the TA equation.
First off, the main point is that there is no substitute for experience in understanding the weighting of TA and FA in the overall stock, market, and trade equation. I'm not trying
to rehash an age-old debate - the horse looks pretty dead to me.
However, back in the day I had to deal with hundreds of high-tech and lo-tech companies directly. I also knew hundreds of engineers from networking in the business and noticed many recurring themes. Combined with my own insider knowledge at the time, my opinion of fundamental analysis of tech companies boils down to the following:
1. At best, FA should be used to eliminate stocks, not buy them.
It's unlikely that a company would fraudulently report a 100% loss when in fact they tripled in growth. But the opposite is very possible. I was privy to the accounting info for a $billion+ company and I can't tell you how much BS was spewed throughout those reports. Politics infects most every company and skimming and fraud are the norm.
Everybody wants their job and home and is willing to lie to keep them, it's that simple!
2. It's real easy for a great company to turn to shit quick. I've
seen gratitude turn to attitude overnight. So even great FA doesn't telescope the coming trainwrecks brewing in the majority of corporate conference rooms.
3. The only halfway decent and reliable method I would suggest is this. Assuming a sophisticated analysis of the company and market conditions:
a. Call the company. If they don't answer in 3 rings, cross them off the list.
b. If they answer and put you on hold, axe them as well.
c. If the receptionist is not cheery and polite, hang up.
d. If you're still on the line, ask for a salesman. If you don't get one quick, see ya.
e. Call back another time and say you are a customer and need some troubleshooting on a product. If you're not treated well, redline them as well. If they quickly give you an application/service engineer with a good attitude, give them a star.
The leadership in a halfway decent company will demand nothing less than the above. If any of these elements are absent in the company, they suck.
Cheers and don't buy all the nonsense you hear on Bloomberg.
i'm pretty sure you could call some places (like AAPL) and not have superior customer service and the company could still be fundamentally sound and a good investment (buy). Vice a versa, call a place with wonderful customer service (perhaps VZ) and they could not be a "buy".