I feel like fundamental analysis is completely useless

R

RGLD

Think about it, if you can find value or predict events before they happen based on balance sheets and economic data, but the market hasn't moved, it means it doesn't agree. Traders know going against the market is a terrible idea. Market is always right. If a bad company you analyzed is trending, than more than likely there is something you missed.

The whole concept is of fundamental analysis is just confirmation basis for technicals. No matter how good a balance sheet is for a company, it's a risk if the market isn't heading that way or the opposite direction. The best course is to just stay clear until the market agrees, which means you wasted countless hours looking at SEC filings for something that may never happen.
 
No. Your fatal mistake here is treating 3 sheet analysis like tea leaf reading.

Fundamental analysis is based on the idea in a perfect world a stocks current price is the sum of future discounted cash flows. So if fundamentals show positive cash flow the stock price, excluding all other external influence, should find an absolute level equal to the current price plus the discounted increase in cash flow. It won't find this level instantaneously which is why fundamentally good trades sometimes look bad for many years.

Unsurprising fundamental analysis doesn't really tell you anything when companies are trading at several hundred times earnings and the CAPE is off the charts. Degenerate gamblers are controlling the price now. Not economics.
 
gaussian said:
It won't find this level instantaneously which is why fundamentally good trades sometimes look bad for many years.
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Isn't that what happened in big short movie? Fundamentals looked terrible, they shorted and most of them got short squeezed the to point of liquidation before market realized what was going on? I wouldn't want to stick on a stock for years before it starts moving while companies that have negative earnings shoot to the moon.
 
RGLD said:
Isn't that what happened in big short movie? Fundamentals looked terrible, they shorted and most of them got short squeezed the to point of liquidation before market realized what was going on? I wouldn't want to stick on a stock for years before it starts moving while companies that have negative earnings shoot to the moon.
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That is however how fundamental traders trade. They'll load up on a stock while it's getting hammered, eating losses over and over again, until the price corrects to where it needs to be. Joel Greenblatt and other graham style investors generally keep a trade for around 5 years. The goal isn't to win all of them but spread your investments over several possible candidates such that the gains from the winners outpace the losers. No good graham style investor bets the house on one horse.

A company with negative earnings would never be a candidate for fundamental investment. So that is a moot point for this style.
 
RGLD said:
companies that have negative earnings shoot to the moon.
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it’s the stonks that shoot to the moon, not the companies

link between the underlying business/company and its stock is elastic

the company and the stock are connected by a very elastic rubber band

that rubber band is being stretched pretty hard right now by central bank activities
 
RGLD said:
Think about it, if you can find value or predict events before they happen based on balance sheets and economic data, but the market hasn't moved, it means it doesn't agree. Traders know going against the market is a terrible idea. Market is always right. If a bad company you analyzed is trending, than more than likely there is something you missed.

The whole concept is of fundamental analysis is just confirmation basis for technicals. No matter how good a balance sheet is for a company, it's a risk if the market isn't heading that way or the opposite direction. The best course is to just stay clear until the market agrees, which means you wasted countless hours looking at SEC filings for something that may never happen.
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The biggest fortunes that have been made in the investment community have been made by fundamental investors.
 
Fundamental analysis matters more the longer you plan to hold a security. It also matters more in certain sectors such as reits, mining, low margin businesses... Nothing wrong with being shortsighted in trades, that's your style and somewhat mine too, but it isn't useless.
 
RGLD said:
Think about it, if you can find value or predict events before they happen based on balance sheets and economic data, but the market hasn't moved, it means it doesn't agree. Traders know going against the market is a terrible idea. Market is always right. If a bad company you analyzed is trending, than more than likely there is something you missed.

The whole concept is of fundamental analysis is just confirmation basis for technicals. No matter how good a balance sheet is for a company, it's a risk if the market isn't heading that way or the opposite direction. The best course is to just stay clear until the market agrees, which means you wasted countless hours looking at SEC filings for something that may never happen.
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When it comes to trading, fundamentals and technicals are two different nearly polar opposite camps.
For trading quickly, fundamental analysis is not a lot of use. Their only use is maybe company announcements and media announcements.
Fundamentals serve investors while technicals serve traders.
Some of the best trading stocks are usually those with crappy fundamentals.
During annual reporting season and 6 monthly reports, a fundamental based stock may react, also when dividends are produced, but really good fundamental stocks usually plod away, not too volatile.
But, don't believe all fundamental data, sometimes it's hiding a multitude of sins.
Likewise technicals, using technical analysis is often fraught with false signals.
 
gaussian said:
A company with negative earnings would never be a candidate for fundamental investment.
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I would BUY a stock making higher highs and higher lows anytime, even if the company has negative earnings and the CEO just committed suicide.

As a timing device fundamentals are useless.
At best they can "explain" (and predict)....the past.

Fear and greed move the market, not fundamentals or news.
 
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