I feel like fundamental analysis is completely useless

[Nine_Ender]

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.

For me, I see it in reverse. Technicals confirm my theories based mostly on fundamentals. They also help define logical entry and exit points. But the main reason for taking on an investment/trade for me is based on fundamentals, sector/market momentum, and news. When I was younger, I had more of a trading approach. Now, I have more of an investment approach but I will take short term profits or losses if things develop quickly.

There are advantages/drawbacks. For example, I've badly missed the mark of US IT in general. On the plus side, I jumped in on metal/energy cycles nicely at times and I know when the banks are good value.

 

[RGLD]

This has nothing to do with technical more of the flaw of fundamentals. Anyone coined that term "Don't catch a falling knife"? Is that when a stock is going down and you're buying it?

If the balance sheets of a company look good but the stock is going down, wouldn't it occur to you that you might be missing something? And doesn't that mean you are going AGAINST the market. Which every "professional" says not to do?

The biggest fortunes that have been made in the investment community have been made by fundamental investors.

That's because we never hear from the ones that fail. Nobody ever does. And this is not excluding technicals - people who lost fortunes on technicals are never heard from also.

For me, I see it in reverse. Technicals confirm my theories based mostly on fundamentals. They also help define logical entry and exit points. But the main reason for taking on an investment/trade for me is based on fundamentals, sector/market momentum, and news. When I was younger, I had more of a trading approach. Now, I have more of an investment approach but I will take short term profits or losses if things develop quickly.
.

That's not exactly what the situation is... I'm saying what if your fundamental research looks good but the stock is trending down. Would you still buy it based on your fundamental analysis?

 

[Trader Curt]

Fundamentals have their place. But you need to figure out which fundamentals actually make a difference in the market? And then you need to figure out when they will make a difference? Also technicals can help you pinpoint when to buy/sell. To me fundamentals are 75% important and technicals are 25%. Ask yourself what would a professional trader think about this information? Then go into a trade it as if you were a professional!

 

[Tradex]

If the balance sheets of a company look good but the stock is going down, wouldn't it occur to you that you might be missing something?

Fundamentalists could not care less, if their "good" stock is going down they simply... buy more!

Technical analysts, on the other hand, see the downtrend in progress, short the stock, and then laugh all the way to the bank, leaving the fundamentalists scratching their head.

 

[Snuskpelle]

If your time frame is years (or maybe months) then fundamentals do matter. But FA is generally of no concern to intraday trading aside from:
A) price fluctuations that newly published fundamental information causes (gotta be quick then as you're competing against HFT).
B) helping you set up a long or short bias in order to only take trades in the expected long term trend, but that can also be done in other ways.

 

[Tradex]

But you need to figure out which fundamentals actually make a difference in the market?

There are literally hundreds of "fundamentals" parameters.
It has been shown that our brain cannot process more than 5 parameters at the same time. Beyond that level it's all confusion.

 

[RGLD]

Isn't fundamentals the reason why people lose everything?

I mean think about it, you keep buying going against the market. It keeps going down, than one day the stock goes to 0 because there was a piece of news that you missed? A piece of valuable information that'll NULL all the balance sheets stuff.

I feel like fundamentals are worthless in this age because of all the fake / Opinion driven / bias news. Look how bad you would have gotten killed if you were betting on unemployment numbers being highest ever. The news were feeding you the bullcrap narrative, and everyone who listened got caught short. You need to have a very strong mental filter and imagination to profit from purely fundamentals alone.

This was the June 2020 unemployment numbers. Fox made a whole skit making fun of them. lol

 

[lindq]

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.

You can buy the finest sailboat in the harbor, with the fastest keel.

But trying to sail against the wind is not advisable.

 

[Tradex]

Isn't fundamentals the reason why people lose everything?

Yes, essentially.

Fundamentalists love to keep a stock even if it's going down big time, because they truly believe it has "value".

Then they sell it only when the pain is too strong and they can no longer lose an extra dollar.

Technical analysts, on the other hand, see a breakout of a support line (or an uptrend line) and liquidate their long positions immediately (or even go short), they don't give a hoot about the "value" of the stock.

Neeeeext!

 

[ironchef]

I mean think about it, you keep buying going against the market.

That is not what we fundamentalists do.