Using ONLY Fundamentals for Investing

[stocktrader3429]

Hi,
Right now, I'm mainly using fundamentals to invest in solid companies.

My strategy at the moment is to set a certain capital gains amount in % and/or exit the position after a certain loss.

Of course, if it's a normal drawdown, I may load up depending upon the funds I have. But if it's something serious, like an earnings miss or a troubling sector, then I may exit early.

Similarly, after I have attained my set capital gains mark, I exit or hold on if everything looks positive.

Essentially, I'm more interested in hitting singles and doubles than hitting a homerun.

I'm certainly beating the market, but I was wondering, is this a good strategy? Can I improve on it somehow?

Please understand that I'm not trading daily nor do I want to. I'm more or less looking at this as swing trading. As such, sometimes if I have attained my goal or lost, then I'll quit in as early as few weeks, and sometimes I may last a few months easily.

 

[Agyar]

I use fundamentals in my primary trading method, holding stocks for anything from a few days to a month or two. I also do some very basic analysis to make sure the stock is in an uptrend. I'm not sure I could even qualify it as technical analysis since there are no indicators. I've had good luck with this method so far, but the market in general has been rising during the time I've been doing it so it is hard to say how it will hold up in a market downturn.

I would recommend looking at some kind of relative strength (not the RSI indicator, relative strength of the stock vs. the market in general) and just developing a good eye for what an uptrend looks like. You don't need any indicators or MAs to know when something is in an uptrend. I bought fairly large positions in both FTEK and AMSF about 5-6 weeks ago. Take a look at those charts. That's what I mean by an uptrend. A nice steady slope up.

 

[stocktrader3429]

Yeah, certainly. I spend quite a bit of time analyzing new stocks and industries. And once I exit a position, I always keep those stocks on my watchlist to see if there might be a dip that would allow me to re-enter the position.

 

[nazzdack]

The best way to enhance your "method" would be to leave the upside wide open on your winners and not have arbitrarily fixed profit goals. That's what keeps a single or double from becoming a triple or home run.