Value investing vs technical analysis

Quote from jlryan87:

Although a lot of people seem to believe that value investing is superior than TA, I can't help but think that value investing also shares the same weakness as TA. Namely, both assume that past performance is indicative of future performance.

An example for TA will be: if closing price crosses a certain moving average, the price will have a tendency to rise. A similar problem with value investing, is that, if the fundamental is good for the last few years, and the stock is not expensive, then stock price has a tendency to rise. The problem I see is, the company may not carry on having the same awesome performance in the future. Also, the stock price may just stuck on the same level for a long time.

What do you make of this?

By the way, I wonder if anyone comes across any research papers that focus on debunking Buffett or value investing.
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Be a dipster. Buy the dips. Make money.

Sell short the rips. Lose money.

Sell the rips. Make little money.

Don't buy the dips. Make no money.

It's so easy even a caveman can do it.
 
Quote from FrankSlaughtery:

+1. the followiong quote is paraphrased from something i read online (if you find the citation pls post so they get credit).

"if he didn't look like everyone's grandpa (and try to act like it) he'd be despised as a greedy hedge fund manager bent on taking advantage of our great companies".

oh btw saying derivatives are weapons of mass destruction while at the same time writing BILLIONS in otm puts is the definition of being a hypocrite.

he also again by definition doesn't have an exit strategy (my favorite holding period is forever). looking back at the bubble during '99 and the beginning of '00 he admitted he should have sold some of his stocks b/c they promptly lost 50% (and they were "conservative" plays like KO). and this has nothing to do w/ "hindsight is 20/20" b/c ANY sell discipline would've got him out w/ huge profits even after giving some back on the decline. something as simple as selling if price is below the 50 DMA would've saved so many people so much money.

anyways, all being said he is a great investor so i'm giving him full credit for that so pls don't take this post as only critical (we could all do better and that def includes me!). just trying to show that while he's a great investor we shouldn't try to do exactly what he's done to be successful.
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Buffett is the quintessential dipster.

He buys the dips and then watches the rips.
 
If your idea of technical analysis is moving average crossovers, then I gotta go with the value thing.

Don't they teach kids not to use them in elementary school now?
 
Quote from FrankSlaughtery:

+1. the followiong quote is paraphrased from something i read online (if you find the citation pls post so they get credit).

"if he didn't look like everyone's grandpa (and try to act like it) he'd be despised as a greedy hedge fund manager bent on taking advantage of our great companies".

oh btw saying derivatives are weapons of mass destruction while at the same time writing BILLIONS in otm puts is the definition of being a hypocrite.

he also again by definition doesn't have an exit strategy (my favorite holding period is forever). looking back at the bubble during '99 and the beginning of '00 he admitted he should have sold some of his stocks b/c they promptly lost 50% (and they were "conservative" plays like KO). and this has nothing to do w/ "hindsight is 20/20" b/c ANY sell discipline would've got him out w/ huge profits even after giving some back on the decline. something as simple as selling if price is below the 50 DMA would've saved so many people so much money.

anyways, all being said he is a great investor so i'm giving him full credit for that so pls don't take this post as only critical (we could all do better and that def includes me!). just trying to show that while he's a great investor we shouldn't try to do exactly what he's done to be successful.
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Buffett is the quintessential dipster.

He buys the dips and then watches the rips.
 
Quote from jnbadger:

If your idea of technical analysis is moving average crossovers, then I gotta go with the value thing.

Don't they teach kids not to use them in elementary school now?
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nobody is talking about ma crossovers. ta allows traders to accurately define risk and reward while value investing by def doesn't (if you buy something at 50 keep doubling up all the way to zero like bill miller did on aig, fre, fnm and a lot of other "value" investors you have no appreciation for risk. it's one thing to blow your own account up - it's another for him to do it and screw over all the holders of his fund.

as far as strategies go i personally don't care what people do - i'm only stressing the importance of managing risk which is typically a weak point of value investors. IF a value investor says "i think xyz is undervalued here but if it falls another 10% i'll exit" that's a diff shade of value investing and closer to trading off of technicals.

so to sum up and make sure no one takes this the wrong way since i don't want this thread to start into a flame war - trade how you want but remember to manage risk how you need to.
 
Value investors presume their perceived bargain purchase price has wrung out the majority of the risk. Sometimes that's right, sometimes not. Sometimes when a stock goes from 100 to 40, it's because the company is sick. Sometimes sick companies die.

So... if a value investor loads up on value stocks, he's praying at least in the back of his mind, "I hope all of this value stuff doesn't go to shit.. 'cause if it does, I'm wiped out". It takes only 1 or 2 bad bouts to wipe out 20 years of gains.

TA investors are supposed to have more control over risk.
 
Quote from FrankSlaughtery:

i'm only stressing the importance of managing risk which is typically a weak point of value investors.
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+1
 
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