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deucy28
Registered: Feb 2011
Posts: 427 |
09-23-12 06:49 PM
Quote from vicirek:
Enron , Lehman etc. .... all with great fundamentals to the last moment before bankrupt.
TheMickey just posted, "Trading / investing successfully is fraught with twists and turns..."
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deucy28
Registered: Feb 2011
Posts: 427 |
09-23-12 07:20 PM
Here is a case where Fundamentals can beat its chest and slap itself on the back:
Goldman, Morgan Stanley, Lehman, Bear Sterns, and other big investment houses not only accumulated mortgage backed bonds, but were doing so right to the END. Credit rating firms were on board, too.
Burry (the first)-- a neurologist turned hedge fund manager), then Eisman, Paulson , Bookstaber, Pellegrini, Lippmann, Greene, Lahde discovered the fundamental quality of the mortgages inside those bonds in time to make the BIG SHORT with credit default swaps, becoming very wealthy.
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Trend Following
ET Sponsor
Registered: Aug 2004
Posts: 1049 |
09-23-12 07:22 PM
Quote from Opulence:
This is something I've been wondering since I started trading. I remember a guy telling me a while ago, actually a few guys telling me that they didn't bother looking at the Fundamentals because by the time the outsiders find out about it, that information has already shown up in the prices. I see what they mean because every time some fundamental news is reported, its always after the fact. Don't get me wrong, I fully understand that government reports, political events, natural disasters, etc. can move a market and blow through a T/A system.
True views on fundamentals. When it comes to TA there is prediction and reaction. Reaction (i.e. price action systems) works. Prediction is folly.
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oldtime
Registered: Jun 2011
Posts: 7479 |
09-23-12 08:41 PM
Quote from deucy28:
"Is fundamental analysis SOMEWHAT useless ?"
Just about everything is SOMEWHAT.
Asking a question like this needs some more definition. I search the internet for answers to questions and find what turns out to be very different answers that eventually I learn all of them turn out to be right. How can that be ? My huge peeve about articles on the internet is they mostly are not dated. What is true today can be different from 3 months ago which can be different from a year earlier, which can be different.......
And this ONLY refers to time frames. Just a few posts ago, TheMickey just posted, "Trading / investing successfully is fraught with twists and turns..." OldTime just posted, "I make money by betting how fundamentals will affect the market long term. Doesn't help me much on a daily or even weekly basis," which is exactly opposite of what make my gains.
This is why as a pairs trader who is apt to hold positions longer than I suspect most pairs traders (I learned this about myself from a great ET thread on this style trading), I have found that fundamentals and their associated events dampen out over time as manifested in their stock plots, and do so with the Short leg in my pair and the Long leg in my pair. (Mind you, these are selected stock pairs with good correlation.) I am so much a pariah to other pairs traders, I even ignore imminent earnings reports from chasing me out of positions or putting on a hedge, e.g. options. Time heals wounds and time dims memory of good events. I don't worry about a trade becoming "an investment" because of it getting a way from me, because "reversion to the mean" is another manifestation that fundamentals all come out in the wash between the two stocks. Studying varying chart TIME frames proved this to me before getting into the trade.
So the thread originator's question is open ended to correct answers coming from all directions. This is especially true when it comes to TIME and DEGREE.
well deucy28, I just answer what works for me. That way when the whole thread is complete you get a variety of opinions. Too hard for me to answer vague questions. And my answer may not even apply to the question being asked. Otherwise, I started spreading forex for the exact reasons you stated, To keep from getting shaken out on some news event (which I don't really consider fundamental) since most of the time there is a reaction that is overblown, and then a reaction to the over reaction to the other side, and finally even though there is a subastantial move, it isn't the end of the world. But getting back to fundamentals, I like to have a long term guess on what will probably happen based on them. Very easy to see when I am wrong. But if you watch cnbc, you would think the fundamentals are violently changing everyday. One day the market is up because Europe is good. Next day the market is down because China is slowing. It can't all happen that fast can it? When I started they told me, "Everything known is already priced in." Not sure I agree with that, but I think more report traders probably should.
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OxfordStrat
Registered: Sep 2012
Posts: 10 |
09-23-12 09:27 PM
Quote from Trend Following:
True views on fundamentals. When it comes to TA there is prediction and reaction. Reaction (i.e. price action systems) works. Prediction is folly.
Even "reaction" is "prediction" that the shape of distribution of trades will hold.
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RangeTrader
Registered: Mar 2012
Posts: 705 |
09-23-12 09:46 PM
Fundementals can be useful for measuring the degree of speculative bubble the instrument is in. Generally things are always in speculative bubbles to a certain degree but they always snap back to fundamental median... This can be measured with just technical analysis just fine though because fundamentals change slowly.
LoL...
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