Hey, it's Sunday and I feel like starting some controversy. Having been an employee in the corporate world for 13 years, I wanted to shed my opinion as to how I blend some fundamental factors into the TA equation. First off, the main point is that there is no substitute for experience in understanding the weighting of TA and FA in the overall stock, market, and trade equation. I'm not trying to rehash an age-old debate - the horse looks pretty dead to me. However, back in the day I had to deal with hundreds of high-tech and lo-tech companies directly. I also knew hundreds of engineers from networking in the business and noticed many recurring themes. Combined with my own insider knowledge at the time, my opinion of fundamental analysis of tech companies boils down to the following: 1. At best, FA should be used to eliminate stocks, not buy them. It's unlikely that a company would fraudulently report a 100% loss when in fact they tripled in growth. But the opposite is very possible. I was privy to the accounting info for a $billion+ company and I can't tell you how much BS was spewed throughout those reports. Politics infects most every company and skimming and fraud are the norm. Everybody wants their job and home and is willing to lie to keep them, it's that simple! 2. It's real easy for a great company to turn to shit quick. I've seen gratitude turn to attitude overnight. So even great FA doesn't telescope the coming trainwrecks brewing in the majority of corporate conference rooms. 3. The only halfway decent and reliable method I would suggest is this. Assuming a sophisticated analysis of the company and market conditions: a. Call the company. If they don't answer in 3 rings, cross them off the list. b. If they answer and put you on hold, axe them as well. c. If the receptionist is not cheery and polite, hang up. d. If you're still on the line, ask for a salesman. If you don't get one quick, see ya. e. Call back another time and say you are a customer and need some troubleshooting on a product. If you're not treated well, redline them as well. If they quickly give you an application/service engineer with a good attitude, give them a star. The leadership in a halfway decent company will demand nothing less than the above. If any of these elements are absent in the company, they suck. Cheers and don't buy all the nonsense you hear on Bloomberg.
xtrhvydty, can you explain your nick? Why is it 'extra heavy duty'? Now to evaluate your post in a couple or so words: you've got savvy stuff there about reality.
hmmmm so a company with poor customer service = poor long investment?!? i'm pretty sure you could call some places (like AAPL) and not have superior customer service and the company could still be fundamentally sound and a good investment (buy). Vice a versa, call a place with wonderful customer service (perhaps VZ) and they could not be a "buy". -RT EDIT: another reality check... all major companies can't answer to every customer/investor immediately, just not possible
I believe FA should be used to narrow down (i/e IBD lists) then use TA to create effective buy points.
Warren Buffet and others have had great returns just using fundamentals. Many have access to management , company facilities etc. but I read somewhere Buffet at least in his early days did not even want to visit a company because he felt that getting privileged info would be like cheating . I do not believe in using TA alone for stocks, TA will often get you out before huge moves. I do not believe the individual investors can use FA alone because they simply don't have access to the information. Sure there is some level of B.S. in most listed companies. I find that integrity at the top is a good indication of whether the stock is a LT investment candidate Just listen to CEO's on CNBC, do they smile too much raving without end about their prospects? they don't take criticism well ? you smell B.S. personally I have yet to see a B.S.ing CEO provide LT returns to shareholder.
Hey, I must be kind of like Warren Buffet in his younger days: (1) from hanging too much in at Elite Trader, I got my poor TA all screwed up; (2) I've never yet run into a manager/CEO that gave me a juicy tip - only loads of BS like you said. So I have to solely rely on the computer between my ears. That must be the reason I'm still alive (not as much like Ole warren yet!). nononsense PS: #1 Never lose money; #2 Never forget rule #1. (that's wb's secret - it beats Fundamentals + Trend Finding + Money Management; never touch Psychology - it's worse than BS)