Not even insiders or only in special situations, like for instance, takeovers and even then not with much reliability. In the news you just hear of the successful insider trading attempts (they've made money based on their inside info) which get caught, but not the unsuccessful ones (lost money based on their inside info).
Its fair to conclude at this point that those against TA, and I do mean avidly against, not those who found it disagreeable to them personally or those who just use other methods, have as displayed, egos that are not suited to trading any market. They also like to try and associate them selves and gain their sense of self worth and credibility from more complex areas and ways of the market however we can not blame them for this. With those kind of egos trading will appear no less threatening than a rubik cube made out of pressure plates arming the land mine they are stood on, its only natural in this situation an individual is going to try and associate them selves with "prop shop" "bank edge" "quant". All of those being valid but the way they are being used by the anti TA crowd, its more about covering for their own short coming, hence the constant attacks.
If i was a pure market social darwinist ( like most involved in the business) i would be 100% for TA because I would want you to lose---as you know markets are negative sum--- they are also full of deceit and lies from others--- just trying to help here. I care about other traders, particuallarly those I see and know are on the wrong road----- nothing to do with complexity---- some edges are very simple.
Indeed yes, I was rather surprised at the very negative reaction the other day when I posted a definition of TA that included volatility; unfounded personal insults completely out of proportion to the discussion. Today I understood why when the question was asked and answered, our resident quant trades volatility. I am still in the dark about the fascination with prop shops as a means of learning. I know nothing about prop shops, but a reasonable guess tells me they want you to trade so they don't teach you fundamental analysis. I doubt they have people there with advanced degrees in mathematics to teach quantitative methods of trading. That leaves some form of price action or momentum, or some such, which fall under TA. What is the difference between TA one learns from a prop shop, a mentor, generous individuals on a forum like this, or through diligent self-study?
Nothing except perhaps a trader will get there sooner with the help of a mentor. Otherwise TA is TA, whether you learn it on your own or are lucky enough to have a good mentor to learn a system from.
The rest of us just want liquidity and are not constructing positions so large that we need to lay traps to get it, stop talking like a wise guy your a freaking retail trader. No edge you have mention on this site is simple or accessible to retail level. We firmly know what you and your lot are about.
And where has this gotten you? Chasing the next edge? I prefer to trade the mkts ebb and flows, not some quick money gimmick with an expiration date but that's just me.
You're confusing the value of the company with the value of the stock. Until recently, companies were valued on the basis of their book value and their earnings and their dividends. Then when mutual funds got into the act, growth rates got into it, and these were used to justify extraordinary PE ratios. During the internet boom, there was even something called the "PV", or "price to vision ratio". None of which suggests that the price of the company's stock has anything to do with the value of the company. Again during the internet boom, even CEOs stated quite plainly that the stocks of their companies were ridiculously overpriced. None of this has anything to do with the subject of the thread, of course. I brought it up only to define the traditional forms of analysis: fundamental (Graham) and technical (Wyckoff, de Villiers, Schabacker, Elliott). But put in another perhaps simpler way, a company is at bottom worth its book value. This becomes most obvious when the price of the stock has dropped so far that it's unlisted. It is unfortunate that fundamental analysis has become so often corrupted that it acts as a sales tool to justify whatever the analysts have pegged as the value of the stock, but that's less the fault of FA than it is of its practitioners. Those who are investing for the long term would be better served by focusing on the books rather than the latest stock quotes. Daytraders, of course, or short-term swing traders, needn't concern themselves with any of this.
Fantastic explanation. I might add: These days there is far to much "HOT MONEY" running around looking for a quick fix without any loyalty, period. My move to futures from stocks was honed after the "NIFTY FIFTY" and other silliness proved that fundamental was really NOT FOR short term traders. I sat there and watched the crash in 1987 on a Chicago stock market show as stocks dropped like rocks..........the fundies are meaningless to everyone except Warren Buffet types that buy companies for cash flow and use that money to BUY more companies. Great post from you........ a classic..
For sure not. Maybe I've explained myself not clearly enough. What is your understanding of THE value of the company and THE value of the stock? I don't know what mutual funds ought to have to do with it⦠over time different schools of valuation methods have emerged. None of which "came" from mutual funds (from which one initially, btw??). True, so we should keep this short. Graham is VERY old school valuation. Not exactly. If you assume you can sell the individual assets of a company you have to consider breakdown costs as well as the possibility that the market values of the individual assets are below the book values of the assets in the companies accounts. The book value is just an accounting number and in reality often not anywhere near market prices (higher or lower). Companies don't get unlisted because their stock price is low (reverse stock splits help with that problem), but because of fundamental reasons or taking private transactions. That was the point I was trying to make with my previous post⦠it's good to buy a "healthy" company if you are a long-term investor (based on the books), but that does not determine whether the stock price will rise over time. That is dependent on other investors jumping in and driving the price higher, i.e. FA alone is not helpful.