Jason, you said "...if you are strictly an FA guy (regardless of experience), you are not in the position to comment on the short-term movements of a stock." Well, I must disagree with you. Many investigators have studied short term price movements of stocks, looking for, among other things, patterns that were predictive of future price movements. The point was to try to develop naive (i.e. time-series) predictive models. These are very sophisticated mathematical models and they are considered "naive" because the only input is past prices (no fundamentals or economic data etc.) The conclusion from all of these studies is that price movements follow a "random walk". Basically, what this means is that there is no predictive power in past price-volume relationships.
CLE is a thinly traded stock, and as such, even an analyst with a very limited following can have a major impact on prices.
I've looked at claims made by TA for years, and I've come to the conclusion that they are no better than random guesses. You can convince yourself of this claim by going to any of the more popular threads on SI and look at the TA and then look at price movements over the next few days. FA is equally unreliable in predicting price movements. It is best used to winnow out weak companies (weak financially or operationally) from the universe of potential investments. Throw into that mix the rather dismal record that analysts have in predicting earnings and you develop an image of the market that is fraught with uncertainty.
My approach is to find well managed companies (using financial analysis) poised to grow (judging by their financial strength) positioned in an industry with good growth potential (from trade magazines, etc.). I buy and hold so long as the underlying strengths remain intact. That is my reason for investing in CLE.
Regards, and good luck
Paul |
