*** It's time for fundamental analysis to take center stage again; reckless daytraders go home ***
The last year few months, and for much of the last 3-4 years of so, we have seen a lazy and over-optimistist attitude and dart-throw approach to picking stocks. Now it's time to roll up our sleeves and get busy. That is the type of situation I love. Quite frankly my hope is that 80% of the daytraders (at least the ones that do zero DD) will leave the market for good. Daytraders, by and large, do way more harm than good, for everyone. They limit profits on the upside (when they sell for a weenie gain) and they exagerrate the downside when they get panicked out.
My hope is that people will take a more logical approach to valuing stocks and hold longer term. People can continue to buy B2B, B2C, B2D, B2XYZ, or whatever the heck they want, but valuing stocks based on anything other than reasonable PE, debt load, book value, etc., is dangerous.
Luckily the REAL companies with a great track record and a reasonable PE have been hurt along with the smoke and mirrors companies. Now we just have to find the best and most undervalued ones of the lot.
My philosophy has always been to find and invest in fundamentally undervalued companies. If a stock is a good buy short, medium and long term, you can hardly lose. If it goes up dramatically in the short term, you have the option to sell some, or all, right away. If it continues to go down a little after you buy, you can buy more since fundamentally it has become even more undervalued. In that case you still can win longer term. The trick is to do extensive DD on real companies, and then continue to trust your DD. Much safer and surer, imo.
PS- I realize that there are many daytraders that are highly intelligent and do outstanding DD. My comments are not directed at these individuals. More power to the quality pro's out there that know how to consistently make money in the short term. |
