OT I guess…to Kas1
You wrote:
I never said DD is useless. I just think attempting to predict (for profit) short-term price movements of individual securities, or sets of them, is useless.
Come on…what DD is required to place a bet on the come line in craps? Do you consider knowing the odds DD? Re-read my original post. My exact words: " But…investors are hoped to at least call long-term trend lines…Riding shares down in the face of rising interest rates & oil, huge increases in expectations…" Are these the "short-term price movements" you are referring to Kas1? I don't think so. Again, as I stated before, YOU brought this idea of "short-term" and "trading" into the conversation. I have no idea what you consider to be 'short-term'…one hour, one month, three months, one year? Yes I do believe an astute investor can reasonably predict trends in the market, absolutely. Predictions of this sort, all with relative merit, are made every day. To say no one gets it right, even rather consistently, is incorrect IMO. Later in your post you admit yourself that you "recognize long-term business possibilities that the market at large is unable to recognize." That is exactly the substance of my original post!
You said "No one, however, has shown the ability to predict the market. It's a crapshoot, and it's generally not worth it." Those are your words. So if the market is a crap shoot or the 'lotto', what is the use of DD? Why should anyone study the market or individual stocks? Why do you study the market Kas1? What are you doing wasting your time on SI if you believe no one has any predictive ability whatsoever and it is all just figuring "out the winning numbers ahead of time."?
Can you show me one person, or system, or piece of software, that can predict price movements better than the simple (and open-ended) formula that stock prices move in a long term 12% upward trend, with volatility equal to their betas?
Ahhh…so easy! Yes I can. I will use 'long-term' as 3 years. Is this fair enough? Therefore every person who invested (thus using their 'predictive' abilities!) in the NASDAQ COMP bested your 12% considerably! Shall we go back longer than 3 years?
Exactly what kind of informational advantage do you have on these stock price movements? To put it more bluntly, how do you predict when people will buy and sell? And do you really think that your information is so exclusive to you that it hasn't been factored into prices already?
Informational advantage? Re-read my last post: It is putting the pieces of your analysis together and perceiving something earlier (hopefully) than other investors. How do I predict when people will buy and sell? Primarily I use macro, sector, fundamental and TA analysis in relative combination. And finally NO, I never said my information was exclusive, where did this idea come from? I said how I use the information I have is the key to making good investments.
I will tell you a little bit about my brand of DD. I don't claim to be able to predict valuation cycles or the market in general. But I do think I have some informational/analytical advantage when it comes to analyzing long-term business trends. Again speaking bluntly, I think I'm smarter, better-read, better-informed, and more imaginative than the average investor. I think this creates for me opportunities when I recognize long-term business possibilities that the market at large is unable to recognize. It also causes me to discard "opportunities" that the market seems to love -- I have never invested in a dotcom, even though (or because?) I've been using the internet since around 1990.
So because you think you are "smarter, better-read, better-informed, and more imaginative than the average investor", that this allows you to "recognize long-term business possibilities that the market at large is unable to recognize." I don't disagree! That is exactly what my original post was all about! So take out your ideas about 'short-term trading', 'crap shoot' and 'lotto' and I don't understand your argument
This is the informational advantage I bring to the table. It is slight, and only works sometimes, but that's enough for me. I claim that I can recognize some situations when the future prospects of certain companies are under- or over-estimated by the market at large. And really, that's all that I need to make my moves.
I couldn't have said it better.
"Figuring out how investors make their decisions is a good deal of what stock market analysis is all about."
Yes, in the same way that figuring out next week's numbers is what playing the lottery is all about. Can you really figure out people's future investment decisions? I don't even know my own future investment decisions; how can I know others'?
Again, nothing at all to do with the lotto Kas1. Nothing. TA is all about investors decisions…and so is all the other analysis…
No danger to me; it's your own money you're betting.
Again, wrong. It is not Vegas and it is not a lotto. It is not solely a game of chance. Your own post admits that you don't believe it is only chance either, otherwise there wouldn't be the opportunity for you to "recognize long-term business possibilities that the market at large is unable to recognize."
I am not sure there is anything more to bring to this discussion. Perhaps it is more appropriate to PM each other for further conversation?
Good luck,
Eric |
