Techie, if I only bought and sold by F/A, I'd be sitting on my hands for all but about 3-weeks of the year.
F/A implies buy and hold to me. We don't do much of that here, and most of us are in agreement that it's a loser over the next couple of years.
F/A is even more suspect when you have "lack of visibility" when we value companies on forward earnings projections (since last year's stuff is history). Add the goodwill writeoffs coming, special charges, and other accounting creativity and you have little basis for buying most tech stocks right now or the past year for that matter.
I believe Zeev has a quote on his profile that says when T/A and F/A don't mesh, believe the T/A. I think you have seen this play out, and that's why it is such a wonderful tool in our trading arsenal.
I think F/A is useful when a stock has been oversold like AETH or AVCI, when they were selling at or below cash on hand. It is also useful when a company has legitimate, stone cold accounting and a stable product, market and customer base. Again, there are not too many tech companies we can apply that to.
Is CSCO worth $20 based on F/A? Heck no! Are they worth $5.00 on F/A? Maybe, but the charts say you will be waiting a long time before that happens.
I got caught up in that phony F/A crap in the bubble. Never again. Trade the trend, have a plan, stick to it, but be prepared to reverse if you are caught going the wrong way. |
