FA- I think this area holds the most promise for making money. I also assume that my view of FA, and its limits, is different than yours. Beyond elements of FA, other macro issues affect price changes and these are difficult, if not impossible to quantify. Among the issues/forces/conditions that we can't quantify, but which affect micro/macro fluctuations of institutional players, I would include:
*trading/investing (ST/LT) characteristics of respective institutional players. I assume these aren't constant and change often, depending on the texture/culture of international geopolitics as well as micro financial incentives of respective managers.
*the changing preferences and opportunity costs of institutional investors for holding cash or ST bonds. Institutional players and pension funds are playing with a different set of perceptions than small investors. They set the tone/direction of market actions. We're just along for the ride. Since we (?) rarely have a candid view about how these folks really play the game, how they think, what pressures they face, and how they define risk/reward, I think we don't really understand the forces behind market actions.
The anarchistic nature of market behavior is compounded or made more erratic by the fundamental fact that corporations don't pay meaningful dividends. Any tax on dividends serves to skew the 'fundamental' value of any/all securities and their price volatility. Thus, because corporations don't pay substantive dividends, there really is no metric about what 'p/e' defines value. Without a root definition of value, why would anyone buy and hold 'paper'? IMO, this is why B&H is too risky.
Real estate, by comparison, seems to reflect a root or fundamental value -- the replacement cost/sq/ft of living area. Save an earthquake, house values are unlikely to decline by 50% before breakfast. ELAN stockholders weren't so fortunate.
I don't have a synthetic answer about trading or making money.
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