I do still read Murphy's newsletter. I think he is on target much of the time, and he does make good observations. I also think his books are "top notch" material. Pring has taken an approach kind of like Zweig in that both take a technical-fundamental hybrid type of appraoch to the market, which I believe both include market sentiment in their "recipie". However, Pring's approach utilizes much more technical components. This is a more well-ballanced approach to the markets and my preference compared to just straight TA. However, some of their formulations can be a bit much and IMO unecissary. But Pring does know his TA, and he writes some of the best more advanced books on the subject. I think both take this hybrid approach becuase they have found for their purposes that TA is not a complete answer. I have seen some of the truth behind this thinking. I think the book by O'Neal is one viable strategy which should be required reading for any trader which contains both fundamental and technical components related to individual companies.
One thing I have noticed is that some of the more successful fundamentalists that I have read about of known do use some form of TA. They just do not recognize it as this. One that I know of watches the stock price to see how it behaves in the market, and also watches the market. He does not use a chart, but he can see the areas of support and resistance and the trend of the stock and the relative strength of the stock compared to the rest of the market. He has been doing this most of his 50 years of investing without thinking of it as technical analysis. IMO anytime a fundamentalist checks for at least the 52-week high and 52-week low of the stock, he is incorporating some form of TA in his thought process. This ceratinly is not the same as looking at the ballance sheet.
I find that many investors and traders do not really know what is actually making them successful. When they try to explain their success, they are attempting to understand it after the fact so they say what makes sense to them, or give an undue weight to what attracts them to their approach. Lets take Peter Lynch for example. Some would think Peter is a solid example of a 100% true fundamental approach to investing. The reality of it as he documented in his second book is that he was making most of his money not in the places he originally thought, those "niche" small companies in a "boring" business. A computer analyst proved this to him by running reports on his past portfolios. Also, he was known to "churn" allot of stock where many of his investments turned into shorter term positions because he always was coming across something "better" that forced him into selling shares in existing investments in order to purchase his new stock picks. I suspect that part of the reason his approach was successful was that it kept him where the "action" was going to in the market, and the "churning" of his portfolio always kept it performing in the current market. I find that many fundamental based investors end up having a simular approach. So IMO Peter Lynch in some respects turns out to be more like O'Neal than he does at first read.
Bob Graham |
