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Microcap & Penny Stocks : The Henley Group, Inc. (HNLY) undervalued growth company
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To: Nizzo Nigrini who wrote (806)3/7/1998 2:43:00 PM
From: Steve  Read Replies (1) of 2232
 
Nizzo, If I believed that the small cap market was an efficient market I wouldn't use TA to analyze it. Now the academic view of TA is very antagonistic because TA assumptions violate the efficient market hypothesis. And over the long term TA has been shown to be useless in assessing risk and portfolio allocation using TA alone has been shown to be a good way to loose all your money, but of course academic treatment of TA is always this all-or-nothing type of post hoc experiment. The way I use TA is to find quick turn around opportunities and sometimes I get stuck and then try to find value. If I don't find any value I sell at a loss and move on. However, in HNLY I have found some value worth waiting for.

While I agree that TA is useless in the long run (risk allocation), I quote Lord Keynes, "In the long run I'm afraid we're all dead." If I didn't have some quickie Technical rules like when a stock overcorrects one day then there will be a gap up the next; So I want to short on the gap up and buy to cover during the next correction down usually pretty quick that same day. My view is that the long run is simply a series of very short run opportunities. In this sense the active trader who combines Technical and Fundamental Analysis can profit more than the investor who uses only Fundamental Analysis.
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