Temfassbal;
I said I would be ready to take up the debate on Saturday. Well, I'm a little early but I'm back. You would like to have us believe that we should base most of our decision making on something as simple as earnings. I allow that earnings, in the long run, are a very big part of the picture. However, I don't simply base my technical analysis on the obvious. The information that anyone can find on the internet. I also don't discount it's importance. All the data is important. It's a question relative importance. Some things are more important, at certain times, than others.
I am labeled a technician and while I can live with that label it really isn't true. However, what you see as fundamental and what I see as more fundamental are very different. Therefore, our equations are very different and we may reach different conclusions using the same data. All of the above prefaces what I am about to say and I admit, in advance, that I can't prove my case. You can choose to believe it or not. I don't care.
Long business experience and life experience has taught me that when it comes to money especially, really big money conspiracy rules the roost. Conspiracy, is not the exception but the rule. Conspiracy is necessary because one person usually can't do it alone. We see it all the time. We're seeing it now in the Microsoft trial. We saw it in the Savings and Loan debacle. We've seen it periodically, in Congress. We see it in politics. We see it in organized crime. All of the above are about money.
We have seen so many times we have all lost count. So, why should Wall St., the center of the world of money, be any different? Indeed, it isn't. Yet, we wish to disbelieve because it is difficult to live with the fact that the game is rigged when your life savings are at risk. We are involved. We are told that there are rules to protect us however, on closer analysis we see that most of these very intricate rules protect the people who make the market, the insiders, not us. We see that they even ignore the rules when it doesn't suit their tastes and very little can be done about it. When their behavior is so outrageous that they are prosecuted we are told, this is the exception, not the rule. However, we all really, know that for every one caught there are ten or a hundred who got away with it. Usually, on Wall St. those who are caught have pissed off the IRS or some investment bankers (themselves, insiders) but the public is usually, given very little importance, if any. Remember, Ivan Boesky as one, little example?
Bearing that in mind and having seen it, first hand, I can make statements like the current rise in price in SEG is occurring concurrent to the earnings rise, not because of it. It's theater. The rise in earnings may enhance the price rise but it would have happened anyway. A great earnings report makes it easier for insiders to raise prices because the public is a most willing participant. Using several charting techniques I have developed for myself I can find patterns that interpreted through my filter, not anyone else's, enable me to make what would seem to be, ridiculous predictions over ridiculous periods. Actually, the further out I get the easier it is to make the prediction. You believe it is impossible. Well, time will tell, who is right. However, I can say I have made a lot of money using my methods and my experiences, both good and bad. You might say that I am really a fundamentalist while my methods are eclectic, if somewhat, idiosyncratic they have worked for me and the longer I keep at it, the better, as I refine them and learn more about integrating the information I receive. In that respect, I'm no different that Warren Buffet. Another eccentric although, not as rich.
I have said before, that TA is not analysis but a very viable tool for analysis. It is no different than an artist's brush to the investor. That is what makes it interesting. The more skillfully used, the better the result. I reminded you the other day that some of my worthless TA has enabled those who believed the logic and chose to participate, make a killing and every one of them did make a killing, including me. Actually, it was meant for the guy that seconded you. Who says he keeps the book on TA in his garage but I didn't have time to write another post. Sorry.
You and I can agree to disagree but I cannot understand those who reject information merely because it doesn't meet their criteria. I posted my wake up call about options the same day, on the other thread. I received angry letters rejecting the information and asking me not to post anything of that nature again. I had to apologize to keep peace. One even said, he took this thread out of his bookmarks because we are cheerleaders and implied on our thread, we are dodderheads. Only one said, he took the information seriously. Well, I wonder, how Mr. Brilliant feels, now that he knows that some of those dodderheads made a ton of money with the same info. which was handed to him on a silver platter. From his letter, he obviously, considered himself so brilliant that I might burn up if I flew to close. He may be. But is he wise? What good is brilliant insight without the wisdom to use it? Rejecting new information because it doesn't fit in with your usual criteria is unwise. It proves that we all filter information according to our prejudices, likes and dislikes. Nothing is really objective and it is very important to remember this. Even in the world of science we laugh now at some of the things that were taken as gospel 200 years ago or even 50 years ago. As we learn more our emphasis, on the information received, changes. As learn more, we can do more with the information received. However, human nature seems to remain pretty constant from place to place and age to age.
The other day I sat next to an important financier, in a business meeting. He said, that he deals with money all the time and that nothing is more important when dealing with money than the money. I stopped him and said, nothing is more important, in business than character. He immediately, agreed and spun off several examples from his personal library of experience. The point of all this is that you put your money in hands of people you don't know. How do you know what their motives are? I'm sure you have evolved some method of analysis that you consider rational but my experience tells me that human beings are both rational and irrational and can be so, even simultaneously. I always begin my analysis from that point, using that assumption. Therefore, the price of a stock doesn't always reflect the fundamentals, profits or prospects. Sometimes, for long periods. Stitch was right. WDC shouldn't be selling for 20. It should be selling for 7 but there it is! An example of a stock climbing while the company is taking losses. However, even it were making money, fair value for the stock is not more than 10-12 and that's generous.
We consider our financial system fairly rational minus a few flaws. However, the global debt and currency crisis cropping up in so many countries shows us, it isn't. In every country there are different reasons and it's all very complicated but what it boils down to is the irrationality of human nature. We all know it. Even, in our own country, the periodic stock market crashes when the basic economy is solid. The Savings and Loan scandal in a regulated industry which was suddenly, deregulated, etc.. However, when it comes to the stock market and our stocks, in particular, we cannot abide the thought that our stock and our money is being handled for some very self aggrandizing purposes by a small group of powerful conspirators. We, the stockholders should be the only ones who have the right to self aggrandizement. Well, it doesn't work that way.
I have participated in a series of international business meetings this week, trying to make a deal. Several times the deal fell apart and was revived. It all came down to ego, greed and fear. When the terms should have been very simple they were complicated by the participants, trying to get an upper hand. In other words, human nature, irrational human nature.
Now, you asked us to show you a stock whose earnings declined but continued to rise in price , just one. Well I remember Apple Computer did it several times during the last several years. Remembering that a huge mutual fund, Fidelity Magellen was involved in the scandalous pumping up of the stock while Apple's management, its profit picture and prospects were all pretty sad and it was taking big losses. I have one right now, Cell Pathways, CLPA, a biotech, that has more than doubled in price during the last month but expects losses for the rest of the year. During the eighties I saw GM triple its price while its profit picture sagged, remember the diesel Caddy? Brilliant management at GM. These are some of the more well known examples. And I could go on and on.
Now, about my BS. I don't like it when you step on my BS tootsies by telling me my BS is BS. I'm the only one that should call my BS, BS. I know it is irrational but what can I do? It's mine, not yours! And if you cannot find some better, politer reference then I won't write back. After all, although, I was toilet trained in touch typing, in Junior High I have big hands now and typing on this computer is tedious, to say the least. Now that you are properly disciplined and I know you are quaking in your undies, I will allow you your misbehavior, this one time. Be good!
PHOTOMAN
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