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Well said, Richard. I am a newbie in my third year of trading, and
already it seems to me that keeping a weather eye on the waves and sea
will stop me getting washed away, but it won't catch me any fish. I
think you've expressed what I am learning very well. Thanks
Michael
Richard Estes wrote:
>
> I come down hard on fundamentals because I have never seen a correlation
> between any of its measures, I am aware of, that provides an entry/exit for
> optimal gains. The story/news is produced nearly all the time by people with
> an agenda. The crowd psychology with its millions of variables is too much
> for this mortal. The people who sold MSFT today had their reasons as did the
> buyers. I can't outguess my wife's reactions much less those of the world.
>
> What I have left is the results of any and all variables playing in the
> market - Price. If I measure its movement, I might see how fast Price is
> going and in what direction (momentum). I can determine what's normal and
> what is pushing to the edges of the expected results based on the past
> (overextended by move). We use math throughout our lives, why not on Price
> and Volume?
>
> A balance sheet gives me little insight into where price (who's movement
> makes me money) will go. Product/news/sector/earnings/etc. do not give me a
> point to buy or sell. It becomes a guessing game. Take the simplest TA tool,
> the moving average, by looking at it, I can tell if people are willing to
> pay more or less for a stock then they have over an average of the last X
> days. Why they are doing that might have a "fundamental" reason but I can
> only guess not measure. If I decide it is the new product, when do I sell?
> The product is in place. Do I wait for that product to leave inventory?
> That isn't logical or objective. As it isn't logical to buy based on a
> future you can't predict. while price can't go down beyond my limits without
> passing through that moving average.
>
> The talking heads give us reasons for every move. Asia falling apart? you
> wouldn't have been in the market for years if that was a mover. How will it
> be explained when we hit 10,000? The interest rate fear used once a month
> or so? What about earnings estimates? the market may or not react to
> filings. When we have a reaction to an above or below estimates, what does
> that tell us? especially since they are wrong 75% of time. Do the analysts
> have an agenda or do they just do a bad job? How much over or under calls
> for a buy or sell?
>
> It is easy to say "Fundamentals+Sentiment = Price+Actions explained and
> expressed in trends", there is no objective way to measure Fundamentals. And
> the measure of Sentiment is a TA measure. So, TA covers 3 out of 4
> components. Cave men would see the sun rise and contemplate why it happened
> and they made up all sorts of stories, but the real smart ones measured the
> day and night and gave us seasons and calendars.
>
> Richard Estes
>
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