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Paul...
I'm really a pure technical trader but use fundamental info to sort my
prospects. I agree with you in not looking at the fundamentals during a
trade to justify anything. I let price tell me what to do.
Best... John
Szilassy wrote:
>
> John, I look at longer-term data too. Never indicated that I do not. What
> I NEVER do though, is study P/Es, receivables turnover, sequential inventory
> growth, etc., etc. if my hold will be anywhere from 3 minutes to 3 days. I
> do not believe this kind of information has the slightest impact on
> short-term price movements; therefore, its use as a basis for short-term
> trading decisions (or even as a filter in the selection process) cannot
> possibly be of any benefit, IN MY OPINION. The reason I can state this is
> that I used to operate the way Len does. I would go so far as to look at
> fundamentals and try to justify trades which had gone against me by
> believing my observations about the stock's being" undervalued" were still
> valid. I also believed it was safe to wait out a downturn in a long
> position, because the market would ultimately "realize" that my conclusion
> was correct. The danger implicit in this kind of approach is that trading
> capital is tied up indefinitely while other opportunities sail by, on a
> day-to-day basis... and there is no guarantee that the market will ever
> provide justification for your entry decision. As an example, look at all
> those companies with strong fundamentals which provided well-substantiated
> denials of allegations about accounting irregularities. Look at REXI's
> chart since the time the allegations were made AND successfully refuted by
> management in late August.
>
> The only philosophy which can consistently work in short-term trading is
> "trade what you see, not what you think". The proof lies in situations like
> AMZN. I have never traded AMZN, but not because I believe the stock isn't
> worth the paper it's printed on (which is actually true, from a rational
> investor's standpoint). I do not trade it because since I started trading
> it has been too volatile and too expensive for my comfort level. Again,
> fundamentals have no consistent and meaningful bearing on the short-term
> price movements. If anyone can refute this statement with examples, it
> would make very interesting reading for us all! Bring it on...
>
> Best regards, Paul Szilassy
>
> -----Original Message-----
> From: John Rastutis <Johnonetoo@xxxxxxxxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Date: Thursday, February 04, 1999 10:16 AM
> Subject: Re: Hello, Who I am
>
> >Len...
> >
> >First and foremost, I use TA and price as my trading tool. At times my
> >holding period may only be a couple of days but why shouldn't I look at
> >the longer term data? My success has increased generally every time I
> >took advantage of any piece of correlating information.
> >
> >Why don't traders use any information that can even in the slightest way
> >increase their odds? One needs every edge they can get. If I
> >find(through research and testing) that a CEO eats a tuna fish sandwich
> >at lunch and the next day his company's stock gaps up, I'll use it! I
> >don't want to "handicap" myself by ignoring data. It's like going out
> >into a forest that is infested with savage bears armed with a fly
> >swatter. Isn't there a saying about this? Something like "Armed for
> >bear"? Anyway, what's wrong with trading the price but having the
> >research behind the choice of issue. You're right on when you said it
> >can "minimize downside risk".
> >
> >Regards... John
> >
> >Len Olson wrote:
> >>
> >> Dear Paul,
> >>
> >> The reason I concentrate on fundamentals is to minimize downsize risk.
> >> If the company is solid financially AND makes timely SEC reports, to me
> >> it means that that it is a real company that is either making money or
> >> is in a position to weather a storm.
> >
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