[RT] stock fundamentals question, RealTraders Email List Archive

In years past, when I actively traded the livestock markets, I was aware of the trading actions of one large local who made millions of dollars each year for several years in the hog and belly futures markets. While technically aware, this trader's edge came from an extensive network of close contacts in each segment of the cash business. He spoke daily with a pork buyers for large grocery chains about retail demand. He had relationships with several packing houses that provided insight on when packers would be buying animals to meet retail demand and when they might reduce slaughter to force price increases in the grocery store. He regularly shared his market perspective with friends who were large pork farmers in return for indications of their current and future production and marketing intentions. He then compared all the info he gathered with general market expectations based on public reports (including frozen stocks, foreign demand, seasonality, etc.). By understanding the impetus for cash prices and accurately anticipating the changing balance between buyers and sellers , he made lots of money on very sizable positions.

Most of us will never enjoy access to such unique fundamental information. But even the few market participants who can consistently rely on fundamental information must come to the market and take a position to profit from their convictions about that information. If that position is substantial enough to affect the price then it can often be discerned by experienced chart observers well before the reasons are apparent. Fundamental information that is known to all is usually reflected in the price. Fundamental information that is not known to all is only actionable as it becomes reflected in the price. Whatever one's market opinion and from whatever source derived - in the end, price movement is everything - the only way to profit.