In a break from tradition, let's have a 'strategic' thread on the investors BB - such threads are usually a staple of the traders BB.

This thread is intended not to be about any tactical issues such as individual share longs or shorts - more a general discussion on whether share prices in general approximately represent fair value given all that is known about a company at any given moment in time.

Chartists (and I count myself amongst their number) will dismiss any fundamental analysis with a flippant 'It's all in the price dear boy'.

Pure fundamentalists will explain that given sufficient research, anyone can become more knowledgeable than the market and therefore be better placed to gauge true value. (sometimes described as 'the Zulu Principle' - after Michael Walters' book by that name)

Added On edit - oops - It was Jim Slater who wrote the Zulu Principle - not Walters. in the book, Slater argues the case for research and fundamentals by explaining that there are very few people thoroughly researching any single topic, if you make that topic narrow enough. He goes on to explain that everyone can be an expert so long as their research topic is made very specialised.

dont know mate, just referring to other posts, its a bit off shot now, thought it was about "its in the price".

gotta laugh, bb's are great.

see ya all, lee

Gausie

An interesting debate. At the moment it appears that you can only be a chartist or a fundamentalist and not use both to aid investment decisions.

As per my name you can tell where my base lies, though I am slowly learning some of the charting theories to compliment my fundamental understandings. I also believe there is a huge difference between what I would term short term trading and long term investing.

Personally, i believe that there are companys that are overvalued and undervalued based on sentiment but that at a point in the future fair value as
i perceive it will be revisited. Hence some of the shares I own for LTBH are unloved stocks which I believe are currently undervalued.

I also invest in stocks for LTBH where i believe the company will grow at a faster rate than expected due to their marketplace/business model/management and that over time there share price will increase with this growth.

i believe that market sentiment to big announcements is nearly always overdone (based on herd mentality), especially on the downside, which to me distorts the theory that "its all in the price" and often provides a short term trading opportunity or an entry point for a LTBH depending on the company and its situation.

in addition to LTBH, I do also short/medium term trade, mainly based on current sentiment, though i still prefer any longs to still have a sound fundamental base and on a short look for a weak fundamental base. My personal use of charting currently is more for finding an entry/exit point for a share.

I guess this game takes all sorts and a variety of methods. Each can have there claims of success and failure. I have found a method that works for me (utilising my strengths in reading company accounts and analysing company info) and I know others are successful using other methods. Personally I am always trying to learn from the methods others use to evolve my investing and trading style.

I think Guasie is trying to point out that there is another world out there that does on many occassions effect share prices.

I am a fundamentalist at heart, and look at the fundamentals for investing, but in the last year have increasing been using charts to trade and I have started to ignore the fundamentals for my decisions.

Until a year ago, I didn't realise that there is a huge difference between trading & investing. I thought because I bought a share and sold it with a profit in a week and did that several times over I was trading. But the reality is I was actually investing - just over a short period. I now have a trading account where I open positions in a share, which can be short (selling a share so I can buy it later when it drops in price) or long (buying a share to sell later when it goes up in price).

Because more and more people are trading rather than investing they are ignoring the fundamentals and just looking at the market sentiment for a share. The simplest way to do this seems to be by using charts.

LW

Im not sure i agree with your argument that buying several times in short periods is short term investing. in my book that is still trading. is short term investing not trading? i understand that you were only going long but in my book a week is short term and you were regularly trading the same share.

This morning I have took a short position in a share, 30 min later the share dropped to my buy order which closed the position to take my profit. 15 min later in the same share I opened a long position and am waiting for the market to reach my sell order to close the position.

That is what I mean by trading.

Yes LW - i agree this is trading. But so also is holding a share for a week IMHO. You cannot say that you hold a share for a week as an investment. An investment is over a much longer time period during which the company can be seen to be growing/changing etc. over the period of a week you are trading on investor sentiment and not the evolution or development of a company.

Why?

Why do the words pot, kettle and black spring to mind, Testex? Have you considered visiting a shrink?

Gausie's right.

Oi Hilary - u calling me a kettle?

Testex - thank you for your kind words. I am extremely flattered and actually quite touched to find that your opinion of me is so very much higher than mine is of you.

Gausie

;o)

testex,

Can you please refrain from personal attacks on these Bulletin Boards - stick the discussion at hand and not the individual posters.

Thanks

Ian

Careful, G. Or I'll set Ash on you.

:o)

Testex,

Thank you.

Ian

Tested - if I open contract in OOM for 10,000 shares. I only have to front 10% of the costs up front i.e. less than 1,000(instead of 100% - 10,000) for every .25 it moves thats 25 profit on my 1,000. If I can do that every 30 min over the day just on .25 I can make 200 with just 1,000. Obviously 0.5 is double the profit etc. And I can do it both if the share drops as well as if the share goes up in price.

I'm not with CMC anymore - and I have never drunk beer.

Hi LW,

I'm trying to work out which is the greater invention -

(1) Bulletin boards for the promotion of free speech,

or

(2) Squelch buttons to eliminate the worthless.

Votes please ?

Look forward to meeting you all.

Regards etc.

Good post 38, at least your post is factual and not hearsay!

testex: bye bye

Glad you deleted that post, Bullshare.

It would have offended many people, whatever their race or creed.
I couldn't believe what I was reading.

Melnibone.

Melnibone. We are only sorry it was up there for a few minutes

Bullshare well done, I can only echo Melnibones comments