FrankArabia Wrote: ------------------------------------------------------- > valueaddict, > > you do realize it is these people that make our > endeavors possible right? and it is you people who i make major multiples off of at structural inflection points. don’t read what someone else has written and take it as fact. as a cfa, you should challenge, challenge, challenge. when done challenging, find some other theory or proof to challenge. science is often proven wrong.
Okay enough of this. I think the original poster is scared out of his mind right now! hahaha. No need to throw mud. And remember for the exam folks, CFA must not be used as a noun 
“structural inflection point”?? what is that? some kind of technical analysis term to describe when a patten will occur. or some type of macro type thing? I do challenge challenge and challenge. but TA just seems down right ridiculous to me. However, I have read something on TA that says they can add value. I don’t like looking at charts and playing musical chairs. I like analyzing businesses. I’m risk adverse also and believing in some chart pattern to me just doesn’t give me the type of assurance that I need. to each its own. I’m very very happy that there are different types of investors out there. Cause if it was just guys like me, there will be no bargains.
“structural inflection point” as in a macro change. I don’t like TA very much at all actually, I really don’t use any TA. But that doesn’t mean I see fundamental analysis as the live all end all. If its your opinion that everyone using fundamental models would provide no bargains, you are mistaken. I’m assuming that maybe 99% of stock market volume is traded based on fundamentals and/or no reasoning at all, with the other 1% on TA. You know how few TA funds there are… pretty much none in comparison to FA. Everybody is a quant in some way or form and it is when the system that quants have built fails, is when those who foresee its failure can pick up the real “bargains”. btw, a “bargain” also includes an overbought stock, just to make sure thats clear. the greatest fault of FA is that it always notices that equities are undervalued in a bear market, but rarely finds equities as overvalued in bull markets. indeed, greed is stronger than fear. to conclude, being a bull in a bull market is comparable to being a bear in a bear market. right now, you my friend are the contrarian/speculator.
i think we have two different conceptions of fundamental analysis here. But i definitely take from the school of Graham/Buffet. call it what you want. When i look at a security, i value the security on its own. I don’t even pay attention to the market factors. if someone is offering me coca cola for 35 bucks right now, i’ll buy. I dont’ need to see how the market has performed,economic forecast, who is in the office. I don’t care for none of those things. am I a contrarian? dont’ know. those are terms that other people label upon others. I jsut do what I do. Just dont’ call me collect.
Die thread die!!! There is obviously a misconception / lack of understanding on both counterparts. There are also different schools within the realm of fundamental analysis. There is top-down fundamental analysis that focuses stricly on big picture items (whether its region / sector / nation based). There is also bottom-up fundamental analysis which can be further sub-divided into many different categories. Very few are Graham and Dodd fundamentalists ( coincidently FrankArabia and I are). The reference of investment versus speculation did not mean buy bonds. On the contrary it meant that a well researched investment promises safety of principal (meaning low porbability of permanent capital impairment) and a return component (that takes care of itself as downside protection is paramount). It rejects the relation of risk and return and MPT mumbo-jumbo. A note about shorting. Philosophically speaking its easy. Except in practice the market can stay irrational longer than you can remain solvent. In the 90’s recognizing that internet companies were overvalued in '96 would have decimated your portfolio. That why many investors don’t short without a particular catalyst in mind. Greenlight for example shorts frauds and uncovering the fraud is the catalyst. Sort of counterintuitive to short a bubble if one doesn’t know when the bubble will end. You have to have a specific skill to identify catalyst driven shorts as opposed to just being a valuator. Since when does being a contrarian equate to speculation. Its the process that determines whether one is investing or speculating. Lack of process implies speculation. No one ever topped the all-time investor list by becoming one of the herd.
speculation is defined as “a financial action that does not promise safety of the initial investment along with the return on the principal sum”. all non-risk-free investing is speculation. assuming that any company in the world has no company risk is incorrect. i believe even risk-free investing is speculation as default can occur anywhere, anytime, to any company or country. the term ‘risk-free’ needs to be taken with a degree of salt. i agree that one should have some sort of decision-making process to evaluate whether to go short or not.