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Thursday, 14 December 2017

You Think You Know The Fundamentals and Technicals?

When you look at the Sun in the sky, do you know that's the image of the Sun 8 minutes 20 seconds ago?

You may think you are looking at the Sun; you are not.

Talk about looking at illusions. Wink.

When you use fundamental analysis, are you not driving using the rear view mirror?

Unless you tell me you have access to the annual reports for 2018 up till 2048 now?

Same for those of you who prefer the voodoo art of technical analysis. All those beautiful chart patterns and indicators, are they not a snapshot of what has already happened?

(Those who trade Price Action, I bow in reverence to you. Can't poke you. You trade the here and now.)

Now you know why when prices go up, everyone is an "expert" on that stock they owned. Go round telling their friends and families to own it. Look! Its a no brainer!

Talk and behave like sell side analysts, full of conviction with your recommendations.

But when the same stock suddenly turns south... 

Some jump all over the place searching for answers like headless chickens.

Some get frozen with inaction like a deer caught under the headlights of a car.

Investing and trading is a lot like Zen.

The more I know, the more I realise I don't know. 


  1. FA or TA or FATA and then follow up with money management to ride market cycles

    1. CW,

      You and I started in an environment where bad news is bad news; good news is good news.

      Now? Bad news is good news since Central Banks can continue easing...

      Good news is bad news as markets fear Central Banks may take away the punch bowl!?

      Now long only funds/ETFs will beat Hedge Funds hands down. Who needs to hedge when Central Banks have our backs?

      FA and/or TA?


      Its sense of perspective by knowing a bit of financial history ;)

      Unless reversion-to-mean is dead...

  2. Saying goes that buy the right company at the right time and hold, eventually there will be price reversion to mean. That's why need TA / FA. no?

    Hmm... When the prices go up and I sell, I will tell my friends/family don't buy lol.

    1. Rainbow girl,

      Well, that would depend whether your reversion-to-mean thesis meant STI going 20% higher or 20% lower from here ;)

      Same TA/FA - same reversion-to-mean conclusion.

      Those selling today are taking money off the table to avoid profits evaporating; while those buying today are afraid to miss the next leg up ;)

      Hence we have a trade!

      Who is right who is wrong?

      We'll know when the fat lady sings!

  3. Hi all,

    We are always learning all the time!


    1. Ben,

      If we get beyond the dollars and cents, trading is one of those endeavours where the longer we stay in the arena, the more we can see ourselves clearer.

      The closest other endeavours I can think of is either starting your own business or working for commissions only jobs like insurance or property sales.

      Its kill or be killed.

      Very frustrating and infuriating at times; yet during the few times when I'm in synced with the markets, that feeling is indescribable ;)

  4. Well said.

    When we start to believe we know, it is probably time to sell.

    1. Yeow Hwee,

      Welcome to this watering hole!

      Often its we think we know - using information thats 8 minutes 20 seconds delayed...

      Markets are forward discounting.

      When I were working in Supply Chain, just walking over to Transport and I'll have the newly negotiated Transport Agreement frieght rates for next year.

      I think I have the industry insider edge over the outsider retail momentum crowd ;)

      But then, we don't invest in what we know. We invest in what we think we know (a nicer way to say follow the crowd).

      Doctors chase semi-conductor chip stocks; IT pros punt on biotech.

  5. Hi SMOL,

    I don't know the technicalities of fundamentals nor the fundamentals of technicals lol

    Okay, actually a bit more complex than that. It's initially don't know. Then read a bit, thought I know everything. Then crash a bit, then I don't know anything. Then a few such cycles, I think I know a little, but definitely not everything.

    So "don't know anything" also have degrees and different stages lol

    1. LP,

      That's a nice word play! I think I can steal with pride!

      Yes, to know there are gaps that we don't know is already a big improvement from I don't know anything stage!



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