|"Peter Maiden" <email@example.com>
|Sat, 28 Apr 2001 07:50:13 +1200
Phaedrus - great post. and a pretty impressive case study. I enjoyed reading it and gives me some inspiration to do more study of such things - if only time would allow. maybe early retirement is the way to go.
I also agree with your opening remarks in response to Hugh. Even 'fundamentalists' need to take note of charts to show them trends before making short or long term investing decisions.
I'm not saying to the degree of technical analysis and sophistication that you demonstrated - but at least take into account long term trends that charts are showing.
Let's take AIRVA for example.
This stock has (technically) been in a downward trend since 1993.
The 5-year chart also shows a downward trend - even though the price doubled between late 1998 and mid 1999.
The 2 year chart definitely shows a downward trend.
What I am trying to show is that if long term investors wanted to 'invest' in AIRVA at any time since 1993 the charts would have told them not to.
AIRVA was touted a good stock in the Brokers Tips this year and many sharechatters were talking up this stock as good value, recovery stock etc.earlier this year
Even at $1.50 a few months ago it was not a good short / medium / long term investment. The charts said show, There were no signs of a reversal of the downward trend.
A chartist might even claim that the events that have caused the recent decline in the AIRVA price were showing in the charts - something was going to happen that will continue the downward trend of AIRVA.
Those who thought that AIRVA were good value and a good long term investment earlier this year were really 'trading' the stock. Just like those who may have made a killing when the AIRVA price went from $1.50 to $3.00 in 1998/99. They were not 'long term investors' - they were 'medium term traders'.
I have never held AIRVA because of this long term trend. I also honestly say that I have 'invested' in other stocks ( that were fundamnetally sound) that had showed a long term down trend - and they continued down. Previous lessons not learn't..
Those 'investments' have been, in reality, nothing more than a punt.
There is a place for technical analysis - whether a simple cursory glance at a chart or the sophisticated stuff that Phaedrus does. Even if for nothing else but as a signal when to buy and when to sell - whether the time frame is months, years or decades.