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Re: [sharechat] Experience and judgement


From: "tennyson@caverock.net.nz" <tennyson@caverock.net.nz>
Date: Sun, 27 May 2001 22:59:37 +0000


 
Hi Tony, 

>
>I'm new to this chat and would like to know how to
>analyze/"do our studies" properly. I have a fair idea of
>what it entails from text books but what do you guys do?
>Where do you get your data from? Annual reports?
>


I don't think that I have ever bought a company where I haven't seen 
an annual report, or at least a prospectus.    Often a comparison 
between 'back to back' annual reports can be illuminating.  You read 
the hyped outlook from the previous year and compare that to what 
actually happened.  Useful for highlighting the weak points of 
management and give you an idea as to how to 'filter' their current 
comments as they relate the the future outlook.   Where possible 
check out the annual reports of the competitors of the company you 
are thinking of investing in too.   That can often be more 
illuminating than looking at the company's own reports!


>
>elsewhere? Or do you build your own models? I'm
>referring to fundamentals rather than charts, or do you
>use both?
>


I sometimes use a very crude form of charting when buying and 
selling.  I look at where the resistance points seem to be so that 
my buy/sell instructions are at least realistic.  I always like to 
get those few extra cents per share on the sell price too.   But 
probably over the long term it doesn't make much difference.


>
>I wonder how this all works for each of you...you do the
>numbers, check with the other brains and then trade...?
>


For every trade there is a buyer and a seller, so obviously *all* 
the 'brains' are never going to agree.  That is what makes a 
market!  I am not saying that either the buyer or the seller is wrong 
either, in any particular trade.  Different time horizons, 
rebalancing issues and different investment philosophies can mean 
both the buyer and the seller made the right decision - for them.

Sometimes I make investment decisions, and set buy /sell 
price targets weeks in advance.   Then I  stick to them no matter 
what the ebb and flow of the market is on the particular day I 
actually buy or sell.  I think that, at times, you can be too close 
to the market and let some day trading issue cloud your longer term 
investment vision. 

>
>Does the market move BECAUSE of your recommendations
>before you trade? Or do you trade before you air your
>views?
>


I seriously doubt that any share of significant standing can be 
moved by anything said on this forum by one person.  I have had rogue 
e-mails (not anything to do with this forum) talking about obscure 
stocks on the NASDAQ, purporting to be 'hot tips'.  If a share is 
not often traded you might be able to influence the market if enough 
gullible people believe your tip.  Myself, I send these 'hot 
tips' straight to 'Spamcop'.


>
>I have to think that you don't give out all your tips
>for free and wonder why, if you do?
>

Ah,  I see you are cynical too!   An excellent quality for an 
investor to have, if I might say so.   I guess my philosophy is the 
more information shared about the more I am likely to get back in the 
long run too.  And investing, unlike trading, is not a zero sum game. 
Which is to say that if I win, we can all be winners.

Finally with any post of substance I tend to disclose my interest, 
which should give readers some idea of where the bias is likely to 
be.  Hope that answers your questions.  But there is no short 
cut to doing your own homework.  Would you base all your 
investment decisions based on what some dog says on the 
internet? SNOOPY






---------------------------------
Message sent by Snoopy 
e-mail  tennyson@caverock.net.nz
on Pegasus Mail version 2.55
----------------------------------
"Dogs have big tongues, so you can bet they don't 
bite them by accident"


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