Forum Archive Index - February 2002

[Phaedrus <Phaedrus@techemail.com>]

Snoopy,
        Let's summarise some of our many points of agreement :-
(1) TWR has good fundamentals.
(2) Fundamentally good stocks should eventually have their value recognised by 
the market, and begin to trend up.
(3) It may take many years before this begins to happen.
(4) The best stocks to hold longterm are those that are in longterm uptrends.
(5) TWR has been trendless over the two and a half year period since it listed.
(6) Fundamental analysis is unable to predict when TWR will begin to trend up.
(7) Technical analysis is unable to predict when TWR will begin to trend up.

  Now, our difference :-
 You advocate buying on the strength of the fundamentals, hoping that it will 
not be too long before the rest of the market agrees with you, and continuing 
to hold regardless of how long this may take.
 I advocate waiting until a trend actually develops, buying then in the hope 
that it will continue, and selling if it does not.

 There is one thing that technical analysis does very well. That is identifying 
stocks that are trending, have just begun trending, or have stopped trending. 
So, while it cannot predict when TWR will go into an uptrend, it can tell us 
when or if it actually does.

 TWR is a good illustration that buying solely on fundamentals can carry very 
high opportunity costs - substantial funds may be tied up for literally years 
without any return, preventing investment in stocks with equally good 
fundamentals that are in longterm uptrends.

                   Phaedrus.

 

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