The other day I was watching one of the "fundamental" analysts on the blue channel who says that things are likely to improve in the coming months and the markets have been over-reacting on the downside. This after reminding us & the TV anchors of her "market prediction" a week earlier on the same channel of the imminent market collapse as the fundamentals are "stretched". "Stretched" at 5200 nifty and cheap at 4900? 300 pts on nifty an over-reaction?? My calc tells me its not even 6%. Oh, then by the same logic wht abt the over-reaction on the upside of abt 100% in the last 9 months!
I am not against fundamental analysis or anything like that. Far from it. I believe, fundamentals are the most important criterion for investing in stocks or any other asset.
But to change them on a daily basis just to make them fit to our trading plans without any fundamental shift at the ground level makes them look more like funny-mentals rather than fundamentals.
I have always felt that fundamentals do not change perceptibly on a daily basis and generally take some time to get discounted. Markets don't fall 50% in a single day, jst because they are overpriced by 50%.
I think the analysts know this too. I wish they were atleast honest with themselves.
Trading based on fundamentals is as bad if not worse than investing based on charts.
Just my humble opinion.
Would love to hear from you on this subject. Please do share your thoughts in the comments section.
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I dont agree on the statement on 'investing based on chart'. They are one of the best methods, provided they use a sound concept like Elliott Wave Theory.
ReplyDeleteI have been investing based on fundamentals with returns of around 25% per year. Time given to see the status of my portfolio had been substantial. Hence I am slowly shifting to trading on long term basis for which I find your webpage extremely useful. I have done mock exercises already and hope to improve returns. Any advise on it? I also congratulate u for the buzzingstocks.com site, a very very useful one.
ReplyDeleteI would like make distinction between investing and trading. Trading on the basis of charts and Investing on the basis of the fundamentals.
ReplyDeleteDharam Dev
Your name and your writing both sounds uttam, One who trade or invest should have clear approach n understanding of equity market like you. what is importatn in the market is to make money. One just can't make money in the market if he just follows the fundamentals. Fundamental is important to choose the scripts for trading. but ultimate thing in the market is timing when to buy or go long and when to exit or short. Analyst on all the so call b chennals are there to make ppl fool.
ReplyDeleteur words are true uttam...,
ReplyDeletetrading based on fundamental is a fake...,
those who ont know the chart techniques ,they cant survive in market for long time...
fundamental news were published in trend reversing times............,great to hear this from you...,
rajasekar(sekarsecret@gmail.com)