Technical Attack
One of the reasons I find investment strategy discussions interesting, is because there are so many different approaches and values that influence each person’s investing style. It’s almost like a personal philosophy.
And like all things personal, there’s a tendency to believe that your own style is the best possible, and all others trivial; and sometimes, arguments over investment strategy gets as heated as other personal discussions do. When personal preference dominates the thought process, to the extent of throwing out the baby with the bath water.
Like this article from the Motley Fool - called technical analysis voodoo. (Registration required - there’s a copy available through yahoo that’s free to access).
Now I’m not into technical analysis - I’m more comfortable with the value investing approach. But I do know that value investing doesn’t necessarily work in the short term; enough irrationality exists in the market, and if your investment horizon is short-term, you need to focus more on current news and trends. And to use tools that allow you to understand the underlying trend.
Otherwise, you fall into the hammer-and-nail trap; when all you have is a hammer, everything looks like a nail.
Written by 2cworth on April 11th, 2006 with
1 comment.
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#1. April 13th, 2006, at 6:47 AM.
I’ve been around the block-and-back with opinions of stock analysts, all known options strategies, whispers and hunches and fads, over the last 20 years in this business.
As a portfolio manager, it always come back to this:
1. Keep your emotions out of the process.
2. Understand that Wall Street wants you to belive successful investing is an art, but the fact is; it’s more a science.
3. Don’t reinvent the wheel. Use market-beating strategies that have worked over LONG periods of time. Usually that means cheap stocks with strong price momentum.
The K.I.S.S. principle applies to investing in the stock market.
Anything else seems to me like driving around the block to go next door.