Email of the day on investment methodology:
“David/Eoin. Having been a subscriber for a number of years as well as an attendee at 2 of the chart seminars and a full time investor for several years I have learnt a lot about the financial markets out of necessity. I have changed from someone who used to think that the charts can tell me a lot to someone who realises that they actually tell me very little. I tend to use them now only by looking at them for very long term perspective (ie 50 yrs) and long term likely support levels where buyers are likely to come in. Now I concentrate on individual company analysis and follow the writings and methodology of Warren Buffett and Peter Lynch. I have had more success because I realise that it is the fundamentals of companies and an understanding of capitalism that creates long term returns. I would like to see your new site develop more towards this type of individual company analysis and less general market analysis. I believe that with many people now managing their own money there is a vast untapped need for this type of specific company analysis. I would be happy to discuss further if you wish."
Many thanks for a very interesting email of general interest.
Necessity, which you mention, is a very useful source of motivation and applies to most of us. Also, as we develop our investment understanding and methodologies, we tend to play to our strengths, and that seems to be what you are doing. However, I hope you will not give up on factual, behavioural technical analysis which you see on this site and which is also utilised with considerable skill by many of your fellow subscribers. Aside from the time and effort that you have invested in studying price charts, they are an ideal complement to your preferred methodology, in my opinion.
I like this sentence: “… I realise that it is the fundamentals of companies and an understanding of capitalism that creates long-term returns.” Eoin and I agree. However, the charts will help you to see more easily when the crowd’s fear or greed are pushing those companies too low or too high, particularly if you are monitoring overextensions relative to 200-day MAs shown on weekly charts. They will also enable you to identify efficiently sector relative strength or weakness, usually caused by a combination of fundamental perceptions, liquidity and fashion.
I think FT Money has already gone partly down the path that you request we follow. Consider our classification of the Autonomies, which this service named, often mentions and which Eoin frequently reviews. Are not these successful, sector leading, multinational giants, some of which are also Dividend Aristocrats, not the sort of companies that you are talking about? Eoin and I are top-down global strategists, and our spheres would be severely restricted if we tried to become forensic accountants poring over company reports, and grilling corporate boards, even if we could do that, which we cannot. Fortunately, one does not have to be the inestimable Warren Buffett or Peter Lynch to identify value, as you have also done.
All of us at FT Money would like to see this service develop and grow, and I believe it will. First, however, we must quickly sort out these wretched teething problems, and no effort is being spared. Thereafter, everyone at FT Money would welcome your thoughts, and those of any other subscriber on the most useful future developments of this service.Back to top