Still Have 40,000 Shares of IMMR

[DesertCat]

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But catch these errors, you need to be able to estimate what intrinsic value is, and you can't do that by just looking at one aspect of the company.

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So according to this statement, you cannot make money with insider information about pending one time events (lawsuits, settlements, recalls, discoveries, etc.) which is equivalent to the realization of the market misinterpreting the effects of public one time events.

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Estimating intrinsic value has nothing to do with what kind of information you have, it's assumed you have enough information to estimate value reasonably accurate. This isn't always true, and some companies (internet businesses during the bubble) couldn't be estimated at all due to this information failure.

And as far as I can tell, David isn't talking about insider information.

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Price is determined by the aggregate view of the market. If the public is irrationally viewing one factor, how is this any different from the public irrationally viewing the sum of all of the factors(ie the intrinsic value)? Both are going to put pressure on the price in one direction and both are making assumptions about how much attribution various aspects contributes to the price determined by the market.

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One more time, how can you tell whether the public is irrationally viewing any factor? And how can you tell whether any errors made by "the public" in one factor, isn't more than offset by errors the public made in all other factors?

There is only one reasonable approach (assuming you agree with David that you can't predict price action through charting and other technical approaches). You estimate all the factors and compare the sum you get to the market price. Usually price will be close to your estimate. When the price is far below a reasonable estimate, you have enough "margin of safety" to make a purchase.

[jaydub]

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And as far as I can tell, David isn't talking about insider information.


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His injured QB analogy strongly implies otherwise.

Where did the post about reds getting housed in this forum go? Deleted or self edited?

J

[Jcrew]

Insider information was brought up to show an instance where everyone can agree which one time events can be used effectively to make money.

Here is something that might explain it better. Can you make money JUST doing fundamental analysis of a company without taking into consideration the impact of global macro trends?

[DesertCat]

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Here is something that might explain it better. Can you make money JUST doing fundamental analysis of a company without taking into consideration the impact of global macro trends?

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I have a two word proof that shows you can. Warren Buffett.

[DcifrThs]

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Here is something that might explain it better. Can you make money JUST doing fundamental analysis of a company without taking into consideration the impact of global macro trends?

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I have a two word proof that shows you can. Warren Buffett.

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i wrote out a long answer to this statement. then just laughed to myself and said "lol, it's not worth it, somebody will come in and explain this in 4 words." you did it in 2. wow.

but, just to state my point, you can hedge out market movements even if you aren't warren buffet. i.e. fundamental analysis of a stock can lead to your conclusion that it is attractive, but you don't have a view on where the market is headed. so you short out the mkt risk and isolate your exposure to the stock itself.

Barron

[David Sklansky]

"How do you know the market doesn't rate the quarterback change as skillfully as you?"

I said that only I know.

As far as whether I am talking about inside information or not, what difference does it make? This debate is over my contention that you can have an edge because you have somehow evaluated one aspect of the stock better than others have, even if you know nothing else about the company. I still don't get why you can't see that as obvious.

[David Sklansky]

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That the markets price on average is correct. Which sort of implies that charting won't work.


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David, can you explain your reasoning as to why market price on average being correct, would lead to an implication that charting won't work?

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I'm not sure the reasoning is 100% foolproof and I don't have time to think about it.

[Jeffmet3]

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"How do you know the market doesn't rate the quarterback change as skillfully as you?"

I said that only I know.

As far as whether I am talking about inside information or not, what difference does it make? This debate is over my contention that you can have an edge because you have somehow evaluated one aspect of the stock better than others have, even if you know nothing else about the company. I still don't get why you can't see that as obvious.

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But how can you possibly know that you evaluated this aspect better than others?

TASR's price increase could've had absolutely nothing to do with what you saw as an inequality.

I think what he's trying to say, is that by showing 2 stocks that went up, you're using this information to justify your strategy which defies the accepted opinion and that's being results oriented.

[kdotsky]

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And how can you tell whether any errors made by "the public" in one factor, isn't more than offset by errors the public made in all other factors?

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You're right, you can't tell. But his point as that these "other" factors are equally likely to cause an overpriced stock and an undervalued one when you know nothing else about them. In other words, the expected value of their pricing is the true price. Any deviation is just variance.

[kdotsky]

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This debate is over my contention that you can have an edge because you have somehow evaluated one aspect of the stock better than others have, even if you know nothing else about the company.

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I disagree. I think most people understand this point, and probably agree with it.

I have trouble understanding the first part: observing something about the stock that is unaccounted for in the price. The QB example is obvious because it's insider information and you know it hasn't been accounted for. But I still don't see how you argue that TASR's price will account for your observation in the next few years rather than the previous few.

This might get at the issue better: when and why do you sell TASR?