I definitely didn't expect this post to inspire TA vs. FA discussion, but I suppose it makes some sense.
kimchi, just because you use less data than other analysts doesn't imply your data is any better. So your "one piece of data" comment is sort of loaded. I'm a little confused regarding your thoughts that "[Price] can't be massaged or manipulated like most other forms of data." What forms of data do you feel can be manipulated and how are those manipulations different than possible price manipulations. Marc Andreessen paints a pretty clear picture of price manipulation in a recent
blog post about the Sowood hedge fund collapse:
"Given what we were facing and our uncertain ability to meet margin calls [we were leveraged -- we used debt to double down on our bets to juice returns, common for this class of hedge funds], we sought other buyers for some or all of the positions [all our peers on Wall Street smelled "blood in the water" and drove down market prices even further]."
Lastly, why use "hourly,daily, weekly, monthly charts" for price? Why not chart something else, like spread or volume? There's a big difference between using fewer inputs and using the right inputs, and you seem to be suggesting that one implies the other, even more specifically, that the first implies the second.
blueman, can you post an example of me writing long paragraphs to disagree with you when you were right?
hawk, "coming up with complex models incorporating lots of variables seems smart and gives you precise numbers, while saying you have no idea what exactly is going to happen but are pretty sure the stock is very undervalued doesn't sound so smart." I gave a presentation for an investment club at NYU on November 4, 2005 pitching Wynn Resorts (WYNN) as an investment idea. This was only a few months after they had opened their first casino in Vegas and there was virtually no operating data available yet. I chose not to include a valuation (I did include some statistics like win/table/day and revenue/room/night). The audience pressed me for a specific value in Q&A. This was not unreasonable because nearly all presentations in this club ended with a DCF that produced a specific dollar value of the company. My rebuttal went something like this:
"Let's say I offer you a bar of gold. You know, for a fact, that it is 100% real gold. I hand you the bar of gold, which is about as big as your phone, but you are not allowed to weigh it or in any other way attempt to determine its mass, volume, etc. Then I tell you that I'll sell you the bar for $50. Now do you care what the hell it's worth?"
Wynn got voted in by like 3 votes (25-22 or so) [img]/images/graemlins/smile.gif[/img]