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Already Priced In? Going Surfing.....The Bottom...Analysts

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March 07, 2009 – Comments (2)

All of this discussion of Technical Analysis and Fundaments along with Elliots Wave Principle mixed with Dow Theory have me thinking of two things.

1. Going surfing.  No I don't surf, but I could sure enjoy a nice vacaction where people do surf and sip my cold one(s) while wondering if the surfers are in a wave or a trough and whether the pro will wipeout before the amateur because he thinks he knows better and takes more risks, or if anyone even cares.  I could daydream, with a few scenery distractions, and forget about what is best, TA or Fundamentsls and after enough drinks contemplate the meaning of the universe and not care if the market crashed or rallied. Bears or Bulls, who cares when you have bikinis, cold drinks and warm sun.

2. Second thing I thought of, back to reality, my wife doesn't like it when I daydream about bikinis was a discussion I had with a friend about TA.  I floated him a few stocks that I had gotten pretty heavy into fundamentals with and he floated back his TA impressions.  One of the stocks was too small and not worth bothering with, not enough analysts.  The other had only IPO'd about two years ago and had no run record, so not worth looking at.

The bottom line is that he believes there is no benefit to fundamentals.  The experts do the work for you. Just follow the graphs and see where they are going to go next and move with them or ahead of them.  You don't need to worry at all about fundamentals, the analysts do ALL of your work for you.  Just pick big cap stocks with a good following.

Well, it's hard to say, but I'm certain he's down a whole lot more than me.  My two little followed stocks are doing okay, especially relative to the market. 

What does "already priced in" mean??  I hear it all the time even in this market.  This market is running on fear, greed, news, (various interpretations of it), other countries, more fear, and yes, the government sticking it's nose in constantly causing a new round of fear and confusion.

TA is good to get trends, fundamentals work for some people, especially those who look long who just want good companies and can weather out the cycles, but what does already priced in mean in this market?  What do the charts mean from hour to hour in this type of market? If the analysts knew anything why is the market moving 5%+ almost everyday.  If the analysts knew anything why aren't they on the beach drinking cold ones??

I hope we're near bottom.  Bottom historically is where all the fear has done it's damage. I informally talked to five friends this past week who are hobby investors and have 401K plans, that sometimes we collectively cry about as we wish for early retirement over a cold brew.  Misery loves company, and we all love a cold brew.  Three had cycled all of their 401K's into stable funds.  Two felt they had missed that chance and were just going to ride at this point.  No point getting out.  Bottom might be near, might be far.  Bounce might be shallow or large, but they were just tired and in for the ride.

Folks I know have either ran in fear or capitulated.  Signs of bottom?   There will be a few more quarters of bad earnings for many companies.  Layoffs will continue. Auto Industry and banks will be in a funk.  Overall though it is darkest before the dawn.  The path up from the bottom may be shallow or steep, but I think the best plan is to start buying in a little bit or being ready to.  If you buy on the way down and on the way back up, your recovery, (historically), will be much faster than if you did all your trades at the top and wait for a full uptrend to be established.

If I can only get a little bit back, even a little, then I can sell it, go to the beach, learn to surf and forget about how many waves and troughs we have been through. In the meantime I'll keep my fundamentals on a handful of companies. Enough to diversify, but not so many that I can't keep track of which CEO ran off with the secretary or which ones went golfing with Bernie. I'll look at the TA and the many different interpretations it brings. I'll hope for the bottom at 660, but be ready for it to be 630 and pray it's not lower.

Surf's up.......

 

 

2 Comments – Post Your Own

#1) On March 07, 2009 at 4:27 PM, kaskoosek (87.51) wrote:

Nic writeup TSIF

+1 rec

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#2) On March 07, 2009 at 4:41 PM, RonChapmanJr (72.85) wrote:

"If the analysts knew anything why aren't they on the beach drinking cold ones??"

No need for 2 question marks on this one, the answer is easy.

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