Case Study revisited. (It's good to go back and see how it all worked out.)
Quote:
Originally Posted by
Snoopy
The old adage "Buy into weakness, Sell into strength" applies here.
Just how good is that old adage? You and others were "buying into weakness" all the way down as per the charts that began this thread. By contrast, the green arrows mark buying into strength. Which worked out better?
Why would you want to "sell into strength"? No-one knows how far any uptrend will run. Look, though, at where red arrows mark selling into weakness. A nicely timed exit, yes?
http://i602.photobucket.com/albums/t...B/TUA22310.gif
Quote:
Originally Posted by
Snoopy
"Trouble is, the liquidity is poor, and with this type of small company it is hard to offload any decent-sized parcel of shares in a hurry if the trend starts to deteriorate.".
Certainly TUA is a relatively lightly traded stock but you overestimate its trading difficulty. For example, after triggering Sell signals, the shareprice moved little for about 4 months, allowing plenty of time to exit. You can't expect to unwind a substantial position in a small company in a single day.
Similarly, when buy signals began triggering, the shareprice moved little for 4 months allowing a leisurely entry.
Quote:
Originally Posted by
Snoopy
I have been accumulating TUA for three and one half years!
Yes, and the result is an average price paid of $1.37 and a position that has been underwater for the greater part of those three and a half years. You would have been far better off not accumulating during the long downtrend, but buying anytime at all once the uptrend began. You and others were focusing on the low PE and the "13%" dividend yield - while your capital was being eroded at well over 40% pa!
Quote:
Originally Posted by
Snoopy
It is always easy to say with hindsight that one 'should have bought earlier'. But should *you* (Colin) have bought earlier, really? .
Yes, as a TA, of course he should have! He should have been buying at around 75 cents, when all the indicators were firing off BUY signals for the first time in over 4 years. The exact same indicators that gave such good exit signals years in the past.
Quote:
Originally Posted by
Snoopy
There was no indication that the coming FY2010 might be better than FY2009 until Friday's full year FY2009 profit announcement.
TUA was in a steady uptrend, so the market was clearly optimistic.
Go back to the first 2 posts on this thread and see just how well 6 simple indicators have performed with this stock - using parameters that were set in 2004 and have remained unchanged ever since. Every so often, someone claims that TA leads inevitably to "overtrading" and is unsuitable for longterm investing. This chart gives the lie to that. 2 trades in 8 years will NOT turn you into a wild-eyed crazy trader!
See how the the market "knew best" with seemingly good results failing to influence the ongoing downtrend. Only staunch fundamentalists and those impressed by low PEs were buying into the slide. Buying downtrending stocks is not a good idea - regardless of the dividend yield!
It's nice to see signals derived from such very different indicators correlating so well.