Hey Guys,
I just finished my university degree and the one class I found of any real intrinsic interest was a class on fundamental analysis using a modified DAE model. I completely understand the concepts and ideas behind this "value" method to approaching trading -- that's not to say that my valuations are particularly good or insightful at this point, but I feel like I have a solid foundation to learn from in coming up with a figure for what a share "ought to be worth."
So my question really is what now? I have an account with direct broking, and I've put a little bit of capital into a few equities I feel are quite undervalued, but in reality, I really have no idea what I'm doing. Could you recommend some books/websites/etc. to help me gain a better understanding of the "big picture" of share trading? It's all well and good to form an opinion on the value of a share, but actually knowing when to enter and exit is a different matter.
Also, is it worth learning some TA? Can I use FA and TA together? It seems like you could use FA to find equities that you think are undervalued and then use TA to help you decide when to enter and exit. Do people do this? Note: I know nothing about TA except that we're told in finance classes that it doesn't work. This seems utter bull**** to me. Of course we ought to be able to identify statistical tends in human nature and that affect on the market!
Really, I'm just looking to learn. So anywhere you can point me to get a good foundational understanding to build on will be much appreciated. I'm 22, know only what 3 years of a BCA teaches you about the market (nothing?), but I'm intelligent, eager to to learn, and I find this stuff really interesting.
Thanks in advance,
noso
Where do I begin?
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17-10-2008, 04:10 PMnosolutionWhere do I begin?
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17-10-2008, 06:06 PMHalebop
Welcome nosolution!
There is a big difference between share trading and share investing and the philosophies that form inputs and outputs for both. You'll only work it out by doing rather than thinking it through.Quote:
Originally Posted by nosolution
There are quite a few people on this site that combine FA and TA. I bet those folk in the finance class either quoted no source for the "TA doesn't work" prognosis or a discredited or biased research piece. Google "momentum investing" and see how easily very basic TA could be applied to this approach (recent research showed Momentum investing to be a very profitable style even though little or no FA need be applied).Quote:
Originally Posted by nosolution
I apply the same statistical concepts around patterns of behavior in my FA as many use in TA - this stuff is basic statistical math rather than bunk science. None of the tired arguments against TA address the statistical arguments because they have a statistical and scientific basis that is beyond the horizon or understanding of TA critics. My advice is keep an open mind. TA is just a tool - it is equally as faulty as FA but combined together my experience has been positive. (Keep in mind that nothing replaces experience as well - early results will have a lot more to do with luck than skill).
Most of us are looking to learn. You have a great state of mind to be so receptive. Keep a healthy skepticism too! Your chosen theories should be supported by better investment results too, otherwise you may have succumbed to nothing better than a dogma.Quote:
Originally Posted by nosolution
On the FA front I like Buffett's tenet's for their risk avoiding simplicity - a simple list of binary responses to some basic qualitative questions. The Warren Buffet way was the most useful book to me for building a short repertoire of qualitative hurdles.
For TA I've had numerous influences, few of them found in popular TA books. I keep it simple and stick to factors as I can relate them to the basics of statistical math.
Good luck! -
17-10-2008, 07:14 PMshastaQuote:
Originally Posted by nosolution
Hi Nosolution,
Welcome to Sharetrader :)
You have made a wise move coming to Sharetrader, there is a wealth of free information on the various threads, & plenty of posters willing to help.
First book you simply must read is, "The Intelligent Investor" by Benjamin Graham.
Buy a copy of that, & it will be the best investment you will make, Halebop touched on it, as it's the very tenets Warren Buffett uses & are timeless.
Have you got a written plan on how you will decide on what to buy/sell?
I've always found when you write something down, use it & refer to it before acting, it helps keep the emotion out of investing/trading.
If you have any trouble navigating around the site, do post more questions & don't be shy to ask...:o
We all started out as beginners & we all are still learning ;) -
18-10-2008, 02:43 PMnosolutionThanks
Cheers for the response guys. I'll definitely go grab those books -- both I've heard of before. Also, are there any particular news sources (websites?) that you guys read daily to make sure you're keeping abreast of the current global economic and market happenings?
I'm really glad this site exists; I've been reading other threads and it's obvious that there is a wealth of knowledge here and people seem genuinely happy to share it. You'll definitely be hearing more from me.
-noso -
21-10-2008, 06:21 PMSheikh Al-KadhemYes, "Securities Analysis" by B. Graham and D. Dodd is also an excellent read (If a little archaic by modern standards).Quote:
Originally Posted by shasta
They tend to focus on investing rather than speculating/day trading however.