FBU Chart.

[limegreen]

Oh I'm sorry, are weak arguments supposed to be exalted? I thought the purpose of discussuion was to expose bad arguments. Not to pile on the arguer and try to smother him.

You're extremely quick to stake out the moral high ground for someone who entered the discussion with hurling a lot of insults and not much in the way of arguments.

In fact, if I may be so bold, you are the pack.

[Phaedrus]

SectorSurfa.
As a newbie, you may be unaware of the existence of the old ShareTrader Snitz forum. I was posting FBU charts there from 2003 to 2007 and if you go back and look, you will find 46 pages (!) of charts and discussion which illustrate the principles of trendfollowing as applied to FBU on a day-to-day basis. Follow this lot right through and you will get an overview of trend-following techniques that you may find helpful.

so just to keep the trend in place for 7 years in hindsight, you adjust the trailing stop loss to 25%!!!

It takes a while for a trend to settle down. Initially, FBU had a maximum volatility of around 16%, but the volatility was increasing and kept rising until it reached 25%. I used this figure as an FBU trailing stop for about 3 years before it was (belatedly) hit. Your claim of "hindsight" is therefore without foundation. In any event, I have devoted many posts to the question of trailing stops and have always said that while they are better than nothing, they severely underperform more dynamic trend indicators. I don't use trailing stops and only include them in my ST charts because I know that some people here do use them.

All other times you have done much lower amounts...eg 10%

All other times?!!!! Perhaps you mean all other stocks! You must surely have noticed that different stocks exhibit different levels of volatility! It is obvious that they therefore require different trailing stop parameters. Yes?

....and you wouldn't have been out of the stock April 2005ish on a drop from $8 to $6

Longterm holders of FBU would not have been out at this time because the uptrend was still intact. Price action was above the trendline and above longterm indicators such as slow oscillators, moving averages etc. As I have said before "Long-term holders of this stock have at times had to withstand drops of up to 25%, if they wished to continue holding. If this is more volatility than you are ready, willing or able to withstand, you have two alternatives. One is to get out of the sharemarket altogether. The other is to trade the stock."

....so what protected the trader who doesn't want to "give so much back" from the 25% drop then?

Their trading system. The use of more active indicators and trendlines optimised for the secondary trends that comprise the main longterm trend. FBU is a reasonably volatile stock with clearly defined secondary trends. This is what makes it a good stock to trade.

The primary emphasis of my ST charts is on the longterm trend. This is because most people here are not all that interested in trading. Nevertheless, I have posted many charts showing indicators suitable for trading FBU's secondary trends.

....well short term or long term, I guess again its always easy after the fact.....

SectorSurfa, you seem confused and suspicious over the Williams'%R oscillator "Buy" signals that have been generated. This indicator, along with a suggested 90 day period, was posted here many years ago. From that point on, buy signals were completely "automatic", with no further input or interpretation required. They were there for anyone that bothered to look. Your claim that they were only visible after the event or were only easy to see "after the fact" is arrant nonsense. Garbage. Anyone, anywhere can run a 90 day W'%R on FBU and see for themselves just how good these buy signals have been. Year in, year out.

I have decided I must be stupid not to get the ease of it

You're not stupid, SS. Just young, brash, inexperienced and not widely read.

I hadn't realised that you were a Buffett disciple, SS. Would his system have got you into NZ's best stocks? (FBU for example)

Amongst other things, Buffett looks for companies whose earnings are in an uptrend. The shareprice of such companies is often in an uptrend too. That's what I look for. We are both trendfollowers to some extent.

When it is all boiled down, what did my "FBU Chart" thread accomplish?
(1) It identified a good stock to hold. "Fletcher Building has been in an uptrend for years, has good fundamentals and a good yield, all of which makes it an excellent "buy and hold" candidate."
(2) It suggested means of monitoring the long-term uptrend, using methods that anyone could follow for themselves. These methods eventually identified early weakness in the longterm uptrend and signalled a very timely exit. (FBU has fallen substantially since then.)
(3) It identified FBU as a good trading stock "In addition, its secondary trends are very tradeable" and suggested suitable indicators for this purpose.
(4) It suggested methods of identifying good entry points into this stock and posted frequent charts featuring these signals. "Technical analysis provides an excellent means of timing your entry into stocks such as this."

I would hope that many people might have found this thread interesting and perhaps even useful. For myself, FBU has been a spectacular performer, both as a longterm hold and as a trading stock. You can't ask for more than that.

[limegreen]

it was my point all along that its the weight of argument that are supposed to matter not the weight of opponents.

Can you point out where that was subtly hidden among the ad-hominem attacks?

And t here you have it SectorSurfa, the difficulties with attacking Pheadrus on tthis site, first you have to wade through an a mazing amount of goobledegook to understand what the systerm is all about, then you have to become an enthusiast for using it. Then you have to detect some of Pheadrus's sillier prattle and the flawws in his alledged systerm............ then when you stand up and make your point, the PheadrusBots come piling in on you like a bunch of demented weasels, afraid that you might find that the emperor reallly is stark naked.
And on top of that MacDunk pours a stream of the finest qualilty Bulll....! Still if anyone has the iron will and obsession to take them all on its you!

[Halebop]

Thanks for the debate. Unfortunately my knowledge of investing is no richer but at least I feel enriched by the layers of irony.

[JMKC]

SectorSurfa.
I hadn't realised that you were a Buffett disciple, SS. Would his system have got you into NZ's best stocks? (FBU for example)

Amongst other things, Buffett looks for companies whose earnings are in an uptrend. The shareprice of such companies is often in an uptrend too. That's what I look for. We are both trendfollowers to some extent.

Phaedrus, I quite enjoyed reading what you had to say up until this paragraph. I am not a major Buffett disciple, but my best guess is that given at around the $3.50 mark back in 2003 it certainly would have come up on a value screen. That is why you saw 4-5 offfshore deep value funds investing in the stock back then.

Your second comment about him looking for companies in an uptrend is factually incorrect. He is not a trend follower at all. In fact value investing methods often totally contradict both technical and momentum investing.

However in fairness, everything else you say makes pretty good sense. It is also fair to say very few people (not just on this site) have any real understanding of volatility.

[duncan macgregor]

Now, why is it that you lot always have to hunt in packs?

I am not a pack person myself. Packs or gangs are for the insecure, the type of person who needs back up to boost their inferiority. My mate SECTOR SURFER might talk a lot of crap, but is definately not a pack person. PHAEDRUS, my sparring partner SNOOPY, and my good self, all jump up say our bit, take the flack, and come back for the second round.
SECTOR SURFER is learning the game, what quicker way to do that than question his teachers. The people that get all childish name calling only do it because of their own inferiority. PHAEDRUS said he sold out then went on holiday which is very strange because i did very similar. SECTOR SURFER rubbished me for doing that because he thinks i dont know how to operate in a bear market.
TA investing requires you to get out of falling markets, and into rising markets, buying more of the same on the way up. Its that simple regardless of how you operate your TA system. When the market as a whole is dropping any self respecting TA investor sells up, and goes fishing, leaving the brain dead holding the baby. I only see one buy signal on the NZX which i posted on the NZO thread, so let no one accuse me of coming out after the event. Macdunk

[Halebop]

Your second comment about him looking for companies in an uptrend is factually incorrect. He is not a trend follower at all. In fact value investing methods often totally contradict both technical and momentum investing.

Phaedrus said Buffett looks for companies whose earnings are in uptrend. Buffett looks for companies with a long history of outsized return on equity, high return on assets and the ability to reinvest those profits for more of the same. All of which points to earnings being in an uptrend, often over decades. This is not very different from various forms of technical momentum investing and like a TA, Buffett doesn't spend a lot of time working out the "why" of it, just the demonstration of it. His letters often explain he purchased this or that company on the basis of a few pages of historical data, personally liking the managers and a handshake.

[Phaedrus]

Wikipedia, Buffett's Investment Approach,
(From the book "Buffetology" by Mary Buffett)

Questions to determine what business to buy :-

Question 2 :- Are the owner earnings on an upward trend?

[Phaedrus]

I still cannot get my head around all the TAs saying "remember your tight stops" and yet we now have the "flexibility" to "extend" them to 25% for the sake of showing a candidate for long term investing TA style.

As far as I can make out, SS, your claim here is that any longterm trend-follower would have been flicked out of FBU back in 2005 by the 16% trailing stop in use back then. Let's examine that premise.

Here is an FBU chart showing as much as we knew in 2005, along with the indicators then in use. The big retracement under discussion is in the magenta circle. Leaving the trailing stop issue aside for the moment, let's look at the established longterm uptrend. We had a well confirmed trendline in place and the highlighted 2005 retracement didn't even get anywhere near it. Price action remained well above any established longterm moving average. Excellent confirmation of the uptrend was provided by the ever rising On Balance Volume indicator which also remained well above its longterm trendline. This was an uptrend in excellent health - and it was accelerating! No longterm trendfollower would dream of selling out of such a stock. Now look at the 16% trailing stop I had been plotting for FBU. Price action broke below this at around $6.40. No longterm holder would have chosen to ignore all of those strongly positive trend indicators and sold-out on the basis of a trailing stop. The broken trailing stop simply showed that FBU's volatility was increasing and that a 16% trailing stop was now too tight for this stock. The decision then was to either raise the value of the trailing stop to reflect this new reality - or to dump it altogether.

main point, a drop from $8 to $6 is ok for TAs to stay in long term? .....I JUST DONT GET IT.

Sure it was OK. Longterm trend indicators were nowhere near being triggered. The uptrend was not only intact - it was accelerating! See above.

There have been other occasions during this long uptrend when a single indicator has been triggered. To act on an isolated signal in the absence of any confirmation is not good practice. What you are looking for is some degree of consensus.



This is very old ground we are covering here, SS. Here is a quote from an August 2005 FBU post of mine :- "Technically, nothing much has changed since I posted the chart that began this thread in 2003. The long-term uptrend has steepened a little, necessitating an updated trendline. Same with the OBV. Business as usual. Time to cash up and take profits? Nah.
It seems to me that a lot of you are talking about stops because you do not have any system. McDunk's suggestion of using a tight stop would have had you flicked out of FBU years ago. Here we have a stock that is an excellent long-term hold - to be sold when the long-term uptrend ends. It is also an excellent trading stock - to be sold when the medium-term uptrend ends. The chart shows the last few medium-term trendlines, along with their associated buy/sell signals. Sort yourselves out - select and use a system appropriate to the timeframe you prefer to trade."

[duncan macgregor]

PHAEDRUS, Macdunk sets a tight stop loss on an initial buy then lowers it when in profit depending on the trend. He then buys all the way up. I would have been out several times then back in on the buy signal, which may or may not have been the best way to go.
I only go up to a 15% trailing stop on long term trending companies and buy back when it gets above the 30 day moving average. Never had FBU but thats how i would have operated if i had. If you feel inclined compare that to a buy and hold on a share that trended up like this see if i would be in front or not. Thats the best part of TA you can back test to improve your system for going forward. Remember a 20% pa time line starting at stop loss level on the way up. Macdunk