Technical Analysis doesn't work AT ALL

[Gunnski]

If you are not absolutely sure, don't get in!

[npg]

Originally Posted by KathiM

At the end of the day we want to make money! And money is being made by buying cheaper than seelling; NOT by buying value! The value just gives you an indication of where the price might go in the future and I follow this logic. Value does not prevent stocks from a crash, so why would I ignore the risk? I wan to have money for the last 20years of my live. If it takes me 5 years to recover from a crash I cannot just live 5 years longer. Value does not save you from an 'unjustified' price!
I think it is prudent to have some 'risk management' in place. The question what is the best risk management within the rule#1 approach?

KathiM

We will have to agree that we disagree on that one.

Ultimately, from my experience value gave me the best protection overall. I don't believe markets are efficient and I don't believe that I have lost money when the price tanks further below intrinsic value. Provided I have a reasonable guess at the intrinsic value and apply a suitable margin of error I am not nervous when a security is available at even a further discount. I know that I won't be able to time a market, I also know that I won't be able to guess it's future moves. My only chance of outperforming the trend is to buy securities which currently are out of favor and offer a reasonable degree of protection of principal.

A margin of safety is risk management. It is a very old principle applied in civil engineering on a daily basis, but some people prefer to use price action instead because thats the image they have in their head when dealing with securities. This emphasis on price action is a very tough bias to get rid of.

In the medieval times it was thought that drilling a hole in the patients head would release pressure and therefore cure the patient from a migraine attack or even a simple headache. I don't think times have changed that much. Metaphorically, we still behave the same way at large. And I am fine with that. It gives me the advantage a card player has whose opposition has been told it's no good looking at the cards to win. In other words, I have no intention of competing like the one legged man in an ass kicking contest.

So we disagree. And I'm fine with that...

[sanjayshetty]

hi everone,

I've been reading this thread, and I must say I found it interesting enough to read all the posts, 7 pages of it at one go :-)
It's been extremely interesting and Enlightening.

[Gunnski]

Adam very nice job.

I would add that investors/traders need to get use to looking to the left of current price on the chart. Look for areas where your investment may experience areas of resistance & or support. This can assist you with determining your ratio of risk to reward.

The MA(50) is more for Traders. Who tend to be shorter term holders of the stock. Where the use of the MA(150) is more for Investors, who plan on hopefully holding longer term.

I stongly suggest the RSI is in a upward trend when you pull the trigger for your buy!

Thanks for your help on above post!