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Re: Techs post, OK, I understand.This is an oft repeated mantra on these boards which is misleading.Correct fundamental analysis [if one removes the influence of unpredictable random events] will lead to profit REGARDLESS of the "price action". It is in this sense that fundamental analysis is theoretically superior to technical analysis, as ta is dependant upon human behaviour etc which has no instrinsic value in and of itself.A 10% share of a company is a right to 10% of the company's cash flows. Assuming the company is not mismanaged [management distributes cash when there are no NPV positive investment opportunities] the shareholder will release these values. If an investor buys a stream of cash flows that are worth $10000 [when adjusted for the timing and the risk of the cfs] for $5000 and the cash flow forecasts become accurate, the investor has made money regardless of the performance of the share price. This is intuitively true if one considers non or thin publically traded investments.Of course, does this help you to buy company ABC at $2.34 on March 1st and sell ABC for $3.20? Depends on your beliefs as to market efficiency.
Re: Techs post, OK, I understand.
This is an oft repeated mantra on these boards which is misleading.
Correct fundamental analysis [if one removes the influence of unpredictable random events] will lead to profit REGARDLESS of the "price action". It is in this sense that fundamental analysis is theoretically superior to technical analysis, as ta is dependant upon human behaviour etc which has no instrinsic value in and of itself.
A 10% share of a company is a right to 10% of the company's cash flows. Assuming the company is not mismanaged [management distributes cash when there are no NPV positive investment opportunities] the shareholder will release these values. If an investor buys a stream of cash flows that are worth $10000 [when adjusted for the timing and the risk of the cfs] for $5000 and the cash flow forecasts become accurate, the investor has made money regardless of the performance of the share price. This is intuitively true if one considers non or thin publically traded investments.
Of course, does this help you to buy company ABC at $2.34 on March 1st and sell ABC for $3.20? Depends on your beliefs as to market efficiency.
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