Re:
A Contrarian Viewpoint.
"Dummy" Systems don't work. Any system that the (m)(a)sses can exploit won't have a long-run efficiency because the peons will ring the profit out of it. Yet, most of the big movements in stocks occur because of institutional, trusts, non-profit, mutual funds, hedge funds, and all other large scale investors. Generally, when you see a trend rising, it's being heavily pushed by the big players. 70%+ of the volume is from big guys, so your 100, or even 1,000 lots won't make many waves, at least after your initial trade.
That said, the markets are not, by ANY means efficient. The Market Efficiency Theory, whose author won a Nobel Prize, assumes ALL players have EQUAL access and use of information, that we are ALL playing on the same field for the same reason. This, to any investor, is not true. Even in RE, where a plot of land might be useful to a Residential Builder who can turn a larger profit on the building of many homes, is different than someone who wants to operate a golf course on the same plot of land. Your purpose for the RE will inevitably dictate the profit and costs. If a family sees a plot of land, they might want a home with a lot of land, but their affordability isn't as high as the builder who wants to put up 2 homes, or who could zone it for condominiums.
Same in the markets, many guys day trade, and just want some volitility, other's are pure shorters, and like to beat a stock down with a bunch of other shorters. Others are long-term holders of positions throughout a trend, like the Market Wizards and Turtle Traders. With everyone having a different position, different expection, and differing levels of "guts", the market moves in very unpredictable patterns.
I've personally used Stock analyzing programs that have given me 100% profits, plus. In such cases, I don't care about slippage. And if my commissions are low, fine. Everyone has to make money to stay in business and provide a service. I set in stop limits and monitor the progress. I monitor both the charts and the fundamentals.
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In terms of "value", Warren Buffet and Benjamin Graham were the first to look at "inherent value." Buffet altered Graham's thoughts and system, which is how he found companies like Coca Cola and the Washington Post, citing that he liked to buy companies similar to a toll bridge with a monopoly. Graham would often buy companies that were trading at a discount from their book value, dubbed the "cigarette butt approach." Theoretically, you'd buy a company based on assets, since most other numbers were just projections. Graham did good, Buffet's done extraordinary. However, Buffet's beginnings were different. He bought Berkshire Hathaway, a mill in New England, siphoned off the cash flow into other companies until he had to sell because textiles were failing. Stories were told that his future was shaped through failure, but he was a man who rarely failed. Sure he missed some investments opportunities, but few who deny that they wouldn't take his 50 billion portfolio, much of which will go to charity.
Value has implied AND explicit, meaning, people value things differently. Assuming a company was "cheap" and nobody was buying it, yet it was highly profitable, you could gobble shares up until you control a large % of it, and do near what you please with the company, just as Buffet did. This rarely, if ever happens, because people PUSH a stock higher, either based on the prospect of solid dividends, as MSFT issued $3 a share, the highest ever for a tech company, or they reinvest BACK into the company providing the company can earn MORE through their business than giving it back to the investors.
There's alot of different VALUES to a business. IBD would examine Sales and Profit Growth, Accountants would examine book value, assets, debt to liabilities, etc. Traders don't care, they play the movement. Certainly you can't fudge sales growth, entirely, they might apportion a sale differently to different quarters to keep it moving, but eventually such funky accounting will tank the stock in coming quarters. This happened when Conglomerates of the 70's and 80's found they could push their stock through the roof by gobbling up other, smaller companies, even if it meant by companies OUTSIDE their realm of expertise. GE did this, though would often buy within their realm of understanding. Even Philip Morris, tobacco manufacturer, bought outside their main line through consumer staples and products.
If Institutional was so much better than an individual, such as you or more, then nobody would buy anything BUT institutional money. Sure they Doctors, and Hoards of Traders, and those guys are PERSONALLY wealthy, but when you consider there's MORE mutual funds than stocks, then you realize MOST funds will be just average, while they jocky for first place. Sometimes a fund will hit 5 stars on morningstar, and then be a dog in a few years. If a fund sticks to its objectives, it will go through up and down periods, but it's when funds TRY to be the winner ALL the time that they get killed. Why? Because, if a fund is supposed to ONLY do international stocks, there's a time to come when international stocks will tank. The fund doesn't want that, so it might deviate from its objectives to keep ratings high, cash flowing in, compensation high, and investors happy. In effect, your international mutual fund becomes a blend fund of whatever is hot at the moment. Such deviation is the norm, not the exception. Funds already allow a 5-10% leeway in what they buy, not to mention whatever cash position they need to reedem shares, which may be 1% to 15%, depending on the status of the market.
Mutual funds and institutions also don't take a FULL position as fast. They have to bite in small bites, though they do get volume discounts as they go. One expense NO included in the cost of mutual funds are TRADING costs, since they don't know or record them, the actual dollars are unknown. They average about 1.50% ON top of their regular expenses, as its a function of how much turnover they have.
I don't have experience as of now beyond stocks and ETF's, but if you're persistent, you can make money and find something that works for you. Expensive systems are attractive, but any broker online or cheap free site can provide something better than an entry chart. You can read IBD books, Graham, buffet, Market Wizards, Jesse Livermore books to get a FEEL of what's happening. Much of the crap on TV has no link to reality or what happens in the markets. They use it as justification AFTER the fact, since most people don't have such advanced info. I say because there's a lot of little guys too, and there's a greater advantage to being "the little guy."
-You can buy small companies that larger institutions can't.
-Your buys or sells don't take long.
-Your buys or sells won't trigger swings in the market.
-You can ride the trend of larger players.
Once you get bigger, then it's great, but big still isn't a $100,000 account, or even $1,000,000, when you're talking about companies that buy or sell in 10's of millions of shares PER DAY. That doesn't shake much up UNLESS you buy a low volume stock.
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My purposes for holding vary. Normally I have asset-purposes. As of now, my brokerage account is to learn more, to get results, and to save for a home or townhouse in the near future (1-2 years) since it is expected that a real estate correction is coming due in New England. A glut of homes yet to be complete, problems with sales already, high prices that are pushing people to move south and bank the profits, and retirees seeking warmer climates have people thinking twice about BUYING now. Many people have taken to fixing their existing place up now. Average homes in my area top out over $300,000, a "decent home", one you'd find in texas, florida, the midwest of 2000+ square feet would top out over $400,000 or more. And given that jobs aren't bursting through the cracks, in fact alot of people are losing jobs, its signaling a A HOLD or CASH AMASS situation. This I've heard from Commerical Builders with 25 years experience, many market cycles, and the know how to do it.
Anyways.
That's my 2 cents.
There are definately systems out there, but they require a "base" of knowledge and understanding about charts and fundamentals to make it happen. They're not for Dummies who just want quick bucks. Just like I'm sure R/E systems can be SIMPLE, but not EASY, and could appear to make big dough, but won't until you immerse yourself.
A-Unit