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the nonbelievers to the TA brand of analysis. I believe that it is proof enough for one to consistently make money, and that since TA provides an investor with a great tool, it is to one's advantage if only an educated minority practice it. I have even gone so far as to offer proof that using fundamental analysis in isolation doesn't "work." One need only pick up any daily newspaper to find sobering reports of fundamental analysts caught dead wrong and the subsequent plummet of a once-favored company's shares. In the real world of investing, one must constantly review one's holdings and look for signs that the investments are performing as they should. |
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Neal: Are you more oriented toward trading than toward long-term investing? |
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Tom: My preferred approach is to trade the short term with a portion of the portfolio. With the remainder, I prefer to invest for the intermediate term in sync with the trend, while using traditional asset allocation between stocks, debt instruments, and cash. I abhor the current fad of the so-called "buy and hold strategy." It really is a nonstrategy. You give up too many opportunities to lock in profits and sidestep risky markets with that approach. The credo of long-term investing is the refuge of the one-eyed analyst, who can only see bull markets and preaches the mantra of "buy and hold." This is the market equivalent of driving down the road, running over the detour signs, but driving straight ahead anyway in the belief that sooner or later, the road will get better. Along the way, the potholes may take out your tires and your car may get damaged, but you still drive blindly on, hoping (expecting) the rest of the convoy to follow you. Why wouldn't you take the detour and drive around the potholes? Because most drivers don't realize where they are on the map. They are too stubborn to back up when they find out they're in trouble, and besides, "in the long run," things always work out, assuming you haven't crashed in the meantime. |
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The financial markets, as everyone knows, have longer bull periods than bear periods. Whether your portfolio (or your |
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