Using some TA in value investment

**qfhe** Wed Jan 26, 2005 5:15 pm

Using some TA in value investment
Hi, Blast

You never mentioned TA in any of your posts. Do you actually use any TA during your investment? Do you think a value investor should not look at TA at all?

I think using some TA could potentially boost the portfolio performance. I want to use some examples to talk about this. One example is USG. USG has dropped a lot recently from its high of $40. You upgraded its risk/reward ratio to extremely favorable and strongly recommended members to buy. But from TA sense, it still hasn't found any support yet. Of course, members already hold USG should continue to sit tight, but new members might want to use some TA and wait for the stock to find its support and then buy.

Another example is sohu. This is a long time controversial story. You personally bought sohu at very low price and held it through its ups and downs. Last year it dropped from its high of $40 to a low of $14 and currently it is still hanging around $15-16. Do you think it is possible to find some TA pattern to unload some shares before the big drop to lock profits and reduce risks last year?

We are small investors, not institutions. One strength of small investors is we can load/unload stocks more quickly than institutions. Don't you think using some TA could boost the portfolio performance?

Look forward to your comments. Thanks!

**qfhe** Wed Jan 26, 2005 5:42 pm

Re: Using some TA in value investment
I just read your previous post and found you did say TA is not important for long term investment. :-)

Anyway, please comment it again.

qfhe wrote: Hi, Blast

You never mentioned TA in any of your posts. Do you actually use any TA during your investment? Do you think a value investor should not look at TA at all?

I think using some TA could potentially boost the portfolio performance. I want to use some examples to talk about this. One example is USG. USG has dropped a lot recently from its high of $40. You upgraded its risk/reward ratio to extremely favorable and strongly recommended members to buy. But from TA sense, it still hasn't found any support yet. Of course, members already hold USG should continue to sit tight, but new members might want to use some TA and wait for the stock to find its support and then buy.

Another example is sohu. This is a long time controversial story. You personally bought sohu at very low price and held it through its ups and downs. Last year it dropped from its high of $40 to a low of $14 and currently it is still hanging around $15-16. Do you think it is possible to find some TA pattern to unload some shares before the big drop to lock profits and reduce risks last year?

We are small investors, not institutions. One strength of small investors is we can load/unload stocks more quickly than institutions. Don't you think using some TA could boost the portfolio performance?

Look forward to your comments. Thanks!

**qfhe** Wed Jan 26, 2005 6:19 pm

BTW, I understand short term flunctuation is not important to long term investment. But how to tell that a short term flunctuation won't turn into a completely reversed trend as sohu did last year?

**blast_investor** Wed Jan 26, 2005 6:30 pm

I personally started out a TA trader or investor first many years ago. I never made any serious big money with TA.

Right now, TA is not main part of my investment analysis. Of course, I did look at stock or index chart with TA sometimes. However, I hate to say, but it is true that TA did not make me big money before, and BIRTP has very little to do with TA.

Well, maybe I was not good at TA before. However, I am not aware of any big guys or rich folks in USA who made huge money with TA either.

Of course, as subscriber, you can do whatever you want with BIRTP picks, with TA or whatever. Essentially, if you are trading BIRTP picks with short term time frame with TA, BIRTP probably can not help that much in short term time frame.

In terms of risk, of course, stock investing is always not sure thing and I can not guarantee anything sure as well. Even though Buffet invests into USG, Buffet can be wrong too.

However, it is my opinion that value investing is relative low risk method compared to other method such as TA. I want to say that TA is riskier method than value investing.

I of course do not want to debate here on merit of TA vs Value Investing. This kind of bebate does not belong here in Blog and it should be in outside public forum. In conclusion, there is very little TA involved in BIRTP service.

qfhe wrote: BTW, I understand short term flunctuation is not important to long term investment. But how to tell that a short term flunctuation won't turn into a completely reversed trend as sohu did last year?

**blast_investor** Wed Jan 26, 2005 7:40 pm

My opinion on how to make sure to avoid risk or loss in stocks?

First of all, I do not believe I am able to predict short term fluctuations.

My way of dealing with safety: value + long term.

Subscribers can look at my portfolio transaction to see that.

**qfhe** Wed Jan 26, 2005 9:48 pm

Thanks a lot for your comments, blast.

我也不是想争论TA的作用。只是提出来探讨，相信不少member都不仅仅是盲目地
follow你的portfolio，他们还想从你那里学习一些知识和经验，

你是个大牛，performance是有目共睹的，我也是很敬仰的。

顺便讲个我在学术界碰到过的故事。去年我参加了一个国际会议，会议的keynote
speaker是个MIT的女大牛，她讲了一大堆，讲完后有人问了一个问题，
那个问题问得很客观，不知她怎么突然变得很defensive，说了一些诸如
我从６０年代在这个领域开始研究，做了１００多个项目，
你说的那些我都试过了，原话好象是I have tried them all, it just cannot be done.
她的意思就是说其它东东都不灵，而且自己亲自尝试过，确实不灵，
只有我这个灵。没有人质疑她过去的成功，她做的那个东东的确也很牛。
可是人一旦牛到她那个程度就容易变得固步自封，因为自己过去的成功
是经过无数实践证明了的，就容易盲目藐视其他一切东东，
觉得全世界就只有我这个好。

blast_investor wrote: I personally started out a TA trader or investor first many years ago. I never made any serious big money with TA.

Right now, TA is not main part of my investment analysis. Of course, I did look at stock or index chart with TA sometimes. However, I hate to say, but it is true that TA did not make me big money before, and BIRTP has very little to do with TA.

Well, maybe I was not good at TA before. However, I am not aware of any big guys or rich folks in USA who made huge money with TA either.

Of course, as subscriber, you can do whatever you want with BIRTP picks, with TA or whatever. Essentially, if you are trading BIRTP picks with short term time frame with TA, BIRTP probably can not help that much in short term time frame.

In terms of risk, of course, stock investing is always not sure thing and I can not guarantee anything sure as well. Even though Buffet invests into USG, Buffet can be wrong too.

However, it is my opinion that value investing is relative low risk method compared to other method such as TA. I want to say that TA is riskier method than value investing.

I of course do not want to debate here on merit of TA vs Value Investing. This kind of bebate does not belong here in Blog and it should be in outside public forum. In conclusion, there is very little TA involved in BIRTP service.

qfhe wrote: BTW, I understand short term flunctuation is not important to long term investment. But how to tell that a short term flunctuation won't turn into a completely reversed trend as sohu did last year?

**philzhang2004** Wed Jan 26, 2005 9:59 pm

deleted

**philzhang2004** Wed Jan 26, 2005 10:11 pm

deleted

**qfhe** Wed Jan 26, 2005 10:12 pm

I'm not upset or irritated at all. I have always respected blast. I have followed him since last May. I trust him and even defended for him in some public forums several times. :-) No need to worry.

我只是善意地提醒，人都是会犯错误的。

philzhang2004 wrote: blast's response is not very defensive. I think his position on a lot of issues are as just ok. Ease up and maybe we want to listen to this joke that tells us what to do what you were mistaken by others:

http://zealot.name/laoluo/老罗语录_好题烂题.mp3

**blast_investor** Wed Jan 26, 2005 10:33 pm

qfhe,

your question with TA is not really a question, it is more like to suggest BIRTP to incorporate TA into its current value investing style.

That of course is BIG NO. BIRTP is very pure value investing newsletter, with some long term growth stock investment in it.

I used to apply some TA on growth stocks before, but with little success. Nowadays, my growth stock pick criteria is mainly from Buffet method, which is originally from Phil Fisher's method.

Of course, your idea of mixing TA with value investing may work, But you have to practise and do it yourself though. This idea certainly did not work for me before.

qfhe wrote: I'm not upset or irritated at all. I have always respected blast. I have followed him since last May. I trust him and even defended for him in some public forums several times. :-) No need to worry.

我只是善意地提醒，人都是会犯错误的。

philzhang2004 wrote: blast's response is not very defensive. I think his position on a lot of issues are as just ok. Ease up and maybe we want to listen to this joke that tells us what to do what you were mistaken by others:

http://zealot.name/laoluo/老罗语录_好题烂题.mp3

**qfhe** Wed Jan 26, 2005 10:43 pm

Blast, I wasn't trying to suggest anything to BIRTP. It was more like "curious". I was curious to know whether you apply TA at all in your investment. I got the answer. Thank you.

Forget about the story. I was commenting this sentence: "However, I am not aware of any big guys or rich folks in USA who made huge money with TA either.".

I hope you're not annoyed or upset about my comments. If you are, I want to offer my sincere apology.

blast_investor wrote: qfhe,

your question with TA is not really a question, it is more like to suggest BIRTP to incorporate TA into its current value investing style.

That of course is BIG NO. BIRTP is very pure value investing newsletter, with some long term growth stock investment in it.

I used to apply some TA on growth stocks before, but with little success. Nowadays, my growth stock pick criteria is mainly from Buffet method, which is originally from Phil Fisher's method.

Of course, your idea of mixing TA with value investing may work, But you have to practise and do it yourself though. This idea certainly did not work for me before.

qfhe wrote: I'm not upset or irritated at all. I have always respected blast. I have followed him since last May. I trust him and even defended for him in some public forums several times. :-) No need to worry.

我只是善意地提醒，人都是会犯错误的。

philzhang2004 wrote: blast's response is not very defensive. I think his position on a lot of issues are as just ok. Ease up and maybe we want to listen to this joke that tells us what to do what you were mistaken by others:

http://zealot.name/laoluo/老罗语录_好题烂题.mp3

**blast_investor** Wed Jan 26, 2005 10:49 pm

:D Not problem. I am not easily annoyed.

As value investor, I have to suffer from shorts attack from newspaper or BBS. Your comments certainly are much more friendlier than those USG shorts' rumors. :)

qfhe wrote: Blast, I wasn't trying to suggest anything to BIRTP. It was more like "curious". I was curious to know whether you apply TA at all in your investment. I got the answer. Thank you.

Forget about the story. I was commenting this sentence: "However, I am not aware of any big guys or rich folks in USA who made huge money with TA either.".

I hope you're not annoyed or upset about my comments. If you are, I want to offer my sincere apology.

**grus2003** Thu Jan 27, 2005 2:15 pm

It's very tempting to incorporate TA into value investment. However, in reality, it's not so practical for our long-term players

1) There are some people making money through TA; however, the primary reason why they succeed is not TA, but the money management skills such as cutting loss etc.

2) Hard experience tells me that being a TA expert is very hard. Reading patterns is relatively easy. Follow the pre-determined rules in daily trading is much harder than reading chart itself. You have to make decisions against human nature.

3) There are fundamental conflicts between TA and value investment. In value investment, cheaper is better; in TA, mostly, cheaper is worse. You have to find a balance between them which is an extremely hard work.

"Do one thing, do it well". You can be either an excellent value investor or a skillful trader with TA. Combing value analysis & TA sounds great, but I am wondering if anyone can do it. It's just a too big project.

**blast_investor** Thu Jan 27, 2005 3:11 pm

Well said. I like your summary of conflict in red sentence.

grus2003 wrote: It's 3) There are fundamental conflicts between TA and value investment. In value investment, cheaper is better; in TA, mostly, cheaper is worse. You have to find a balance between them which is an extremely hard work.

"Do one thing, do it well". You can be either an excellent value investor or a skillful trader with TA. Combing value analysis & TA sounds great, but I am wondering if anyone can do it. It's just a too big project.

**qfhe** Thu Jan 27, 2005 3:50 pm

I like your comments, too, particularly the highlighted ones. Thanks!

I am a green hand in either field but open to various strategies. Maybe you are right. It's like 水火不相容. But this is not known until you try it by yourself. Since both of you said that based on your personal experience, I believe it is very hard, too.

Thank you and blast for your comments.

grus2003 wrote: It's very tempting to incorporate TA into value investment. However, in reality, it's not so practical for our long-term players

1) There are some people making money through TA; however, the primary reason why they succeed is not TA, but the money management skills such as cutting loss etc.

2) Hard experience tells me that being a TA expert is very hard. Reading patterns is relatively easy. Follow the pre-determined rules in daily trading is much harder than reading chart itself. You have to make decisions against human nature.

3) There are fundamental conflicts between TA and value investment. In value investment, cheaper is better; in TA, mostly, cheaper is worse. You have to find a balance between them which is an extremely hard work.

"Do one thing, do it well". You can be either an excellent value investor or a skillful trader with TA. Combing value analysis & TA sounds great, but I am wondering if anyone can do it. It's just a too big project.