I like to say that Technicals have
a faster clock speed than Funda . . .
Fundamental is
very important. It should be the first step in company analysis. And if one has
abundance of patience, then it is sufficient.
Now if one
likes to move a bit faster and/or earlier, Technical Analysis could help. It is
not a science – rather it is sort of an approximation. However, if one can use
it with Funda, then success rates could improve in the business of
unpredictability.
I will go
through a couple of my previous analysis and mention another two that I did not
cover here to explain my views.
Q2 of quite a
few companies are being published. However, the market adjusts earlier – these companies
started to rise earlier before the news was published.
It is one of
the bases of Technical Analysis theory: Market action (price) discounts everything: Technicians believe that the
current price fully reflects all available information.
Thus, the rise
in the charts can be explained by the hypothesis that investors earlier
determined and/or speculated that earnings will be increasing and thus, the rise
in price. Just be wary of Sell on News.
Other two
companies (from among many) that had significant rise in price are Peninsula Hotel and ACI Formulations
both of which had huge growth in EPS. Another example is Central Pharma - although I could not buy their huge EPS growth (coming from ~78% increase in quarterly sales!) - it was a good trade Technically although the Funda seems to be too good to be . . . .
Thus, instead
of relying on rumor, one should focus on Fundamental Analysis and then if one
wishes, Technical Analysis.
It’s your money, your choice . . .
And I have to
appreciate the statements coming from the Government of Bangladesh on avoiding rumor
based speculation:
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