Thursday, March 16, 2006

Why I choose technical over fundamental?

Who is the most famous fundamentalist now in the whole world? I guess it is Jim Cramer. I have the full respect for this guy, I am not like others trashing him as he is a joke. He is not, actually. I don't think those Jim Cramer hatters have so much power and wisdom if they were placed in his position at Mad Money.

But, sometimes following him blindly could be costly. Let's say SHLD. Jim Cramer has been bullish since Sep last year (maybe even earlier than that, I did not go beyond, I think it made my point), but SHLD has been range bounded until yesterday. If you bought it after a fundamentalist's call, you did not lose much money, but you lost the opportunity cost, the time. You are making zero return, while others making meaningful return on other movers.

On the other hand, a technician can put the money to work yesterday, and has earned 5% by now, without any risks related to SHLD. See the difference?

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