December 20, 2011 at 1:28 pm | | Comments 7

I Don’t Care How Fresh Your Fundies Are

I’m a trader, so what I care about is catching short-term moves in price.  I’m not an investor who’s looking for long-haul appreciation or locating the next ORCL.  For that reason, the health of a business doesn’t matter to me.  It’s unlikely to change during the course of a trade that lasts anywhere from a few hours up to a couple of weeks (barring scheduled earnings reports or conference calls).

Some traders fixate on fundamentals.  They might use the fundies as a starting point for trade ideas, which is alright, but is not necessary for short-term positions.  They might use the fundamentals as a logic crutch to defend their losing trade, telling themselves “it’ll come back” because of the business.  We know how that usually ends for them when opinions are allowed to interfere.

If you haven’t already done so, make this all-important distinction:  there are good companies and there are good stocks, and they do not necessarily overlap.  Sorry if that bursts your bubble, but many great businesses have a stock that’s going nowhere.  Some stocks are making excellent, clean moves even though their business may not endure the test of time.  The correlation between good company and trade-worthy stock is not at all guaranteed.

Here’s the point in case you’ve missed it so far…  If you are a trader, focus on the price action and place importance on it alone.  Trading is about compounding money by turning capital over frequently.  It’s not committing to a long-term relationship with a stock…that’s investing and it’s an entirely different topic (not found here).

So if you are a trader, and if your timeframe is less than a few weeks, consider the likelihood that the health (or lack thereof) of the company behind the ticker symbol you’re trading just isn’t going to change that quickly.  Business growth or attrition takes time.  With that in mind, all you’re left with is the price action – right where we began.

Simple and straightforward.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

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  1. Especially for the trading we are seeing in this type of market. I bought several stocks on the dip yesterday. Only two hundred fifty or 300 shares of each. Low priced between 1.50 and 4.00. I put the profit this morning in my pocket BUT missed a bigger move. The thing is a made money. The only time I seem to lose is when I stay in a stock or rebuy it after I make a profit and think I could have gotten more. The charts of the indexes are so close to support and the news is always so gloomy, I have missed some nice moves: MSO & LF examples. I am hoping to catch a ride on one of these stocks in the future BUT I say grab the quick money while you can.

  2. Yes it’s just a market for quick moves, at least until we exit the wedge outlined in Sunday’s video:

    Thanks Art for stopping by.

  3. Great!

  4. Mr. White,

    I love your emails, and in my opinion, you have the best website on the internet. In short, I am better person for knowing you. However, with all due respect, I do not tweet, nor do I have a facebook page. Would it be possible to move the small pop-up screen that is located on the left hand side of the web page to the right side. Or, tell me how I can move it myself. The pop-up partially blocks your commentary’s. For the record, I love all your commentaries. I have not come across a commentary, I did not like. Every commentary you write is excellent and very educational.
    Wishing you and yours, the best for the holidays. Ed.

  5. Hey Ed,

    Thank you very much for all the kind words – I’m not sure I deserve them! To clarify on the pop-up, is it the one that scrolls with the page? If so, you’re the first to mention it. I am wondering if your browser window can just be widened, or if the screen you’re reading is just small. Alternately, you can subscribe to the RSS feed and view the commentary there without the tweet/facebook widget. We are testing it for a little while so it might get taken down, I’m not sure yet.

    Again, thank you very much and I hope the holidays are great for you and 2012 is surprisingly good.

  6. Sir,

    My mistake, it is not a pop-up. It is a small box, to the left of the screen. It does not scroll up or down. It is stationary. The box has “Like”, “Tweet”, “Submit”. The problem with the little box, it partically blocks your commentary. I tried the RSS, but I need a password. Nonethless, I will manage. Just need to adjust and/or, adapt to the little box in the way. Just goes to show ya, not even obstacles will keep me from reading your commentary’s. Regards, Ed.

  7. Relocated it, should be out of the way now. Thanks Ed & Merry Christmas!

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