THe timing was AMAZING for this call against "fundamental analysis" I couldn't say why this was sent today just when the nasdaq is beginning to break after earnings warnings and stocks cut nearly in half. Folks, this is the worst time to get such an e-mail! Obviously folks there are trying figure why things have gone so wrong and they say ITS THE FUNDAMENTALIST that destroying trading. Someone should tell them their methods isolated from THE BIG PICTURE are as obsolete as most dot.coms. It was never just fundamentals, its TECHNO-FUNDAMENTAL analysis. Its true certain times of the year its much less critical but DURING EARNINGS SEASON its the MOST CRITICAL. Some people will do anything to teach their own method and make a buck, whether it works or not!! <ROFL>
The Fundamentalist Regime
The world is full of opinions and cottage industries have sprung up all over for people who believe they can “predict” stock prices. Pristine’s philosophy is not to predict stock prices. We assess probability and take calculated risk. Of course fundamental analysis and its many cousins are in fact “useful to some extent.” But I would not trade on it. Let’s just look at a few basic concepts. Once again. The fundamentalist regime has its place. We need to know what others are thinking and why. It helps us stay in touch with the mood of the market and the psychology of people who make up that market (and their reasoning). But we make our decisions based on probabilities of the outcomes of certain events. We never insist that we know where the market is going or what a security should trade for. No one can know the future. That said, let’s look at the fundamentalist regime.
Price earnings ratio: Well this to me always seemed to be the most notorious and the most dubious. Say you have a company selling at a price earnings ratio of 30. Well, to keep the numbers simple, suppose they earned $1 in the last 12 months. Ok. Is the price right? Should it or could it be $45? $20? If you bought it at $30 and it went to $20 is the price earnings ratio now better? And which earnings do you use? Trailing 12 months? Anticipated 12 months? Don’t even get me started on pro forma, EBITDA, non-recurring events, one time charges and stock option accounting.
So when people realized that the price earnings ratio was “a little” subjective, (because earnings are somewhat subjective to say the least) they looked to the PEG ratio. “Price earnings to growth.” Well those growing faster should have a higher price to earnings ratio. Right? Hey. I agree. But the PEG ratio is only as good as the “E” in PE. And when growth slows, look out!
I will not even waste your time with “revenue” growth related ratios. (Price to sales?) I think we all know where that discussion will lead.
Well the underlying flaw in the assumptions made by any form of securities analysis is the belief that value must by definition eventually equal price. Either in the short term or the long term. Well folks, guess what? Who says so? And even if it does. How long is the long term? I submit to you that there is only one variable of interest to a trader. That is the price of the last share that was traded. Of course, if you want to sell or buy more than one share then the related imbalance in supply and demand will cause the price to change. In some cases radically. This I believe is a more realistic way to explain why a takeover attempt will rocket the price of a stock
The rest is too boring for words but you get the gist of the article...
Market Data 
Markets 
AI
