Amazing

[WallStGolfer31]

Originally Posted by anfern057

"To paraphrase his amazing insight in a nutshell, in the future you won't have a meaningful job on Wall St unless you have advanced quantitative skills. People are using mathematical techniques that make calculus look like grade school math. Basically, fundamental "analysis" and value investing are dead."

Without trying to cause problems...I call B.S. on that.

Hey no problems, it's just debating.

I believe this guy, he's smart, and he's the closest thing to Wall St. I can talk to on a regular basis. He's consulting hedge funds, so he knows what they are looking for. You still need the skills it takes to do fundamental analysis, just not for picking stocks with.

[anfern057]

I can partially agree that trading based on published numbers won't get you anywhere. But I don't think the solution lies in a quantitative finance textbook.

I'm starting to believe more and more in the Peter Lynch credo, "Investing should be easy enough for a 6th grader to understand."

When it comes down to it, a stock represents a business. You need to understand the business, not the balance sheet. Find the up and coming businesses that analysts still don't believe in (the starbucks, googles, etc, of the past 10 years).

Instead of looking at ratios, charts, and greek letters, you should be looking at management, markets, competition, and comparative advantages.

Thats just my opinion.

[WallStGolfer31]

I know what your saying but how do you price in good management? A new competitive advantage?

[llamagatekeeper]

Does anyone else think that social psychology will come into play to analyze public attitudes and add even more to the equation for fundamental analysis? it just seems to me that we are on an endless record that goes round and round where we try and find the one up on the next guy, but in reality everyone is the same and in the end we should just listen to the public.

[anfern057]

Originally Posted by WallStGolfer31

I know what your saying but how do you price in good management? A new competitive advantage?

You need to believe you are smarter then the analysts and the rest of the market who are pricing the stock (who are far from geniuses).

Ex. Under Armour, Google, Starbucks, all at their IPOs were labeled overpriced by analysts. Saying things like growth can't be sustained, etc. But some people had the foresight to see the huge potential and made killings.

Sure its not easy to find companies like that, but they are out there.

[WallStGolfer31]

yeah, I know what you are saying, it makes sense, but how do you price something like that in?

[anfern057]

With that style, I don't think you should worry about pricing things in.

Question for you Dan, I know you are a believer that if the info is public its already priced in. Well, once enough people and funds start using quantitative finance (using public numbers) wouldn't that too become efficient?

Or is it different for some reason that I am not aware.

[aquaswim47]

I know this question was for Dan, but I do think that quantative finance will be priced into a stock. I think it is a new way of technical analysis for analyzing stocks that doesn't involve simple calculus. In a way, it is the method that changes.