Buy Good Value and/or What Other People will Like?

[AceHigh]

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I'd rather buy what people like. They might never like your "value" stock. It won't go up if people don't buy it. You can never be sure of what "good value" is anyway. Companies lie all the time.

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Yeah, I have to agree with this. If a company is fairly valued or close to reasonably valued and they are likely to have good news in the future they are more likely to go up than companies that are "undervalued".

Plus we can be wrong, just as the market can be wrong.

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And your evidence for this is?

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I thought it was a well known axiom that companies trending upward are more likely to continue trending upward than companies trending down are likely to reverse the trend.

Maybe the TA guys can tell us if that is true or not.

Here's some stuff I found: MA

How to Use Moving Averages

Here are just a few simple ideas for putting moving averages to work:


1. Only consider buying a stock if it is above your moving average. By definition, if prices are below the average they are trending down. One of the best pieces of advice I've read on this subject was from Trader Vic. He said

When picking stocks, I never buy a stock when prices are below the moving average, and I never (short) sell a stock when price is above the moving average. Just pick up any chart book that uses a 35- or 40-week moving average and you'll see why -- the odds of being right are way against you.

Mind you, this is after Vic does all of his fundamental analysis on a stock. So even if the stock looks great fundamentally, he'll pass if it's below the moving average.

2. Use moving averages as an exit signal. Seriously consider selling a stock that closes below the moving average.

3. Consider buying stocks as they drop near an upward sloping moving average. You'll notice when looking at charts that stocks often find support (bounce off of) moving averages. Buying on a pullback to a MA will often give you a good risk/reward entry point. You can put a stop-loss order nearby in case you're wrong about the bounce.

That seems to support what I said.