Technical Versus Fundamental Analysis

Technical Versus Fundamental Analysis

A picture is worth ten thousand words (Old Chinese proverb)

Twice in October 1987, over 600 million shares with a total market value of about $25 billion were traded on the New York Stock Exchange. Exchanges of shares valued at $10 billion are now considered almost routine for a day’s trading on the big board. And this is only part of the story. A large volume of trading is also carried out on the American Stock Exchange, on the over-the-counter markets, and on a variety or regional exchanges across the country. Professional investment analysts and counselors are involved in what has been called the biggest game in town.

If the stakes are high, so are the rewards. New trainees from the Harvard Business School routinely draw salaries of well $100,000 per year. Experienced security analysts and successful salesmen, euphemistically called “account executives,” make considerably more. At the top of the salary scale are the money managers themselves – the men and women who run the large mutual, pension, and trust funds. “Adam Smith,” after writing the Money Game, the number-one bestseller of 1968, boasted that he would make a quarter of a million dollars from his book. His Wall Street friends retorted, “You’re only going to make as much as a second-rate institutional salesman.” Admittedly, the depression that hit Wall Street after the crash of 1987 has made such talk appear somewhat overstated. Still, it is fair to conclude that while not the oldest, the profession of high finance in certainly one of the most generously compensated.

Academicians are a notoriously picayune lot. With their ringing motto, “Publish or perish,” they keep themselves busy by preparing papers demolishing other people’s theories, defending their own work, or constructing elaborate embellishments to generally accepted ideas.

The human mind will not be confined to any limits (Johann Wolfgang von Goethe)

The attempt to predict accurately the future course of stock prices and thus the appropriate time to buy or sell a stock must rank as one of man’s most persistent endeavors. This search for the golden egg has spawned a variety of methods ranging from the scientific to the occult. There are people today who forecast future stock prices by measuring sunspots, looking at the phases of the moon, or measures the vibrations along the San Andreas fault. Most, however, opt for one of two methods: technical or fundamental analysis.

The alternative techniques used by the investment pros are related to the two theories of the stock market. Technical analysis is the method of predicting the appropriate time to buy or sell a tock used by those believing in the castle-in-the-air view of stock pricing. Fundamental analysis is the technique of applying the tenets of the firm-foundation theory to the selection of individual stocks.

Technical analysis is essentially the making and interpreting of stock charts. Thus its practitioners, a small but abnormally dedicated cult, are called chartists. They study the past – both the movements of common stock prices and the volume of trading – for a clue to the direction of future change. Most chartists believe that the market is only 10 percent logical and 90 percent psychological. They generally subscribe to the castle-in-the-air school and view the investment game as one of anticipating how the other players will behave. Charts, of course, tell only what the other players have been doing in the past. The chartist’s hope, however, is that a careful study of what the other players are doing will shed light on what the crowd is likely to do in the future.

Fundamental analysts take the opposite tack, believing the market to be 90 percent logical and only 10 percent psychological. Caring little about the particular pattern of pas price movement, fundamentalists seek to determine an issue’s proper value.

Value in this case is related to growth, dividend payout, interest rates, and risk, according to the rules of the firm-foundation theory. By estimating such factors as growth for each company, the fundamentalist arrives at an estimate of a security’s intrinsic value. If this is above the market price, then then the investor is advised to buy. Fundamentalists believe that eventually the market will reflect accurately the security’s real worth. Perhaps 90 percent of the Wall Street security analysts consider themselves fundamentalists. Many would argue that chartists are lacking in dignity and professionalism.

Burton G. Malkiel. A Random Walk Down Wall Street, including a life-cycle guide to personal investing. First edition, 1973, by W.W. Norton and company, Inc.

How to Repair a Fridge

When the Fridge Is on the Fritz

Where to go and who to call when an appliance breaks down

If your furnace is cold, your fridge is hot and your washing machine won't spin, all is not lost. You may even be able to fix them yourself – with a little help from the manufacturer. Many makers of household appliances have hot lines with technicians on hand to talk you through the repair. It could save you the $100 or so that a service call costs. For safety reasons, hot lines won't help on gas ranges and microwaves.

Before calling, be sure to jot down the appliance's model number, serial number and when you purchased it. You may also need to have an ohmmeter on hand, a little device that measures electrical resistance.

Of course, you may not be able to fix more complex problems, or you may simply find the innards of household appliances grotesque. If so, you're not alone. Consumers spent nearly $8 billion in 2018 alone for repairs to electronic equipment, according to the Department of Commerce.

Aside from small local repair shops, big retailers like Sears, Roebuck & Co., which operates the nation's largest repair service, and Montgomery Ward & Co. have expanded their repair operations in recent years. The stores will fix national name-brand electronic equipment, whether under warranty or not, even for products not bought at their stores.

Many chains repair dozens of brands of electronic equipment, from Apple to Zenith, at any of thousands of stores across the country. They will fix out-of-warranty consumer electronic equipment, including tablets, notebooks, audio equipment, and other devices. The rate: around $100 flat labor charge for any equipment, no matter what the problem. Parts are extra, but generally run about 50 percent of the labor charge.

Can we survive without a fridge nowadays? Ice Owl. Photo by Elena

Sports for a Summer Day

Sports for a Summer Day

You'd play a lot more if you could remember the rules. Here they are:

Baffled about how to keep score in badminton? Not sure how to set up the croquet wickets? Unclear on the difference between a leaner and a ringer in horseshoes? Don't know whether or not you have to win the serve before getting a point in volleyball? Here are the basic rules and regulations for four popular pastimes. So go ahead and dig out the equipment you've stashed in a musty basement corner and hit the backyard or beach.

Badminton

Badminton was popular in England in the 1870s, after being imported from India, where it was called poona by British army officers. The eighth duke of Beaufort introduced the game to English society at his estate, called Badminton, in Gloucester. Hence the name. Now, it is the national sport of Indonesia, Malaysia, and Singapore, and a backyard favorite in the United States and Canada.

Badminton is similar to tennis. The object is to volley, with light racquets, a shutllecock or bird (a small, hemispheric cork with a tail of 14 to 16 feathers) until it is missed by your opponent or hit our of bounds. The game can be played indoors or outdoors, by two or four people.

Badminton: Racket, head/frame, springs, t-piece, ferrade, grip, handle, belt end. Shuttlecock/shuttlebird – ribs, skirt,.

The rules: The initial serve goes from the right half of the court to the half diagonally opposite. The serving team continues to serve until losing a rally or committing a fault. A fault occurs if you serve overhand, touch the net, or do not serve diagonally across the court. Points may only be scored by the serving team. In doubles, a player serves until his team commits a fault, at which time the teammate gains the serve. Following each game, the players switch sides. The winning side serves fist.

Scoring: All doubles and men's singles games are played to 15 or 21 points, while women play to 11. The first player or team to win two games wins the match. If a match goes to three games, the players switch sides when the score reaches 8 in a 15-point game and 6 in an 11-point game. In a 15-point game, the team to reach 13 first has the option of extending the game to 18 points if the score becomes tied at 13. In 11-point games, the score may be extended to 12 if the game becomes tied at either 9 or 10. In a one-game match to 21 points, the score may be extended to 24 if there is a tie at 19 or extended to 23 if the game is tied at 20.

New York Central Park, a stade in summer day. Photo by Elena.

Croquet

The game probably originated in France in the 17th century. It became popular in England and Ireland during the 19th century and made its way to the United Stats in about 1870. It was one of the first games in which women and men competed on an even basis. There are three leading modern versions of the game: American lawn croquet, English croquet and roque. Most croquet balls are made of wood, but better balls are made of wood, but better balls are made of hard rubber or plastic. The mallet head may be of wood or other material.

The rules: There are two courses: nine wickets and two stakes or six wickets and one stake. In the American nine-wicket game, the court is fitted to the area available. The English court has definite boundaries and locations for the six wickets and peg. A toss determines who gets which color. These colors are usually painted on the stake, or peg, and control the order of play. Players – two to eight people can play at one time – use balls of the color allocated to them The first striker hits the ball with his mallet at the balkline or home stake, depending on what course one is playing on. Subsequent players do likewise. The course leads through the wickets, or hoops. The strikers alternate turns.

Your turn continues as long as you drive the ball through the proper wicket. If you fail to go through a wicket or hit another player's ball, you lose your turn. You also lose your turn if your mallet hits the wicket or the ground, but not the ball, or if your mallet accidentally hits another player's ball.

A striker makes a roquet by knocking his ball into an opponent's. If you do so, you have three options : 1) You may place your ball against your opponent's ball away ; 2) You can drive both balls ; or 3) you can simply place your ball ahead of your opponent's and take two strokes. Once you hit an opponent's ball, you cannot hit it again until you go through another wicket.

Scoring: A ball put through the proper wicket in the proper direction scores a point. Winners are decided by the total points scored or by the order in which the course is completed.

Where to place the peg and stick the wickets, and which order to play them in.

Six wickets: The traditional English version of croquet requires definite boundaries, but only a single stake.

Nine wickets: The field in the American version can be shaped to the available terrain, but requires two stakes.

Horseshoes

The early Celts were the first to fit horses with shoes. But the game of horseshoe pitching, by some accounts, originated with Greek and Roman soldiers. The more modern version of the game developed in England and mainland Europe during the 17th century. The National Horseshoe Pitchers of the United States was formed in 1915.

The rules: The object of the game is to toss a shoe so that it rings the metal stake or comes closer to the stake than your opponent's toss. In singles, both contestants throw from the same sid of the course. Shoes are tossed underhand.

Learner, or hobbers, and shoes actually touching the stake count only as close shoes. In informal games, a leaner can count for two points. Each pitcher is allotted two tosses in an inning. The pitcher who scores in an inning leads off the next.

The rules:Each ringer is worth three points. Each shoe closer than an opponent's is worth one point, but shoes only score when landing within 6 inches of the stake. If an opponent's shoe knocks a ringer off, it loses value. Two points are awarded if you land two shoes closer than any of your opponents. Leaners, or hobbers, and shoes actually touching the stake count only as close shoes. In informal games, a leaner can count for to points. Singles matches are usually played to 50 points, doubles matches to 21.

Volleyball

Volleyball originated in Holyoke, Massachusetts, in 1895. William G. Morgan, physical director of the Young Men's Christian Association in Holyoke is credited with the invention of the game. It's been modified since and now is played indoors and outdoors and is included in the Olympics.

The rules: There ares six people on each team – usually three forward and three back. The The height of the net varies: 8 feet high for men, 7 ½ height for women, and sometimes lover for kids. The players can hit the ball to each other before hitting it back over the net. However, the ball can only be hit a maximum of three times on one side of the net. A player may not hit the ball twice in a row. When the serve changes hands, players rotate clockwise, so that each player gets to serve.

Scoring: Points are scored by hitting the ball into the opposing court in a way so the competition cannot return it. The team serving gains one point for doing this and continues serving. If the receiving team does it, it wins the right to serve. A game in 15 points, but it must be won by two points, thus 14 to 14 tie continues until either team gains a two-point advantage. When the serve changes hands, players rotate clockwise, so that each player gets to serve.

Wrestling

The two kinds of Olympic wrestling, Greco-Roman and freestyle, bear almost no resemblance to the farcical “sport” that is known for Hulk Hogan and the like who features their performances. The aim is the same: pin your opponent by holding his shoulders to the mat for a half-second.

In Olympic wrestling pins are dramatic but relatively rare. Instead, wrestlers accumulate points for a series of techniques and maneuvers, including takedowns (bringing an opponent to the mat) and reversals (moving from underneath an opponent to controlling him from above).

If a match is tied after five minutes or if no wrestler has accumulated three points or more during that time, a three-minute overtime will ensue. The primary difference between the two styles of wrestling: in Greco-Roman, competitors may not grasp their opponents below the waist or use their legs in any wrestling move,

Who to watch: Turkey, Russia, Cuba, Iran, South Korea, Germany are well-known in freestyle; Russia, Ukraine, Poland, Bulgaria, Moldova, Azerbaijan are strong in Greco-Roman.

Animating

Animating

Since Cameron’s famous movie in 3d, the word ‘avatar’ is easily associated with a tall blue alien figure. However, avatars and avatar creation have been present on the net long before. Some Websites, such as SecondLife and IMVU, are based on the concept, and allow some individuals to experience a sort of virtual life.

The basis of animation is frame by frame construction. Further, graphics may be 2d or 3d. Other basics include the debate: skeletal animation vs. morph target animation, keyframes, visemes (visual field phonemes), bones or rigs, layers and so on.

Cartoon character still. Image: Copyright © Megan Jorgensen (Elena).

A distinct Japanese animated movies and drawing genre is referred to as anime and manga. Worthwhile thematic conventions, such as Otakuthon, are held worldwide. In such gatherings, it is possible to see famous characters like Sailor Moon and Naruto take human form.

Comics are a related endeavor. Some of the better known ones are X-Men (Marvel), Watchmen (DC) and Dilbert. ComicCon is a renown convention on the topic. Other famous comic book and animated characters include Wonder Woman, Batman, Superman, Spiderman, Green Lantern, Flash and countless more.

Machinima are cartoons created with computer graphics specifically from games and the gaming world. A card is required and Machinima (Website and Youtube channel) is a popular resource for such entertainment.

Computer aided design (CAD) is widely used in engineering and architecture. Related concepts are graphic design and computer simulations. Computer Generated Imagery (CGI) has significantly gained in prominence since the 1990s (Lamarre, 2008).

Disney, with Disneyland in the United States and Europe, has a worldwide reputation. Started by Walt Disney, the company’s Golden Age tells the story of 9 glorious animators. One of them was Fred Moore. His assistants Johnston and Thomas (1981) produced a thesis outlining the 12 principles of animation. Other animators include*: Alexander Shiryaev, Piotr Dumala, Marteen Isaak de Heer, Neil Henderson and Jiri Barta. Additional notorious animation studios comprise Dream Works Animation, Sony Imagework, Pixar, Bones, and Blue Sky.

Simpsonized avatar made with simpsonsmovie.com.

Contemporary and famous cartoons and cartoon series: The Simpsons, Family Guy, The Cleveland Show, The Lion King, Pocahontas, She-Ra, He-Man, American Dad, South Park, Jem, The Disappearance of Haruhi Suzumiya, Ratatouille, King of the Hill, Bob’s Burgers, The Goode Family, Thundercats, The Little Mermaid, Fantasia, Beauty and the Beast, Snow White and the Seven Dwarfs (1937!), Toy Story and countless other productions.

Notable cartoon characters: Betty Boop, The Powerpuff Girls (Blossom, Bubbles and Buttercup) Pikachu and other Pokemons, Daria, Bugs Bunny, Disney: Mickey & Minnie Mouse, Goofy…

Animation, as well as film, studies are a legitimate academic undertaking. Two institutions that instantly come to mind are the Academy of Art University and the Netherlands Institute for Animation Film. Also, The Society for Animation Studies publishes an online academic journal.

Animation art appeared relatively long ago. Animations share a common history of approximately over a 100 years. Moreover, since the end of the last millennium, increasingly computerized animating techniques have become nearly omnipresent. Lamarre (2008) notes that many ‘regular’ movies turn to CGI for special effects, leading to most motion pictures becoming animation.

Wells (2011) suggests that animation may go beyond, involving mental processes such as memory and emotional intelligence. Perhaps the Flynn effect (the concept that population IQ averages tend to rise overtime) may explain this increasing popularity phenomenon.

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* Lists by no means exhaustive

Cartoon character Dora the Explorer among graffiti. Photo by: Megan Jorgensen (Elena).

Made with picasion.com.

References:

• Johnston, O. & Thomas, F. (1981). Disney Animation: The Illusion of Life. Abbeville Press.
• Lamarre, T. (2008). Editorial: Animation studies. The Semiotic Review of Books, 17.3, 1-12.
• Wells, P. (2011). From ‘Sunnyside’ to ‘soccer’: Reading up on animation… Animation Practice, Process & Production (AP3), 1 (1): 3-9.
• Wikipedia (consulted).

Copyright © Megan Jorgensen.

What Can Charts Tell You?

What Can Charts Tell You?

The first principle of technical analysis is that all information about earnings, dividends, and the future performance of a company is automatically reflected in the company’s past market prices. A chart showing these prices and the volume of trading already comprises all the fundamental information, good or bad, that the security analyst can hope to know. The second principle is that prices tend to move in trends: A stock that is rising tends to keep on rising, whereas a stock at rest tends to remain at rest.

A true chartist doesn’t even care to know what business or industry a company is in, as long as he can study its stock chart. A charts shaped in the form of an “inverted bowl” or “pennant” means the same for Digital Equipment as it does for MCI. Fundamental information on earnings and dividends is considered at best to be useless – and at worst a positive distraction. It is either of inconsequential importance for the pricing of the stock or, if it is important, it has already been reflected in the market days, weeks, or even months before the news has become public. For this reason, many chartists will not even read the newspaper except to follow the daily price quotations.

One of the original chartists, John Magee, operated from a small office in Springfield, Massachusetts, where even the windows were boarded up to prevent any outside influences from distracting his analysis. Magee was once quoted as saying, “When I come into this office I leave the rest of the world outside to concentrate entirely on my charts. This room is exactly the same in a blizzard as on a moonlit June evening. In here I can’t possibly do myself and my clients the disservice of saying “buy” simply because the sun is out or “sell” because it is raining.

Love and desire are the spirit’s wings to great deeds (Johann Wolfgang von Goethe). Photo by Elena.

You can easily construct a chart. You simply draw a vertical line whose bottom is the stock’s low for the day and whose top is the high. The process can be repeated for each trading day. It can be used for individual stocks or for one of the stock averages that you see in the financial pages of most newspapers. Often the chartist will also indicate the volume of shares of stock traded during the day by another vertical line at the bottom of the charts. Gradually, the highs and lows on the chart of the stock in question jiggle up and down sufficiently to produce patterns. To the chartist, these patterns have the same significance as X-ray plates to a surgeon.

One of the first things the chartist looks for is a trend. If the chartlist draws two lines connecting the tops and bottoms creating a “channel” to delineate the uptrend, than since the presumption is that momentum in the market will tend to perpetuate itself and the chartist interprets such a pattern as a bullish augury – the stock can be expected to continue to rise. As Magee wrote in the bible of charting, Technical Analysis of Stock Trends, “Prices move in trends and trends tend to continue until something happens to change the supply-demand balance.”

Suppose, however, that at about 24, the stock finally runs into trouble and is unable to gain any further ground. This is called a resistance level. The stock may wiggle around a bit then turn download. One pattern, which chartists claim reveals a clear signal that the market has topped out, is a head-and-shoulders formation.

The stock first rises and then falls slightly, forming a rounded shoulder. It rises again, going slightly higher, before once more receding, forming a head. Finally the right shoulder is formed, and chartists wait with bated breath for the sell signal, which sounds loud and clear when the stock “pierces the neckline.” With the glee of Count Dracula surveying one of his victims, the chartlists are off and selling, anticipating that a prolonged downtrend will follow as it allegedly has in the past.

Of course, sometimes the market surprises the chartlist. For example, the stock may make an end run up to 30 right after giving a bear signal. This is called a bear trap or, to the chartlist, the exception that proves the rule.

It is tendency to get whipsawed that is often the chartists’ undoing. Not only does the chartist lose money on the trade but he also pays additional transactions costs to execute the buy and sell orders called for by the trading rule. Consequently, the chartist has to be correct much more than 50 percent of the time simply to break even relative to the “buy and hold” investor.

It follows from the technique that the chartist is a trader, not a long-term investor. The chartist buys when the auguries look favorable and sells on bad omens. He flirts with stocks just as some flirt with the opposite sex, and his scores are successful in-and-out trades, not rewarding long-term commitments. Indeed, the psychiatrist Don D. Jackson, author with Albert Haas, Jr., of Bulls, Bears and Dr. Freud, suggested that such an individual may be playing a game with overt sexual overtones. And all this takes place under the pennant of that great symbol of sexuality: the bull.

Burton G. Malkiel. A Random Walk Down Wall Street, including a life-cycle guide to personal investing. First edition, 1973, by W.W. Norton and company, Inc.