Unpopular opinion: deep fundamental research is overrated
- only 10% of the info about a business matters. other 90% can give you more confidence, but the difference between 80% and 90% confidence isn't that material anyway. that time could be spent studying 10 other stocks
- results in people keeping positions that won't work because they "know alot about the business", tons of sunk cost bias. or worse, false confidence you know everything when you don't (sears, valeant, and the like)
- the chart and the price reactions often more important that the fundamentals. if move up on bad #s, means probably priced in and go long. vice versa. go where momentum feels "easy" instead of where you feel you are fighting tape
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100% right. thank you and fixed!
in general yes, but you don't do deep analysis on a company every 3-6-9-12 months. Usually you do a deep analysis on a company once, make a mental note of things you deem worth checking from time to time to see how it is operating/what's going on, and usually you only check on it
also, never stepped into a HF, but I'm sure they have some well elaborated models on different companies that are left untouched and they may plug new variables only after major events which then helps them see how some numbers may play out/what numbers are affected and may require management to shift their focus on that => leading to a potential anticipation in management moves.
or maybe you dig deeper into any other MD&A, for example, some ongoing lawsuit and once the news appear, you are more qualified to buy the stock/short it on the spot. Let's say X company won ABC lawsuit, it is bad or not? if it's on some contract rights, then it's good; if it's in a lawsuit on the company winning against consumer protection/environmental, then harder to say, maybe more provisions will be reserved in the future/higher risk of losses
What you’re describing works well for a couple of years, but not when you’re running a scaled book. Not every trade you’re doing can be be tilting your book on MOMO, blows up eventually. Same with the incremental data guys.
Man we get it, you trade charts. Stop posting different versions of the same idea all over this board
I feel compelled to make sure no one listens to this knucklehead because his username is similar to mine lol. But let me be clear: no one is going to pay an analyst to look at a chart and say "stock is down, therefore the numbers must have been bad". That is very stupid.
As a PM, I want to know the view and risk before the event, this drives positioning. Post-event, I want to know the magnitude implications. The "work" you do to determine that is not "in the charts" because price is influenced by a lot of factors. E.g. the market is down, or the market is up. If you were to strip out all of the noise in the chart, you end up with EEG (estimate revisions graph). If you're betting on estimates, that's fundamentals. Please stop posting this clown stuff.
If your point is that some pod bois miss the forest for the trees then ya that happens pretty often.
But if everyone else is deep in the weeds and making decisions off that work and a stock moves in your view erratically because you didn’t do the same work then good luck explaining to your PM that you don’t really get why it’s moving the way it is. He will then calls his buddies or sellside and they’ll tell him why and you’ll be in hot water. An only slightly better outcome is that you know why the stock is moving but you decided that whatever is moving it didn’t matter. At least that’s potentially defensible if it’s a smaller move but hey guess what instead of doing that work in your ramp now you get to do it when you have a lot less time.
Deep fundamental research is not valuable FOR ITS OWN SAKE. It has to be:
ACTIONABLE - yields market dislocations that are capturable under YOUR mandate
Sure, for high turnover or one-off, small positions or bets that are mostly thematic industry/factor bets, JUDGMENT and RESPONSE TIME matter more and ‘deep research’ could hinder the latter more than help the former
And sure, for large caps and hedge fund hotels there’s a lot more alleged ‘deep research’ than actual deep research
So all that is meant to give you the benefit of the doubt and try to find an aspect of OPs point that may be correct, but frankly the immediate reaction is ‘lol that’s ridiculous and dumb, and your research not deep’
Munger has three times in his career where he was down over 50%. How did he recover? It wasn’t by taking more risky bets and hoping they worked out, it was by keeping his value investments that he fundamentally knew were good companies and will turn it around.
If you have duration, then yes, even a broken clock is right twice a day.
Nobody cares about this sort of 30-year hold period bullshit. Nobody has enough duration now to withstand 50% drawdowns. It doesn’t matter what Munger did or what Druckenmiller didn’t do. Doesn’t help us in the slightest
yeah if you’re a monkey at a pod shop with strict drawdown limitations then yeah, value investing isn’t going to work. So many PMs burn out not due to bad ideas but just because the market can be brutal though, so good luck. Lemme know if you’re still in your seat in a year or so.
Yall need to stop falling for this troll. Look at lil bros post history-- it's likely he has never actually invested any amount of money in his life.
RoaringKitty would find your lack of faith disturbing.
popular opinion: your "unpopular opinion" isn't nearly as novel or cute as you make it out to be. Its the lazy man's approach to being controversial, which aligns I guess, since you have a fairly lazy approach to understand everything here
Your post shows that you don't even realize what the game is. You seem to think that "deep fundamental research" just means understanding how a business works really well, or essentially a book report of the management value prop / IR deck pitch
Was roughly with you until point 3. Technical analysis? Really?
yeah, let's trade momo and vibes, that always works out
late cycle vibes
Braindead take.
PM: "How are we feeling regarding sizing/positioning?"
Analyst: "I don't know. Chart looks good though."
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