Friday, June 22, 2012

Timing your beliefs or opinions

I've talked before about those people who use fundamental analysis, or economic indicators as a basis for their trading or investing decisions. Marrying those 'beliefs' or your own opinions with a trend following method can bring you superb results. I don't profess to follow fundamentals as part of my own trading decisions, other than vaguely keeping abreast of whats going on. The charts below (a collection of Spanish bank stocks) show that timing your beliefs (i.e. that the Spanish economy was struggling and may need a bailout) to coincide with what price is telling you can pay dividends. Doing this in 2007 and 2008 with the major UK and US financial instiutions made a lot of people a lot of money.

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