I happened to be reading a financial website this morning, and one of the contributors had highlighted the US stock Lions Gate Entertainment as a stock to watch.
This prompted a comment to be posted from an individual asking "why would I buy a stock that incurred a loss for the past 5 years? Moreover, the
total liabilities is about 93 percent of the total assets, am I missing
something in here?"
Well, in answer to that poster the chart below shows you everything you need to know.
Remember the quote from Larry Hite in Market Wizards: "When a market makes a historic high, it is telling you something. No matter how many people tell you why the market shouldn't be that high, or why nothing has changed, the mere fact that the price is at a new high tells you something has changed."
As I've said on several occasions on here, if you are one of those who has to use fundamental analysis, then you can use a longer-term trend following system as a timing device to get you in (and out) of a position.
Trend followers simply follow price and its trends, and act accordingly. In this example, a trend follower would have identified this stock and would have profited nicely from it so far in 2013, whereas someone focused on fundamentals would have missed out.
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