Topic: I might be wrong in just looking at fundamentals. - page 2. (Read 366 times)

Hi Jet Cash, thought I should share my work experience on the trading floor of a big company in London when I was 17

Never ever make decisions based on fundamentals. We must always force ourselves to look into the details and then abide by those laws, even if the
truth hurts us. For example, you can see Ethereum following a down trend (bearish). This fundamental may tell you to stay away from investing in this
because it's risky (this "hurts"). However If we look at the details, that Ethereum 2.0 is coming, that last year in December Ethereum was also following a down trend
but in March-April it went to the moon, then I am sure you will also invest in Ethereum like I did.


When I worked on the trading floor we used to do more discussion and reading news than trading. Some unserious discussions were on the phone with other department
members (group calls), while others needed physical discussion (face to face). Investing yourself is somehow risky because you only have your point of view. Getting a team
of like-minded people (who invest) but with different opinions / backgrounds would be beneficial.

Regarding stock companies you will see that a lot of them have debts. There are some companies in specific that only have debts and follow a huge stock downtrend from time
to time (big go down!). We were told in the trading floor that sometimes, some companies take loans and as collateral they use their shares. I give you $110million in shares and you give me
$100 million loan. I do not repay my loan (tax avoidance ) and you, mister bank will cashout the stock. The company will use the loan to bring the stock further up so it's not really bothering
them long term however this is not abused, just done from time to time.
The best times when you buy shares is to look at the latest date a company repaid their debt if you find any information. They will usually make the news. I also recommend you to subscribe
with Bloomberg which for me has been a successful source of information.


Keep in mind I stopped trading for a while now and my source of information comes only from experience made about 4-5 years ago. Maybe things have changed, maybe not

It is not clear that Bitcoin has "strong fundamentals" and there is no evidence that the price is "constantly being weakened by manipulation". Maybe the problem you have is the result of your assumptions.

I feel that, except for the supply schedule, Bitcoin's fundamentals are nearly impossible to quantify, making them difficult to analyze. The most I can determine from th fundamentals is that thre is a good chance that the price will be much higher in the future, though it is far from certain.

@franky1

How do you determine the fundamentals for shares? The central banks have been lending money to companies to buy back their own shares, and the execs have been selling. This has loaded them with debt, and doesn't bode well for the future. We also have governments who are pursuing policies to move manufacturing and farming to Asia, and this doesn't look good for the future.

Gold is being bought up by governments and central banks, so it is impossible to determine any fundamentals, at least until they announce the possibility of underpinning new crypto with gold.

Bitcoin is even harder to determine. I've seen lots of calculations related to the cost of block mining, but until we know if Bitcoin is going to be a store of value, or a payment mechanism ( or both ), it is difficult to determine the future path of the Bitcoin price. My feeling is that it will take its place alongside gold and silver. The pound got its name because it was originally a certificate for a pound of silver, and later it was linked to the price of gold. The modern pound Sterling has no intrinsic value any more, and gold is still used as legal tender in the UK in the form of the Sovereign and the Britannia.

How long have you been in this game OP? From what I remember you're over 70 years old or so. You might just know better than all of us what best to do.

when looking at the fundamentals stocks do have a fundamental value. but the price is not the same thing

take bitcoin. in 2017 its fundamental value was ~$5k yet its price was $20k
the gap of $15k was the hype/speculation/bubble area. which is not sustainable

take gold its fundamental value is ~$900 but its spot price is $1200
the gap of $300 is the speculation/hype area. which is ok. but if you see it go to $2k a ounce. expect it to not sustain that value


todays bitcoin has a fundamental value of ~$6500 and a price of the low $7k range meaning there is not much speculation hype in the price and it means its holding good value %.
but if it spikes too fast to $20k+ again then dont expect it to hold. unless the fundamental value moves up to sustain it

many stocks/shares price is not the 'value' yes many stocks/shares are hyped up by speculation.
thats why when looking for the finances of a company and adding up its assets and dividiing it by the number of shares the value is a lower number.

what is important is the history variance of the speculation on top.
if a company always has a +10%-200% buffer above the value where the price never goes below or above. then knowing when the price is near +10% of value means its a good time to buy. and if near the 200% of value is a good time to sell

As long as you incorporate emotional, social, political, geopolitical, and socioeconomic biases into your equation the picture clears up  
Bitcoin and the crypto markets overall are easy to manipulate and at this point in the game they evolved to be be big enough to attract attention of major companies, banks and governments.
Those actors previously were content with manipulating the major markets - commodities/stocks, but now they have a new play toy that offers even bigger short term swings.
If you have any reliable insight into any of the above channels that allow you to predict movement of any of the above assets, you should take advantage of it.
I believe crypto markets are perceived by manipulators as the ultimate play-toy, unlike the commodities/stocks market, in case of its demise due to reckless "playing" will not effect the mainstream populations or economies.
They love this toy, and they love playing rough with it because they are not afraid to break it.

Good Luck  

I tend to look at fundamentals, and base my investment decisions on those, but I think I may be missing out. Take stocks for example. There prices don't reflect profitability or asset values, and most companies seem to be laded with debt. But the central banks keeps printing money to buy their shares and push up the prices. Obviously this can't go on for ever, and the stock market will have to dump, but that is politically unsound, so maybe I should be exploiting the price manipulation in the short term.

The reverse seems to be true of Bitcoin. This seems to have strong fundamentals, but the price is constantly being weakened by manipulation. It is rumoured that Ripple could take over from Swift, and public awareness of this could push up the price of Bitcoin andother ctyptos,so maybe I should keep out of the stock market.