For those who care to weigh in, here's an attempt to classify some (not all) of the primary investment philosophies I've seen over time (these are my words, not anything AI-generated, so forgive any errors or opinions). Most people use a blend, so feel free to use these categories, or some of your own to share your outlook on how to invest:

1. Random Walk Theory

• The basic idea is that the market fully prices in all externalities. information (both public and private), investor sentiment, etc., so the best strategy is to set it and forget it - use broad indexes and buy-and-hold strategies, and don't actively trade to try to gain an edge. Dollar cost averaging and dividend reinvestment are common strategies in this theory.

2. Fundamental Analysis

• Through deep (or shallow) financial analysis of financial statements, analyst reports, market studies, and other means, outperforming stocks can be selected by those who have the best access to information, or best analysis tools. Simpler methods include ratio analysis, competitive analysis (both quantitative and qualitative), and M&A speculation (takeout candidates, strategic mergers, etc.).

3. Technical Analysis

• Through deep (or shallow) technical analysis, and a belief that past performance patterns dictate likely future results, setups can be identified that give the trader excess profits versus other methods. Examples include price/volume studies, identification of trading "gaps", technical and statistical measures, and any number of theories (most of which are backtested). These can be as simple as retracement or moving averages, but can get quite complex.

4. Momentum/Other

• This is a catch-all category which includes "buy the dip" traders, pure momentum followers, IPO speculators, and even meme stock buyers. This strategy is usually followed by short-term traders, who sometimes don't care which direction the stock goes (they're comfortable being either long or short), and sometimes are pure degenerate gamblers.

Next, I'll give my assessment of my current thinking, and others are encouraged to share their thoughts.

I bleed maroon said:

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For those who care to weigh in, here's an attempt to classify some (not all) of the primary investment philosophies I've seen over time (these are my words, not anything AI-generated, so forgive any errors or opinions). Most people use a blend, so feel free to use these categories, or some of your own to share your outlook on how to invest:

1. Random Walk Theory

• The basic idea is that the market fully prices in all externalities. information (both public and private), investor sentiment, etc., so the best strategy is to set it and forget it - use broad indexes and buy-and-hold strategies, and don't actively trade to try to gain an edge. Dollar cost averaging and dividend reinvestment are common strategies in this theory.

2. Fundamental Analysis

• Through deep (or shallow) financial analysis of financial statements, analyst reports, market studies, and other means, outperforming stocks can be selected by those who have the best access to information, or best analysis tools. Simpler methods include ratio analysis, competitive analysis (both quantitative and qualitative), and M&A speculation (takeout candidates, strategic mergers, etc.).

3. Technical Analysis

• Through deep (or shallow) technical analysis, and a belief that past performance patterns dictate likely future results, setups can be identified that give the trader excess profits versus other methods. Examples include price/volume studies, identification of trading "gaps", technical and statistical measures, and any number of theories (most of which are backtested). These can be as simple as retracement or moving averages, but can get quite complex.

4. Momentum/Other

• This is a catch-all category which includes "buy the dip" traders, pure momentum followers, IPO speculators, and even meme stock buyers. This strategy is usually followed by short-term traders, who sometimes don't care which direction the stock goes (they're comfortable being either long or short), and sometimes are pure degenerate gamblers.

Next, I'll give my assessment of my current thinking, and others are encouraged to share their thoughts.

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Currently, I am probably 60%+ a Random Walk guy, with maybe 30% based on some fundamental analysis. I probably have 5% each of my trades dictated by technical analysis (usually simple retracement after huge swings - generally bullish on quality companies, bearish for momentum stocks), and 5% momentum (usually day-of-IPO trades for potential breakout technology companies).

I don't really touch about 80% of my portfolio (add in a few long-term holds, or trim big winners occasionally), but speculate with the rest. This has provided a foundation of excellent market-perform results. I have had particular success with IPO-day trades on companies I didn't fully understand at the time (META, PLTR, RDDT, etc.). My retracement plays are a mixed bag (some have turned into long-term holds), and I occasionally hop on a bullish or bearish pure momentum or meme trend, without a proven track record of success.

1. Random Walk Theory

I did this from 2000 to 2015. It works. This is still how I manage the 401ks. S&P500.

2. Fundamental Analysis

Started getting better around 2015. Came up with my own ratio that relies heavily on P/E and Net Margin.
GOOGL right now is a great example of what I like.

3. Technical Analysis

I can identify a double top (or double bottom) or a cup and handle. Everything else is voodoo to me. Many thanks to OA for the early posts on cup and handle. I still look for the "Thank you Jesus goalposts".

4. Momentum/Other

Momentum is not for me. In the "other" category, I set a trailing 10% stop loss. The market decides when to sell. I buy GLD when everything is going to hell.

Quote:

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Fundamental Analysis

• Through deep (or shallow) financial analysis of financial statements, analyst reports, market studies, and other means, outperforming stocks can be selected by those who have the best access to information, or best analysis tools. Simpler methods include ratio analysis, competitive analysis (both quantitative and qualitative), and M&A speculation (takeout candidates, strategic mergers, etc.).

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Sometimes, the best access is turning on Fox Business. Charles Payne, Liz Claman, Maria Bartiromo are those who typically interview analysts who provide compelling information. For the record, I do not listen or watch Jim Cramer.

Also, both Schwab and Fidelity have some pretty good third party research.

I buy/hold. I don't trade. I guess if I had to pick a category it would be Fundamental Analysis.

halfastros81 said:

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Random walk for sure. Time in market >>>> trying to time the market.

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This is me as well. I have gotten some great tips from others on great ETFs to buy, good dividend positions to have and other tips, but I am pretty boring in my portfolio and consider myself well ahead of most people.

At the risk of making this a "Random Walk" cheerleader thread, I'd love to hear from some technical analysis people. I think we have a number of them on this board.

My opinion is that the really good technical traders are actually mainly just really good traders. They manage risk well, and have disciplined exits and profit taking. The analytical types that are drawn to quantitative and statistical analysis also can demonstrate good "bankroll management", as I call it. I believe posters like 30k, OA, H-A and others when they say that they do really well. But, I'd love to hear if they believe their results are more due to uncovering technical setups or more due to them being extremely disciplined traders (which I believe they are).

Random walk for core and will buy whatever is on sale and hold longer term, usually an ETF like XBI


I dont like holding things long term with a high PE even of its the next Big AI thing or whatever

I bleed maroon said:

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At the risk of making this a "Random Walk" cheerleader thread, I'd love to hear from some technical analysis people. I think we have a number of them on this board.

My opinion is that the really good technical traders are actually mainly just really good traders. They manage risk well, and have disciplined exits and profit taking. The analytical types that are drawn to quantitative and statistical analysis also can demonstrate good "bankroll management", as I call it. I believe posters like 30k, OA, H-A and others when they say that they do really well. But, I'd love to hear if they believe their results are more due to uncovering technical setups or more due to them being extremely disciplined traders (which I believe they are).

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IM(laymans)O, if there's a technical setup that has consistently proven to be profitable, the algos would be hammering it every single time.

I hear sometimes about this or that working out 70-80% of the time... If that's truly the case, then why are you messing with anything else? If I've got a setup that wins 80% of the time, why am I even bothering putting money elsewhere?

IMO like you said its about money management and having the tools and outs to get that number that is a tenth of a point better than what your joe schmo retail trader gets.

Random Walk except for my individual stock account.

The latter is 80/20 fundamental analysis and momentum.

Recent examples of Momentum bets are PLTR and ET both of which I saw on here and threw money at them. Bought PLTR at $23.

Real estate - random walk / technical analysis. purchased real estate during market periods where it was a buyers market. will result in large gains once i decide to sell.

crypto - momentum / random walk

investing in my own company / starting and expanding said company - fundamental analysis



i'm not expert, but I set my money up to be walking at different paces.

401k, long term play.
crypto could pop any day, could be a long term deal, i dont know. but its money im willing to gamble with and i'm okay if it doesnt pan out.
real estimate - less than 10 year play. will sell and roll into long term hunting land investment and ownership.
small business ownership - all of this fuels number 2 and number 3 of this scheme. my day job pays all my bills. the small business profits fuel the investment machine.

I'm an index investor with about 7% of my net worth in individual stocks so probably #1

Value Investing

Purchase of assets/securities for less than their conservatively calculated intrinsic value (preferably with an acceptable margin of safety between intrinsic value and the market price).

I guess I would say what I do mostly is considered "Random Walk Theory", according to OP. My theses for investing have been:
1). I have neither the skills nor the time or interest to invest in individual stocks (exception being BRK/B, if you could call it that). I have no inside knowledge that others with more contacts, money, etc. do not have.
2). I have no ability to time the market.
3). Stocks outperform other asset classes, so I am extremely stock heavy given my age and time to retirement.
4). I have just started dabbling in private equity markets, I wish I had done so earlier.
So far so good, but check back with me after another 2000/2001, 2008, 2020, etc.

Like everything, ignore the "experts" and grab all the low hanging fruit.