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Andy Zaky
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Andy Zaky is a Hedge Fund Manager at Bullish Cross Asset Management, and editor of the Bullish Cross financial newsletter. His main area of knowledge is in global macro economics, fundamental analysis and technical analysis. Andy has about 14 years of investment experience, a strong background... More
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  • A Short Comment on Using Fundamental Analysis  5 comments
    Aug 9, 2010 1:55 PM | about stocks: AAPL, GOOG, BBRY, AMZN, MSFT, HPQ, DELL, WMT, XOM, IBM, INTC, V, VZ, T, NOK, BAC, GS, XLF, VXX, DIA, QQQ, SPY
    The editors at Fortune published a story I wrote for them today on a certain level of caution that investors should use when relying on fundamental analysis as a tool to make short or intermediate term price projections for Apple (NASDAQ:AAPL) or any other company. Though valuation proves very useful for making long-term predictions, history has taught us that patience is key when making investment decisions.

    Even today, Apple has been very range bound largely due to the sizable market correction that began on April 26 suggesting that Apple, like nearly every other company, is at the whim of the larger concerns of the broader market at least in the short-term. As I noted in the article, I'll be running a second piece on Apple's long-term valuation this week, but I had to stress just how important it is to have a long-term horizon on the company when relying on valuation as a basis for investment decision. So much so that it warranted a full article on the subject. You can read the full piece here.
     

    Disclosure: Disclosure: All Cash.
    Stocks: AAPL, GOOG, BBRY, AMZN, MSFT, HPQ, DELL, WMT, XOM, IBM, INTC, V, VZ, T, NOK, BAC, GS, XLF, VXX, DIA, QQQ, SPY
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Comments (5)
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  • davel
    , contributor
    Comments (4009) | Send Message
     
    I have long had issues with the price of Apple stock in relationship to the numbers they report. This is not a recent phenomenon.

     

    You give very good examples, the most recent being the drop to the 80's when Apple was posting increases in revenues and income.

     

    I understand your point about relating market cap to other companies be they tech or no.

     

    However, at the end of the day, the price of any stock is only as high or low as what others are willing to pay for whatever reason. The reasons do not have to be rational and frequently are not.

     

    The big lie is that the markets are rational. In my opinion the financial markets are run by sheep. They look for the 'leader' and follow that leader until they find a new one. In the dot come era, all these analysts would appear in public and with a straight face talk about how traditional valuations did not apply for company X. It did not matter that they had a p/e ratio of 1000 or not even a ratio considering many did not actually make money.

     

    I recently scanned a book by G. Soros who made a point about the irrationality of markets. I need to buy the book. He gave a very good analysis of how markets are not rational.
    11 Aug 2010, 10:34 AM Reply Like
  • Andy Zaky
    , contributor
    Comments (538) | Send Message
     
    Author’s reply » Yea i say that in my article. I don't think any advanced participant of the equity markets think its rational by any stretch of the imagination. Thanks for the comment.
    11 Aug 2010, 11:06 AM Reply Like
  • The EconomicJoker
    , contributor
    Comments (958) | Send Message
     
    Andy, your articles on Technical Analysis are much more interesting than APPLE talk.
    19 Aug 2010, 01:03 PM Reply Like
  • Andy Zaky
    , contributor
    Comments (538) | Send Message
     
    Author’s reply » Yea I agree. But technical analysis = everyone bitches, complains and whines like a baby. I'll tell you right now. Those who understand technical analysis and know how to capitalize on it are far more financially intelligent than those who just rely on fundamental analysis. I noticed that almost everyone on SA has some high degree of difficulty with technicals. All I get is "technicals are voodoo" "tea leave reading" or that they don't work. I translate that as: "I can't make money on technicals so I have to bash them as being worthless." That's fine with me, because I'll continue to capitalize on these indicators.
    19 Aug 2010, 01:45 PM Reply Like
  • FatPat
    , contributor
    Comments (94) | Send Message
     
    I am not a great technical analyst. I analyze things first fundamentally, and when the few technical indicator I know point in the same direction, I feel much more comfortable to pull the trigger. However, one reason why technical analysis works, is that a lot of people use it, it has also something of a self-fulfilling prophecy. It s a bit like what happened to Google, everybody was bashing it "one-trick-poney", should not retreat from China, Bloomberg and CNBC analyst bashing, missing quarterly expectation, because revenue grew "only" by 25% and earnings by 28%. Honestly, earnings visibility by Google is far higher than by Apple. Right now the stock is so damn undervalued, with a constant growth rate of 25%, and P/E of 13 if you subtract the cash on the balance sheet. Nobody can tell me that this is rationale. It s a joke!
    25 Aug 2010, 08:04 PM Reply Like
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