Direct Method (1)
──────────────────────────────
Serialized series “Trading Philosophy”……14
──────────────────────────────
Before I entered elementary school, I attended a calligraphy cram school, and one day the teacher
said to my grandmother, who was also learning at the same calligraphy class.
“How about you taking a little break, Shinichi-kun…?”
I was a bit energetic and would slide on the tatami,
and because I was a bit creative, I wrote words not in the model, but… when spoken directly,
it seemed to be said, “It’s a nuisance!” I’m sorry…
There are many cases where it’s better to wrap things in a softer expression rather than saying them directly.
However, there are also instances where being roundabout makes things hard to understand.
There are various data sources consulted in forecasting trades.
For individual stocks, the fundamental analysis alone is wide-ranging.
The reference data can be broadly divided into two categories.
1. The stock price itself
2. Everything else
The attitude of trying to judge (predict) by looking at “the stock price itself” can be called the “direct method.”
Based on the Efficient Market Hypothesis explained earlier, if “all information is already priced into the current stock price,” then collecting peripheral information is a waste.
Also, regardless of the approach, in the end you will be “buying or selling at market prices,”
so looking at the stock price from start to finish is simpler, more practical,
easy for individuals to implement without much deviation—that is the philosophy of “market technical theory.”
Therefore, while evaluating changes in performance, a company's growth potential as valuable data for thinking about the future, you always check the stock price itself to determine buying or selling actions.
What Lin Investment Research Institute advocates is this “direct method.”
Whether it is the “direct method” or the “indirect method”… it may seem crude to divide it into two parts like this,
but in market technical theory, the important thing is “price movement and the corresponding response,”
and to solidify the approach, a somewhat extreme partition is adopted to fix the stance.
Next time, I will continue the explanation a little further.
