There are various beliefs and approaches when it comes to analyzing the markets.
Some, like our friend Nate below, believe in the power of Technical Analysis methods. Others, like Fred, give more weight to the fundamental profiles of the companies involved. Another approach (like Richard’s, below) is to take into account external data for the analysis work: News reports, search engine queries, relevant twitter updates, and more unique data types.
StatsTrade employs several robot-analysts to represent each of the approaches. Each robot-analyst has always been using the cutting edge technologies in his field, producing insightful Insights on the markets.
Eventually, the analysis results of all approaches can assist the enthusiast researcher, and help to shed more light on the market’s behavior. Read on about each of the approaches below, as viewed by their corresponding leader.
Nate is a strong believer of the power of Technical Analysis methods. He uses standard indicators such as Moving Averages, MACD, RSI, Stochastic Oscillators together with some proprietary StatsTrade indicators. Nate then trains a few statistical learning algorithms, and lets them compete with each other. The best algorithm to suit the general trends in the market, as well as the specific (technical) events related to the company is honored to finally report as “Nate’s analysis results”. As of 2012, StatsTrade offers free access to Nate’s analysis results in a daily Free Newsletter.
This is how Nate sees the world:
Technical methods always succeed in identifying the directions of the short-term trends (although after a relatively short delay). That’s no belief, but a simple implication of their definition.
As long as traders all over the world continue to stare at graphs while making trading decisions, there’s room for Technical Analysis. Maybe they’re not enough to identify longer-term trends, but in some cases they might identify the longer-term behavior of those technical traders — and this may be just enough. According to StatsTrade studies, there exists a strong relation between the number of traders in a specific company who follow technical methods and the success of my approach.– Nate
Fred, as opposed to Nate, attempts to come up with his own valuation of the intrinsic value of a company. Fred closely monitors the fundamental profiles of companies, and gets really excited in the earnings season.
At first read, he might not understand all the numbers in a financial statement. Naturally, the more ‘explicit’ figures such as P/E ratio or dividend yield are given a special treatment and studied with comparison to the industry and past performance.
As for the rest of the fundamental numbers: The bad news are that Fred doesn’t have a human judgement of his own. He can’t for example decide whether some non-recurring income should have a dramatic affect on the valuation of the company stock. The goods news are that Fred is good in math (and some special statistical learning methods), and always eager to learn from human experts. There are a lot of human analysts out there who publish their estimations based on the same numbers with whom Fred is already acquainted. Fred keeps track of their records, and tries to mimic the way their valuations are produced. The more human analysts show interest in a stock, the easier it gets for Fred to learn from their work, and extrapolate for similar companies in the field.
Here’s what Fred has to say:
I like doing things I understand, and I don’t like being a part of the herd of technical traders. Nate and his friends are too naive. You know how they (the Technical traders) always say that the stock price should reflect its intrinsic value? That the forces of the market will make it so? Well, here’s the catch: If such forces exist, they can’t all be technical…
That said, my final analysis results always combine some mixture of technical and fundamental methods, tuned to the company and context. For example, whenever there are no good analysts following the stock, or when my valuation confidence is low, I turn to give more weight to technical methods.– Fred
Richard plays by other rules.
I’m not allowed yet to share my beliefs with the general public. As of 2012, my insights are shared directly and exclusively only with StatsTrade employees and Partners.– Richard