(1/14) CHART FIRST -- “Any time I get into a position, I’ll look at the chart first...I always default to the chart. It is critical for entry points.” - Steve Cohen, SAC Capital -- Let’s talk about fundamental analysis and technical analysis. Too often, people view them as

2. Momentum Is King First, because the most powerful force in markets is momentum. This is backed by extensive studies and quantitative research, but at the simplest level, it is because markets are driven primarily by fear and greed. People tend to buy high and sell low, and

3. CHARTS REFLECT FUNDAMENTALS In the short term, a chart may be disconnected from fundamentals. But over months and especially over years, the chart of a stock will accurately reflect the fundamental trajectory of the underlying business. As an example, here is a 10-15 year

4. Entry/Exit While each portfolio manager has their own criteria for entry and exit, here is a chart that would be viewed more favorably than the first one we tried to pitch: The chart is still unfavorable, but unlike the “falling knife” from before, this stock appears to have

5. Risk Management The use of charts helps us practice humility. Many investors begin their career as fundamental analysts who ignore technical analysis. Eventually, they suffer big losses as a result of ignoring what the market was telling them, and they recognize that

6. PHILOSOPHY: FUNDAMENTALS AND TECHNICALS Relatively speaking, my "technical analysis" is pretty limited. I care only about horizontal lines and volume. I want to know where institutions are willing, or have been willing in the past, to step in and buy stock. Everything still

7. PHILOSOPHY: FUNDAMENTALS AND TECHNICALS Stocks are always in one of two phases: balance or discovery. This is why I care about "horizontal lines" on charts. When a stock sits in a tight range for years, it is in balance. But when a stock breaks out to fresh highs or breaks

8. INCREMENTAL BUYERS AND SELLERS The reason why buyers and sellers matter is that whatever stocks are "worth" fundamentally, they are still subject to the laws of supply and demand. Stock prices move on incremental buyers versus incremental sellers. It helps to understand this

9. PUTTING IT ALL TOGETHER Point being, even as a fundamental analyst, you want to be conscious of these types of phenomena when they occur...horizontal lines, volume, breakouts and breakdowns. As I wrote endlessly in the "stop-loss" thread - the exact placement of the stop is

10. LAZY THINKING When a stock breaks to all-time highs, it enters price discovery. All the "idiot" stocks right now, the quantum stuff, the pre-revenue stuff, this is all that is taking place. There is nothing fundamental. Sharp traders are bearish and long. If a stock broke

11. L/S ERRORS - FY2 VERSUS DCF LAZY THINKING Stocks aren't priced on FY1/FY2. They are priced on a DCF. Let's say FY1 EPS is $1.00 and FY2 EPS is $1.00. Let's also say that FY5 to FY10 is $50 in EPS per year...which will continue to grow higher, funded by FY1 and FY2 coming

12. L/S ERRORS - FY2 VERSUS DCF LAZY THINKING This has nothing to do with a frothy market, with the Fed, with the dot-com, etc etc...this is basic fundamental analysis and its why I have to stay off the feed. I don't know any "hf analysts," L/S analysts, TMT investors, to whom

13. THE DUALITY OF MAN On all the YTD P&L posting... First off...if you're out there envious and mad, wishing negative P&L on people...bro...that ABSOLUTELY will come back around on you. Wish people health, wealth and happiness man...no reason not to unless you're an envious

FINAL THOUGHTS: SUCCESS CLOUDS THE MIND For those of you who have been ringing the register, may you all go buy dumb shit, feel self-assured, feel wealthy, and feel like the man. Then, please be aware that this is what always happens next. One day, it might be tmw, it might be

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@gregoryblotnick thx for the knowledge

on relationships + effective communication + understanding human nature… 5 frameworks I wish I’d been taught at a younger age: *** 1. On self-reproach…before you run your mouth Three Asks: “Does this need to be said?” “Does this need to be said, by me?” “Does this need