Wednesday, April 11, 2012

Q. Is it possible to make fortune  like Warren Buffet (or peter Lynch
or any Fundamentalist) only by investing and holding value Stocks for a long time?

A. It is always possible as human beings are imperfect. It is finding and exploiting that imperfection that fortunes are made. A hedge fund strategy is simply that and even today is successful. But using the same imperfection will not work because man is always trying to become perfect hence corrects them as he goes along.

Q.  In this era when information is flowing everywhere is it possible to find out true value by simply analyzing the financial statements.  (Often Financial statements are manipulated)

A. Here is the answer is no. Today's data, interviews and analysis reports are mostly tainted by manipulation. You can no longer succeed by just reading them. you have to dig deep and do a lot more field work.

Q. Will it be more beneficial to do momentum trading in Blue chip company (which has good liquidity). Is day trading in Stock is worthwhile or it is dead now ?

A. Trading, be it momentum or day trading or high frequency trading still works for the same reasons I outlined above. That is a business of buying and selling like any other commodity. It is risky and hard work but definitely workable. Especially good is using options.

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