How to analyze fundamental stock market news and profit from it?

[wahkao]

How to analyze fundamental stock market news and profit from it?

Everyday got so many news come out from bloomberg or Reuters. Some are positive, some are negative.

How do we analyze the news to decide which are positive for the company and which are negative? And the degree of positivity and negativity.


On the practical side, my idea is to camp at my computer, wait for the news to come out.
If the news is good news, and prices have not moved, I immediately buy
If the news is bad news, and prices have not moved, I immediately sell

But I guess its not as simple as that because prices will change very fast.
So the question is how do we analyze fundamental stock market news and profit from it?

[wahkao]

some pictures put here for illustration of this thread
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[godjira1]

Dude. I dont think this is efficient use of time. There are algos out there using keyword searches and stuff - u can't arb them.

Time is the ally of the retail investor, but it takes a lot of mental discipline to utilise it.

[Greenrookie]

Seriously, I dun trust news 100%. Especially news that explain market movement, could be quite a joke if u monitor how bloomberg new commentary can swing from day to day.

Also, different sources of news have different biases/ accuracy. Bloomberg news on shipping is usually quite backwards.

News is part of the noise

[kagemusha]

How do you interpret if it is a good news or bad news?
Some news may be ambiguous, depending on who talks about it.

Eg, tapering ----> when it happens, some analyst say, good because it shows the economy is getting back on its feet.
While some say, bad, now Fed is cutting the supply of money.

Only time will tell if news is considered good or bad.

[wahkao]

a lot of my friends say they use news to make their investing decision.

For me, I feel that news are usually released with lots of agenda behind it. Like trying to pull down stock value before delisting, damage control or because the news reporters are simply paid by someone to draw attention to something.

When Bloomberg usually releases news, citing the source as "according to someone with knowledge of the matter. We cannot reveal that someone because this information is private".


I believe the audited financial statements more than news.

[Temperament]

MORE INFORMATION IS NOT NECESSARILY A GOOD THING


Many investors give little or not thought as to how they actually go about making decisions. One bias they have is: I know better, because I know more. The illusion of knowledge is the tendency for people to believe that the accuracy of their forecasts increases with more information. The simple truth is that more information is not necessarily better information. Another bias: I can make a judgment based on what it looks like. Companies that have seen growth in the previous five years are forecast by analysts to continue to see very high earnings growth in the next five years.
Analysts are effectively looking at the company’s past performance and saying this company has been great, and hence it will continue to be great.
Analysts fail to understand that earnings growth is a highly mean-reverting process over a 5 year period.
Effectively, analysts judge companies by how they appear, rather than how likely they are to sustain their competitive edge with a growing earnings base. Another bias of investors: that is not the way I remember it.
Our minds are not supercomputers, or even good filing cabinets.
They bear more resemblance to post-it notes that have been thrown into the bin, and covered in coffee, which we then try to unfold and read. People are more likely to recall vivid, well-publicized or recent information.
Simonsohn Et Al hypothesizes that one reason for overweighting of direct experience is the impact of emotion. “Directly experienced information triggers emotional reactions which vicarious information doesn’t.” investors experience will be a major determinant of their perception of reality.

[chialc88]

T,
Information (or even information overload) is always good.
The bad things I felt is false info or wrong way of interpreting the data.

So, our job as a teacher is not to teach students on facts nor give them information.

I felt that our mission is to teach critical thinking skills aka ability to think on their feet.... you got what I mean?

If they are able to pause and exercise their brain then we would had achieve something.



This is what I had learn in army from my army mate Ng SK:
+ do not believe what you read
+ do not believe what you hear
+ do not believe what you see
+ only after you think, analyze then you will form your conclusion
+ after you had formed your conclusion, there will be someone trying to change your view, you must stand firm on your belief and not sway by them

War-kor,
I am still learning and I hope you might give some examples on how you benefited from the auditor report...

As for myself, my take is both news and auditor reports are good source of infor aka I would not ignore using news as a fundamental research opportunity.

I profited from news in newspaper and you might not believe ... news from VB forumer too.

As for auditor report, I can only recall one or two instances that I avoided a loss but not profit from it.

Good if you could share some of your war stories too... if you don't mind.



I have a need for speed....




A Life not Reflected is a Life not Worth Living.

[Temperament]

How do you interpret if it is a good news or bad news?
Some news may be ambiguous, depending on who talks about it.

Eg, tapering ----> when it happens, some analyst say, good because it shows the economy is getting back on its feet.
While some say, bad, now Fed is cutting the supply of money.

Only time will tell if news is considered good or bad.

Yeah!
For every piece of news, there will be 101 pros and 101 cons. If i listen and act on all the markets' news, i will soon have Bipolar personality. No not correct. i will soon have "Split Personality" (Shh..My wife think i am at times)

i love the markets' behaviour.

[Temperament]

"This is what I had learn in army from my army mate Ng SK:
+ do not believe what you read
+ do not believe what you hear
+ do not believe what you see
+ only after you think, analyze then you will form your conclusion
+ after you had formed your conclusion, there will be someone trying to change your view, you must stand firm on your belief and not sway by them "

Who can don't agree with the Logic above?

The reality is actually based on this (imho)
A unknown Christian's Prayer.

"No one reacts to things as they are but to one's own mental images.
Keep me aware that it is not what happens to me in life that matters;
But rather how i react to what happens.
Amen.

And this is not the first time i share this.
i love this prayer very much because it is not only very logical but remind me who i am.
i am really nothing.

"