Loading...
See More

Tech troubles

Oct 03 2012 10:04

Company Data

BRITISH AMERICAN TOBACCO PLC [JSE:BTI]

Last traded 0
Change 5,2
% Change 0
Cumulative volume 389261
Market cap 1.27tr

Last Updated: 19-12-2014 at 04:39. Prices are delayed by 15 minutes. Source: McGregor BFA

Related Articles

One up for the little people

Marikana: massacre or mascara?

My untraditional role

A retirement strategy for my parents

Will my export effort make a difference?

Going potty

 
Fin24 user Jeremy Samson writes:

THERE is a sub-group within investing which is home to the "technical analysis" geeks - a rare breed of quasi-investors who have created a whole discipline by extracting data into graphs that no one ever bothers to look at.

I guess they do have their place in society: they can understand the Duckworth-Lewis scoring methodology that leaves thousands of cricket supporters perplexed and confused when they discover that, because of a change of weather, their team has suddenly lost a game that they appeared to be winning.

But that’s as far as their skills set extends.

Accountants are notorious for a having no handle on reality and this unique sub-group of guys is even further removed from what’s happening on the ground.

They choose to look exclusively at the numbers without any consideration for what is actually going on. I read recently that "British American Tobacco [JSE:BTI] is showing signs of heading towards an outbreak." (Perhaps it was a breakout.) It had breached the one section of the graph, some geek excitedly pointed out.

The share then proceeded to go limp for a few weeks. Probably, I reckon, something to do with the PE being over 20 and the Australian government imposing some draconian law stipulating that all packs need to be olive coloured in future.

This wasn’t in the graph though.

I have never read a snippet of technical analysis and thought "I bet this person is a bundle of laughs at drinks parties" They seldom even mention what it is that the company they are "analyzing" does.

I went to an Allan Gray presentation once. There an enthusiastic blonde-haired guy took the stage and began wildly pointing at some graphs explaining how the stock market was over-valued.

The lines were all in the wrong place, the yields were rubbish and if you looked at the graphs carefully you’d be able to see how the whole system was on the brink of meltdown.

I remember the market was below 30 000 at that stage. I also remember pretty good finger food and thinking "I should really rebalance my portfolio" which, thankfully, I never got round to doing.

In their defence: how were they to know that we’d have more QEs than there are Queen Elizabeths? That Ben Bernanke likes inflation more than unemployment, and that when fixed income yields are in low single figures people tend to plough money into the stock market. For them the future wasn’t what it used to be.

Graphs do, I guess, have their place. They are a great visual way to understand the past and, to a smaller extent, extrapolate what might happen in the future.

But as far as connecting arbitrary points and then making sweeping statements about the direction of share price movements – I’m sorry. Nope.

I guess when it comes to the final analysis: to each his own. I am only 1.68 cm tall. I just extrapolated my two-year-old daughter’s growth chart.

Things are showing huge upside potential. I just worked out that she is destined to become an 8 ft tall supermodel. This is surprising, considering my stature.

Either that or there’s something my wife isn’t telling me.

 - Fin24

Disclaimer: All articles and letters published on MyFin24 have been independently written by members of the Fin24 community. The views of users published on Fin24 are therefore their own and do not necessarily represent those of Fin24.

Fin24 reserves the right to obtain service providers' comments before publishing any articles or letters. Fin24 editors also reserve the right to edit or delete any and all user material comments received.

Any experiences you'd like to share with fellow Fin24 readers? Send your stories to editor@fin24.com and you could get published.

Or if you have a pressing financial question, post it on our Money Clinic section and we will get an expert to answer your query.

*For more on Fin24 stories, check out our Facebook, Twitter and Google+ pages.







 
NEXT ON FIN24X

 

Lastest Articles

Here is how to check your credit score and manage it Read More...
Top tips to save money over the festive period Read More...
These are the top 5 most fuel efficient cars in SA Read More...
What to consider when switching medical aid schemes Read More...
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
2 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

Brought to you by BizNews

More from BizNews

We're talking about:

Small Business

Retailers of any shape and size can now unlock the power of mobile transacting.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...