The above quote from Sean McLauglin is very true, all you have to do is read any of the market wizards books to agree. You had macro investors, value investors, technical traders, etc..; Bruce Kovner, Jim Rogers, Mark Weinstein. Today we have many extremists in the investing world; we have the extreme fundamentalist, the extreme technician, the extreme passive investor and the extreme active investor. What dictates what is the right way or wrong way of investing/trading is your P&L. I believe a hybrid approach triumphs all.
There is no doubt that in order for a stock to make a multi-year run it has to have a story, strong earnings, sales growth etc…But sometimes a stock can get cut in half before the next 10-Q and 10-K comes out, look at the oil names recently, sometimes a stock can double before the next 10-Q.
Technicals will many times keep you from owning a great company, with great numbers, just because it broke some trend-line that you believe is important or because it’s below some magical moving average. Other times it will take you out of an overly loved stock that gets cut in half before the fundamentalists get a chance to read the latest filings.
Pick your poison. What’s important is to know what works for you and what works within your time-frame. If you are a 10-Q, 10-K reader then your time frame is at a minimum one-quarter, you should probably not sell a stock based on the price action if you bought it based on its previous 10q. You must first read the updated 10-Q or 10-K, and then you have to come to the conclusion if whatever changed is a one-off event. Tough decision.
If your time frame is less than a quarter and even up to a year then earnings, sales, growth are for the most part irrelevant, if you think otherwise just look at the biggest winners every month.
Here is what Kyle Korver the NBA’S best 3 point shooter had to say about developing his shot. “I think the secret to shooting is finding a shot you can make exactly the same every single time and then do it a whole lot. There’s no secret potion to it all. You just gotta find something, however you are, like, whatever feels good to you, but shoot it so you can make it the exact same every single time. The exact same. Like, a little bit off can change a lot. So you focus on trying to make it the exact same, and over time hopefully you become a good shooter.” In other words—DO WHAT WORKS FOR YOU.