I was always taught to primarily pick investments based on fundamentals like P/E ratio, debt ladders, dividend coverage etc.
But now it seems people primarily use sentiment based along the business model/area instead.
Which do you use?
I understand that many people (including me for my retirement scheme) use broad based index funds. But even then you do have choices b/w large/mid/small/growth/value as well as sector funds.
Now days do people pick stocks/ETFs/MF based on fundamentals or sentiment?
byu/Ok_Atmosphere3601 ininvesting
Posted by Ok_Atmosphere3601
3 Comments
Sentiment can make you more money faster. Because, you ride the wave…
However, the pricing is based on sentiment and therefore you can also lose more overall.
Higher risk = higher reward.
Fundamentals, means you truck along logically, with a sensible business.
I mean if you bought in at the bottom of the tulip market and sold at the top, you became one of the richest people in the world. If you bought 3 days before top and sold 5 weeks later, you lose you ass.
In comparison to say a tulip, where you buy it for $1,000 and sell it for $10,000. Or buy it for $1,000 and sell for $1. All in 6 months. (Sentiment)
You say buy a rental property for $1,000, you make $100/year for life, you won’t turn 1K into 10K overnight, but you also won’t turn 1K into $1 overnight. (Fundamentals).
Personally, I do Fundamentals and wiggle trade Sentiment of things that are fundemental. Lol. Similarly, I’m never really going to turn 1K into 10K overnight. But might turn 1K into $1,100 overnight. If 1k goes to 900… well I sit on it with the Fundamentals.
If I had two choices I’d consider fundamentals. But I don’t want to pick a stock without picking the company that stock represents which is a lot more than the accounting numbers.
For what it’s worth I’m a sentiment/ momentum investor..I do play close attention to negative sentiment and ask the question why..not buying falling knives but more like nothing is actually wrong with the numbers it’s just falling on sentiment ..if you have the time this can be very profitable..buying on the numbers alone can be a frustrating method of operation because if your view of the numbers are positive it’s very hard to sell if the stock trades poorly