In answer to the following question on a Linked In forum: “what is the best advice for a trader who is just starting up his career and is not consistent profitable yet?” experienced investment professional Glen Howe replied as follows: “Miguel, most of the answers are based on a statistical or charting methodology of trading, and while they are relevant in many circumstances across many products there is the area of fundamental analysis to look at too. Its not clear from your comment which products you are trading but in the world of equities fundamental analysis of companies and their prospects are key. Understanding the management motivations and the upcoming events or catalysts which will realise value are extremely important. Know your strategy and why you invest each time. Understand your upside versus downside and what you will do if and when either of these occurs. Try to avoid deviating from the rules and process that you build. Do not be greedy and do not get complacent- these cause the downfall of many a new and experienced trader (both in individual trades and their careers/funds as a whole). Learn to not trade too much-don't be desperate to put every idea on. There is always another trade. Size your trades according to risk/downside and volatility and related to your total fund size.” I replied as follows: The use of a systematic investment approach is not incompatible with the use of fundamental analysis. At least if fundamental analysis is conducted on a quantitative basis. Of course, what you can not systematize is an analyst’s discretionary and subjective judgmental view. You can systematize and codify a statement like "invest in companies whose forecast earnings growth for 2013 is x%"; you can systematize a statement like "invest only in companies x% of whose revenues comes from China"; you can systematize a statement like "invest in companies whose debt to equity ratio does not exceed x%". These are examples of fundamental analysis which can, in fact, be systematized. You can not systematize statements such as the following: "I don't want to invest in companies where I do not like the look of the CEO – where I just don't quite trust him"; "I have a hunch that their business model just doesn't stack up – so I won’t invest"; and so on and so on. In fact, many of the reasons why an analyst would recommend investment on a fundamental basis can be systematized. The actual timing of that investment could possibly then be decided by systematized technical analysis; or not, as you choose. The sad truth is that in the world of actively managed funds, professional fund managers and their teams of analysts (the vast majority of whom exercise discretionary judgement based on an analysis of fundamental micro and macro data) fail to match up to their benchmarks. Hedge fund wizards who use fundamental analysis may well do rather better but increasingly we have seen that their judgement can often be a matter of luck rather than good judgement or good predication; and good luck runs out eventually. And we have recently seen quite a number of hedge funds come under scrutiny for front running, insider dealing and so forth – which perhaps helps to account for their success in “fundamental analysis”. In the majority of cases, particularly in well developed capital markets, fund managers can not beat the index; they ARE the index. Arguably, there is greater scope for fundamental analysis in developing markets such as small cap China but I suspect that even there, few discretionary fundamental analysts do end up adding value. I realise I am talking here of investment rather than trading; but only the time scale differs. There is little evidence of persistence in the performance of fundamentally managed funds. Mind you, given the collapse of JW Henry and the disastrous two years we have just had in the world of systematic global macro, it would be fair game to point out that systematic analysis is certainly no panacea and let’s face it, particularly in shorter term systematic trading, models need constant adaptation for changing markets. If you doubt what I am saying, just take a look at what you would have achieved in terms of investment performance by following the fundamentally derived views of some of the major investment houses and brokers. Take a look at the guru rankings at CXO advisory Group if you want a belly laugh!
He uses a combination of fundamental factors and technical factors to derive his forecasts, leaning substantially toward the latter for short-term predictions. No commentary from Mr. Nassar is available over a period when the stock market has significantly declined. If he has a bullish bias, it would not show up in this sample.