A friend of mine was bemoaning his lack of riches despite having spent a decade or more in the markets, that too actively. His beef was that he was always focused on momentum while those that made money focused on value. This beef extends quite a bit amongst market players and is one of the favorite tools to bonk technical analysts on the head with. Those that want to sneer at TA often are fond of saying ‘Show me a rich TA’. The riposte to that is, ‘Just because you haven’t met one doesn’t mean they are not around’! My experience over the past 35 years in the market and as a TA over the years is that the TAs who make money prefer not to shout it from roof tops. Isn’t it ironical that the ones who question the approach are themselves not exactly rolling in the good stuff?
There are only two ways to make money in the market. One is you buy at price A and sell at price B (assuming that A<B). The other way is you get some dividends or other benefits while you are still a shareholder. No one really built mansions on dividends for sure. So, that leaves price gain. Now, it is largely irrelevant whether you used Value investing or Growth parameters or had some insider dope or used chart patterns in order to buy at A. Each of these approaches is completely distinct from the other. So long as they all (assuming) sold at B, all of them made the exact same money. Then, how does it matter what was the approach and can one really be said to be superior or inferior to the other? Does the time factor of holding really matter then?
Ultimately, therefore, it is all about whether you could buy at A and sell at B (which was a higher price). How you did it becomes irrelevant. It is just that we like to clothe the arguments in different wrappings. That would boil down to, as the good books explain it, your innate vasana– the essence that makes you distinct. Some like to buy value, others go for growth, some like to play momentum, some like the research, others hate it, some just can’t do the work while others revel in the work itself! We are all different in the way we see the markets and like to engage in it. Generalisation is the way the world would like to slot us all into convenient boxes so that identification and processisation are simplified. But at the end of the day, the market is the great leveller. Just like in the sports field, on a given day, a team or a player wins because the odds came together in a way that made it so. In quite the same manner, in the market, some odds come together at a time that makes one type of market player who is long at price a win. The world always looks at the winner and declares his method to be perfect. It is simpler that way. Life is easier to lead and practice. The real truth however is that the winners keep changing from time to time.
Ultimately, it’s just price. We have to get that right. For entry and for exit. Rest is just the means to get it right more often than not. The sun will never set on that debate!