Fundamentals in action

a) fundamentals work in the long term
b) the long term trend overrides the short term trend
hence fundamentals override technicals?????
Anyone who disagrees
look at what happened to the breakout in bajajhind earlier.
The initial breakout was killed completely. It turns out it was a wave b or wave c or something, full retrace as opposed to the breakout in nifty.
When the fundamentals are not aligned with the technicals the market might zigzag in a lazy fashion. abc , abc, abc. When the fundas and technicals both point up, you get a proper impulse , see nifty/rcom etc. If you are still not convinced, keep watching jetair. It keeps getting into trouble near 800. Expected to post mild losses in next 2 years before any major recovery. Once the Indian airline industry goes through a proper consolidation and gets rid of these small players+price wars that they create we can expect better times for jetair. Stock will double in 5 years.
But first it will totally kill any trend following system.



Anyway bajajhind expected eps fy09 maybe 21 or so if sugar prices recover, target 210-230 in 1-2 years.



http://finance.yahoo.com/funds/understanding_investing/article/100592/Why_Have_Stocks_Provided_Long-Term_Real_Returns_of_7%25
Why Have Stocks Provided Long-Term Real Returns of 7%?
Excerpted from Common Sense on Mutual Funds by John C. Bogle, pages 36-37
We can use the historical data to answer a simple question: Why have stocks provided long-term real returns of 7 percent? Answer: Almost entirely because of the rising earnings and dividends of U.S. corporations. The sum of real dividend yields and earnings growth generated during 1871-1997, adjusted for inflation, equals 6.7 percent in real terms. In other words, the total long-term real return on stocks derived from dividend yields and earnings is virtually identical to the 7 percent real return actually provided by the stock