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Tea with AK71: Hope.

Friday, July 9, 2010

I coined a phrase "Hope Analysis" aka "HA" a few years ago amongst my investor friends. This is a word play on FA and TA. In those days, I was a FA guy and not a very good one too. Did not know anything about TA yet.  Then, there were people who would buy stocks based on gut feel and hope for the best.  These were the people whom I called HA practitioners. Cheeky of me, I know.

Actually, there is nothing seriously wrong with HA.  We are human beings after all and there must always be hope or else life would be bleak indeed.  I remember receiving pamphlets in my letterbox when I was much younger with words in big bold letters: "There is Hope!".  Ok, ok, I am being cheeky again.

When we use FA, we can only hope that we have done a good, thorough job of it. We can only hope that things would turn out the way we think they should.  When we use TA, we might also hope that things would go the way we think they should.  Of course, some hard core FA or TA practitioners would say that hope should not be in the picture.  Some would say that FA is about skills and foresight and TA is emotionless and we should just let the charts talk.

More enlightened practitioners would realise that, whether FA or TA, there are no absolutes.  Everything is about probabilities.  The closest we can get to being absolute is therefore 99.9999%.  Ok, you might want to add more 9s if you like to infinity but you get the point.  99.9999% is as fine a gold bullion as we can get as well.  I doubt we can find 100% pure gold in this world.  Impurities? You bet. They are part and parcel of life.  We can reduce impurities but it is near impossible to eliminate them.

What about FA plus TA? Well, it is just another approach.  I dare say that HA has a place too. Good luck.

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