I just finished up the second case for Professor Crocker Liu, price and earnings momentum. Through this case we looked at technical analysis, and tested the validity of using moving averages and relative strength indicator to dictate buy and sells. While I personally think that technical analysis is useless, and that the fundamentals of the company matter a lot more than what the stock price has done in the past, it was a very interesting case. I think I may use some of these technical indicators in my upcoming IAG presentation. This is not to say that I won’t do the typical DCF and maybe a multiples analysis, but I’m going to bring these indicators up at the major reason to buy.
Why am I going to do this? Two reasons. First, my presentation is very close to the end of the semester. The intrinsic value that a DCF shows will not be achieved by the end of the trading session. So, for the short term play, I’m going to talk about the technical indicators. Second reason, I strongly believe that IAG should try to educate its members; not only through the workshops but through the presentations as well. Since IAG is a DCF shop, I might as well try to teach the members something new while I’m presenting.
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