4. March 2017

The future is here:  Facet Analysis
A revolutionary development in analysis

It’s been a few weeks since my last entry because I’ve been working on this new concept. This is probably the most important blog I have written. I'll time stamp this blog as “March 2017”, and say "you heard it first here". The term Facet analysis is what you heard first here. That may be a bit too pompous for my taste, but we are certainly on the way to something revolutionary here, and this requires a new term.

People often ask "are you a technical analyst or a fundamental analyst?". This is so old and outdated, that I’m sighing. For me that is like asking a carpenter "Do you only use a hammer in your work, or do you also use a saw?". The carpenter would not really understand the question. Of course he uses both.  But he also uses a screw driver and sand paper and so on. He likes all tools, regardless of what they are called. If they do the job, then he likes the tool. The thing is: Each facet requires a different tool.
The true benefit of facet analysis is that it is a more advanced and robust analysis. But one of the side benefits of facet analysis is that it puts an end to the tedious war between fundamental analysts and technical analysts. It is simply so old and outdated, so dinosaur extinct.  Let’s get to the next level, shall we? Now, please!

Facets of a diamond
The "next level" is what I term Facet Analysis, and this is combining:

       Macro economy
       Technical analysis
       Fundamental analysis

For those who start to see the light of evolution here: No, it is not a mere "addition" of three parts. It is not just taking three independent types of analysis and “if they all say buy or sell, then we are more safe”. If it were only that, then we were simply slapping three totally different systems on top of each other and duct taping them together. That is hardly worth a new name. Duct tape is not a new invention.

Instead of duct tape we are fitting analysis together on the X, Y and Z axis! We are matching the types of analysis together, much like Lego blocks. They FIT together, filling out the missing parts in the other. The requirement is that they fit together both on the X axis, the Y axis and the Z axis. The video will show this. The three types of analysis are created to snap onto each other and make a strong unit. Like man and woman are meant to complement each other, having different strengths that the other one doesn't have, and that they need. How can we NOT see that these are meant to complement each other? It is so natural. I don't get it, because it is so obvious to me. But that is how evolution works. Some learn to make fire and benefit from this, and others don't bother to collect wood and so they freeze and become extinct over time. There is some Darwinism at play here, because this process is naturally quite slow like the evolution of species. But my point is, unless you are old and stuck in your dinosaur ways, why would you not want to be part of something new, evolutionary and better?

The secret is in the sauce...
The secret of the system is the X, Y and Z axis, and I will show this in the video. It ends a bit abrupt because I hit the time limit for video, but that's ok. I will cover the X and the Y axis in this video. The Z axis is something I'll convey in my next blog.

After you have seen the video I hope you understand how intricate the systems fit together. How each type of analysis has some strong points that the others don’t, and in what way and time they work together.

Raising the bar
Ok, so what is an obvious problem? Facet analysis means that you should be versed in multiple types of analysis, and yes, that means that you need to spend much more time getting to know these types of analysis. You are no longer a one-trick pony. You learn how to perform them and learn the pros and cons of every one of them. We are raising the bar here, so get over it and wipe away those tears. What is the alternative? Stick to what you know, clutching your one "my preciousss" favourite?

No-one expects you to be fluent in 5 languages, and we don't expect you to be a master of all types of analysis. But you should be able to do them to some degree. I speak Danish quite perfectly, English rather well, German so-so in an informal situation, French with a very good pronunciation but with an extremely limited vocabulary, and both Spanish and Cantonese only hanging on to the barest thread. The same type of thing will normally happen with types of analysis. You are not expected to be equally good at all types of analysis. I have written a blog about this -  Do you know your own analysis DNA? . Have a look and test yourself!

The question and the answer
So the wrong question is: Are you a fundamental analyst or are you a technical analyst? If you refuse to be a dinosaur, then the answer is "I'm a Facet Analyst". This is much more than just saying that I'm 50/50 - a  combination of 1+1+1. Instead you are utilising a dynamic interchange of tools on the X, the Y and the Z axis - addressing all the facet of TAD - Timing, Amplitude and Direction. A true step in a more advanced direction.

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