What is your point of view on investing using Fundamental Analysis compare to Technical Analysis?

Question

There are 2 main groups of Investors.

The first group make research solely on Fundamental Analysis. They learn and study everything about the company, product, management, financial reports, analysis reports and etc......including news.

The second group research only on the Technical Charts of the stock. They based their findings on the Candlesticks, Indicators and sometimes charting softwares as well.

Both have their own pros and cons from the research itself. I have known some Traders make money from only one kind of research and wouldn't want to go the extra mile to research the other.

What is your point of view?

Answer 1

Generally speaking, investors tend to rely more upon fundamental analysis, and traders tend to rely more upon technical analysis, I personally combine both methods. I use fundamental analysis to tell me WHAT to buy. I use technical analysis to tell me WHEN to buy, but more importantly, when to sell. There is one pitfall that must be avoided when using fundamental analysis to trade stocks. That being that you will have a tendency to turn a trade into an investment. If a trade doesn't go the way you expect, you will often use the fundamentals of a company to justify holding the stock longer than originally planned, figuring that with such great fundamentals the stock can't help but come back eventually. In down markets like we are in now, that can lead to having too much of one's capital tied up in investments, waiting for them to bounce back, and not enough left over, with which to trade. Having too much money tied up in investments restricts the flexibility that a trader needs in order to be efficient. When this situation arises I begin each trading day knowing which of my positions I am willing to sell, in order to facilitate a trade. I would rather put my money in a position where it can make a 10% gain in 2 weeks, than a 20% gain in 2 months.

Basically, the shorter the time that you hold a stock, the more you must rely upon technicals, the longer you hold it, the more you rely on fundamentals.

Answer 2

A chart of a stocks price over time gives an overall view of all stock purchasers confidence or lack thereof in a companies stock and how it changes. As such it is a useful tool in determining how other investors feel about the stock. Investors buying or selling stock is really the only thing that directly affects the price. Other things just increase or decrease the investors interest in a certain company or industry.

That being said I also look at some other things before buying a stock. Are insiders buying or accumulating stock? Or are they converting stock options and keeping the stock? Or are they selling it as soon as they can convert it into actual shares. Is the company making a profit, or is it losing money? Not all stocks that are losing money are bad investments, not all stocks making money are good investments. For example, Auto Industry. Right now they seem to be losing money. Does that mean the auto industry is going to go out of business? Probably not, maybe this is a good time to buy.

For myself I use technical analysis, but cross-referenced against several other nontechnical indicators. (Not all of which are indicated here)

Answer 3

You can make money with both methods, just as a matter chossing one that you expert in and comfortable with. but i do combine both methods for max profits. Read article about it here:

Fundamental Analysis Vs Technical Analysis
Which One to Choose That Will Make the Most Money for You
http://www.stock-investment-made-easy.com/fundamental-analysis-or-technical-analysis.html

Answer 4

Why don't you invest in mutual funds and let a money manager worry about it. Unless you are looking for a very expensive hobby. Please read my profile. I am your friend and am trying to help you.

Answer 5

Actully, combining both is the best way to go.