I know there are two application used one being fundamental analysis and the other being Technical analysis. I want to know which is better.
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I know there are two application used one being fundamental analysis and the other being Technical analysis. I want to know which is better.
Related posts:
Best is to combine the two. TA is much more subtle than you may think, which is why so many people say it does not work. What they mean when they say that is that they do not understand it. You can just as easily say that Russian does not work. But it works for Russians.
They both have their strengths, depending on who you ask. Fundamental is easier to understand, so many people think Technical is better because there are fewer people using it and therefore more opportunities, but I doubt it. I’d look at results from both before making any decisions.
Neither one is very good. Fundamental analysis takes a lot of work – several days or a week at least for each company, plus twice as much for the general industry the company is in, plus twice again for the whole economy. And you have to re-look at the industry and economy every 3 months or so. But first, you need a couple of years of hard study to know how to do it properly. And even then, it gives you only a 1% edge. That might be worth-while if you are investing 10 or 20 million dollars.
Technical analysis works about as well as reading tea leaves or astrology. In other words, not at all. Most people who say they made money with T.A. are really using T.A. + intuition. The rest are just lucky. You hardly ever heard about the 80% who lose money with T.A., because they don’t talk about it.
If you can’t do graduate-level business / economics study for two years, the best way to make money in the stock market is to first spend a few months studying Modern Portfolio Theory. Then buy a money market, a good bond fund and some mutual funds.
I find a happy medium between both. However fundamentals tend to carry more weight with me. Tech Analysis favors shorter term holding periods for me. Lately though I’ve thrown both out.