Fundamentals And Technicals: Two Sides Of The Same Coin

By Author: Niveza Investor
Total Articles: 14
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A statement is never a fact unless you analyze it for yourself or get relevant justification from the person who has made it, spare the exceptions. This strategy works the best in stock markets, where there is nothing you can call a thumb rule. So to make things easier, experts have come up with two very basic ways to try to anticipate the stock markets.

To start with:

Fundamental analysis is the study of company’s financial statements, management, and its performance as compared to its competitors and the overall stock market. It includes looking into the expenses, incomes, assets, liabilities by way of Balance sheet, Profit & Loss A/C, Cash Flows, Capital Structure.

Technical analysis is the study of historical stock price movements to predict the future price trends. It involves the study of Price actions and price patterns with the help of different parameters, indicators and Oscillators and most importantly the Volumes of trade.

Thus, fundamentals usually suggest what to buy/sell and technicals suggest when to buy/sell.

In fundamental analysis one evaluates the stock to measure the ...
... intrinsic value. It includes the study of overall economy and industry conditions.

Technical analysis is the means of studying statistics generated by market activity such as past prices and volumes to identify the trends.

Fundamentals is based on quarterly and yearly analysis i.e according to the changes that take place in the company’s financials. The short-term fundamentals is news based. Technicals provide you with different time frame charts (1 Minute to 1 year), with different combination of indicators.

To sum it up Fundamentals brings us very close to Value investing because value comes from fundamentals and value investor seeks fundamentally strong companies accompanied by its earnings, dividend, book value, cash-flow that are selling at a bargain price and Technicals believes that price discounts everything and depicts the mass human psychology on the charts by way of Law of demand & Supply.

These two terms are seen by many as polar opposites- the oil and water of investing. Technicals tell you the best time to enter into an undervalued stock, mostly in oversold situations and fundamentals plays a major role in reaffirming the decision by studying the key fundamental data.

So why stick to one. How about trying a Techno-Funda Analysis?????

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