All about investment

by: Shaun Rosenberg

Technical Analysis VS Fundamental Analysis, which one is better. These are two different theories about how the market works and how to make money in them. Hard core Fundamentalist will tell you Technical Traders can not possible make money in the market. Hard core Technical traders will tell you Fundamental Analysis isn't worth the effort.

So, who is right? Let us take a look at both of these theories.

We will start with fundamental analysis. This involves looking at individual companies. You must look at a company's financial statement. You must also be aware of any news that comes from the company.

The whole theory behind this is if you find high quality companies and buy their stock it will eventually go up. After all if a company is a great company its stock should go up.

The problem with Fundamental Analysis is that it favors the large investors. Think about it, if you are investing billions of dollars in a company you can afford to spend millions to find information about that company. You can also talk directly to the CEO's of the companies that they are thinking about investing in. This gives large investors an unfair advantage.

Technical analysis however does not give anyone an advantage. It is all about chart patterns. The more you learn about chart patterns the better an investor you will become. And because it deals with chart patterns everyone who has a computer is on an equal playing field.

Now you may think chart patterns might not be able to help you, but you would be wrong. They have helped millions make money in the market. They also make sense.

If you see a stock bounce between $45 and $60 continuously and it is at $45 you would assume that it is going to go up. Why? Because it has always bounced off of $45 in the recent past. In fact every time it gets to $45 most people consider the stock undervalued and buy it. Also where do you think the stock will most likely go? $60,right?Why? Because it always has in its recent past.

There are hundreds of chart patterns out there that have been tested numerous times by numerous people to be true.

Most technical traders do not concern themselves with a company's fundamentals. This is because they don't really need to. Most of their trades could only last 1 or 2 months. Remember Fundamental Analysis can find strong stocks that may eventually go up in the long term. If you are only in a trade for 1 month it may not be worth looking into.

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