Fundamental Investing vs Technical Analysis

There are two main strategies that are used to pick stocks on the market, fundamental investing and technical analysis.

Fundamental Investing aims to find the true intrinsic value of the business/stock and buy it at a discount to what is is trading now. It looks at underlying factors that influence the stock and the future prospects of the company. In theory, if you have bought a good company trading below its intrinsic value, you will do well over time.

This means that a fundamental investing is usually a long term strategy for trading stocks. They do not try to time the market or buy and sell on certain swings, but hold until the company intrinsic value of the company changes, by then, hopefully making a large capital gain.

To find out more about fundamental investing and for a more detailed look at the terms surrounding it, have a look at the investopedia entry on the strategy:   Fundamental Investing

I also like Rodger Montgomery's value investing strategy for picking well performing stocks, his blog and insights can be found here

Technical Analysis or "chartists" aim to find structural and technical patterns based on previous performance of the stock in an attempt to ascertain future price movements. T/A's try to time the market conditions when buying and selling a stock and use various technology and analysis such as candlestick charting and volume/price analysis to make their decisions.  Again for a more in depth study on technical analysis see the invesopedia entry on T/A

First Post - Beginning Fundamentals on Investing and Trading

Hello and welcome to my blog! I hope you enjoy my insights into the markets and my opinions on some the best investing and trading strategies I've encountered.

The first thing a novice should know about investing and trading, is that trading should be a part of your whole investment strategy. Depending on your individual circumstances, you could have all your capital in shares,  currencies, CFD's etc. or less than %20, it all depends on your individual outlook. 

This also means that when you start trading something like shares, you should know whether you classify yourself as a day trader (someone who trades frequently and tries to time market conditions for maximum profit) or an investor (someone who trades the market less frequently and holds more long term). An excellent resource that I used at the beginning of my investing journey was this book: "The Intelligent Investor by Benjamin Graham"

It's available free in audiobook form on YouTube:

I highly recommend listening to the entire reading and the more detailed book, touted by Warren Buffet himself as "The best book on investing ever written". Both give an invaluable insight into how one can potentially beat the market by simple investing techniques such as Dollar Cost Averaging, Margins of Safety and Portfolio Diversification.

Next post we'll look at two strategies one could use to trade worthwhile stocks: Fundamental/Value Investing and Technical Analysis.