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 Fundamental vs Technical Analysis, What do you prefer?

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TSckeenkheong85
post Jan 11 2007, 07:46 PM, updated 18y ago

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In stock market, there are 4 types of people:

First type using fundamental analysis to invest in stocks

Second type using technical analysis to invest in stocks

Third type using combination of TA and fundamental to invest in stocks

Fourth type using gamble style to invest in stocks (either by following tips, or following trends)


As for me, I am the third type, I use combination of technical charting and fundamental of the company stocks before making my decision.

As for the technical analysis, I'm using Metastock to analyze so that I have a clear idea where is the direction of the stocks moving and as a back-up to make sure my decision is correct, so guys, what you all using and what kind of investor you are? smile.gif

This post has been edited by ckeenkheong85: Jan 11 2007, 07:47 PM
INFeRNO
post Jan 12 2007, 12:28 AM

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I'm not an investor, but I'm more keen on fundamental analysis, simply because it seems like the safer bet to me. I like long term investments, day trading is just way too risky for my taste.
fyire
post Jan 12 2007, 12:57 AM

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Well, the 3rd type was was described r those in the position to gain the most out of the mistakes done by the day traders or short term investors tongue.gif
low yat 82
post Jan 12 2007, 08:55 AM

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if u r invest, i think better stick wit 1st one... if u r saying, trading, then 3rd type is bettter..
TSckeenkheong85
post Jan 12 2007, 04:20 PM

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QUOTE(INFeRNO @ Jan 12 2007, 01:28 AM)
I'm not an investor, but I'm more keen on fundamental analysis, simply because it seems like the safer bet to me. I like long term investments, day trading is just way too risky for my taste.
*
erm... not necessary using technical analyze is a short term analyze, is a form of art and it can assure us the right time to enter and exit if a big reversal is waiting for us smile.gif (fundamental just give us confident to back the technical charting we have done before making decision to enter)

QUOTE(fyire @ Jan 12 2007, 01:57 AM)
Well, the 3rd type was was described r those in the position to gain the most out of the mistakes done by the day traders or short term investors tongue.gif
*
erm... combination of technical analyze and fundamental study of stocks will give you an earlier entry and earlier exit before the stock going into reversal or holding it when the stock in retrenchment smile.gif
cherroy
post Jan 12 2007, 04:36 PM

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Actually both can complement each other, either way will do.

You can do fundamental first then find out the value of buy or sell, set a target buying price or selling price, then look for TA to look for bottom or top to maximise the return.

or

Doing TA first, get the better value of buying or selling, then justify will fundamental analysis whether it is worth to buy or sell.

For sure, for long term genuine investing (not speculating), fundamental part is essential.
chaoshero
post Jan 12 2007, 10:06 PM

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I would still think that fundamentalist prevail....otherwise if everyone claim that they can predict the price patter and forecast future prices I bet nobody is going to office and work....cos everybody will be instant millionare since they can tell the direction of "fortune"..........

This is also in-line with what Warren Buffet quotes....
scarline08
post Jan 12 2007, 10:54 PM

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Still a newbie in investing, just started buying stocks a few months ago (doing pretty good I guess). Still haven't decided on the best method on stock picking.

I don't see myself in the 1st or 4th group though.

ts1
post Jan 13 2007, 12:32 AM

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apply fundamental so calls top down approach n apply technical analysis

fundamental approach will let u select stk can invest while technical will be teach u on timing...
TSckeenkheong85
post Jan 13 2007, 09:43 AM

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QUOTE(cherroy @ Jan 12 2007, 05:36 PM)
Actually both can complement each other, either way will do.

You can do fundamental first then find out the value of buy or sell, set a target buying price or selling price, then look for TA to look for bottom or top to maximise the return.

or

Doing TA first, get the better value of buying or selling, then justify will fundamental analysis whether it is worth to buy or sell.

For sure, for long term genuine investing (not speculating), fundamental part is essential.
*
yes, we need both of them so that our investment will be a reliable decision, almost 80%-90% investor out there are not using any fundamental nor TA to do the judgment. Therefore in the end when the stock going all time high, there might be a reversal coming on, an early exit is required so that we won't make the mistake.


QUOTE(chaoshero @ Jan 12 2007, 11:06 PM)
I would still think that fundamentalist prevail....otherwise if everyone claim that they can predict the price patter and forecast future prices I bet nobody is going to office and work....cos everybody will be instant millionare since they can tell the direction of "fortune"..........

This is also in-line with what Warren Buffet quotes....
*
haha, there is no 100% by using TA can't make you rich, there are a lot of indicators which need to use to help us to have a better decision making and to assure us the timing to entry, example: Genting stock price is hitting RM30++, ask yourself, is it worth to put in? suddenly Genting drop until RM20++ level, what do you feel?


QUOTE(scarline08 @ Jan 12 2007, 11:54 PM)
Still a newbie in investing, just started buying stocks a few months ago (doing pretty good I guess). Still haven't decided on the best method on stock picking.

I don't see myself in the 1st or 4th group though.
*
As a newbie, try to learn a lot, either by picking some good books to read, or you go to investing forum to learn some new stuff, either you using fundamental or TA, or combination will be better, for my advice, try to learn TA so that u will have a good idea like reversal, retrenchment, resistant, and support. Another tips, never never listen to people tips, do your homework, be extra caution when investing cause is your money.

QUOTE(ts1 @ Jan 13 2007, 01:32 AM)
apply fundamental so calls top down approach n apply technical analysis

fundamental approach will let u select stk can invest while technical will be teach u on timing...
*
yes, truth, TA just help u plan a better point of entry and exit, so that you won't be trap inside the stock when reversal is happening. Added with fundamental will give you confident for a long term investing for the particular stocks.

This post has been edited by ckeenkheong85: Jan 13 2007, 09:44 AM
cherroy
post Jan 13 2007, 10:55 AM

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It can be sum up like that

1. Correct fundamental & correct TA
- Gain through the particular stock & maximise the return rate by better timing of entry or exit.

2. Correct fundamental & poor TA
- still can gain through the stock since investing a well-managed and good prospect company but return rate is down a bit compared to (1) due to wrong timing of entry & exit.

3. Wrong fundamental & correct TA.
- might as well gain since get the timing right but invested in wrong company so risk is a bit high compared to above (1) & (2)

4. Wrong fundamental & wrong Ta
- disastrous

For speculating or speculate in futures, you can totally ignore the fundamental since you are speculating only for short term, TA can do it alone since you just look for price differential to gain, Genting or Iris, don't actually bother as long as there is price differential. (not to promote speculate since history tell us speculators always lose out due to human nature of 'greed')

But for long term investing, totally different case, fundamental part is essential since you don't want to invest in a no prospect and poor managed company, isn't it. For long term investing, fundamental is essential while TA as a supplement will be the better strategy

But sadly, people always mix up between speculating the investing which led to poor decision making. Eg. people rush to buy stock when market is hot to try their luck but if market turn against then they keep it for years become investing.

You must set whether you are investing or speculating.
If speculating then it market turn against, you need to cut lose, no matter what.
If for investing, don't actually care the short term movement since if company is good then surely the stock price will be on the upward trend for long term as well as getting handsome dividen rate.



vincentlws
post Jan 13 2007, 04:55 PM

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i prefer fundamental to evaluate my stock and technical to time my entry and exit...
mucklampir
post Jan 13 2007, 05:01 PM

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for those who use fundamental analysis, how far u use dis method? just look at the PE, DY, ROE onli or thoroughly study their 5 years financial reports?


cherroy
post Jan 13 2007, 05:48 PM

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QUOTE(mucklampir @ Jan 13 2007, 05:01 PM)
for those who use fundamental analysis, how far u use dis method? just look at the PE, DY, ROE onli or thoroughly study their 5 years financial reports?
*
All are needed

PE, DY, ROE, NTA, 5 years past performance, industry comparison, gearing, cashflow (also very important), industry prospect etc.

A single or two factor will lead to mis-evaluate the company. If you look at PE and NTA alone, several company has low PE as low as 5-7 but the particular industry porspect is on the way down so the low PE has its reason. Eg. some oil stock has low PE now below 10 but oil price is dipping so PE of 10 seems not cheap anymore due to bearish of oil price. So several factors need to be considered before making a judgement.
ts1
post Jan 13 2007, 06:27 PM

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depend on ur appetite lo....u might wan select some neutral or positive or negative beta company
investmentlink
post Jan 13 2007, 06:34 PM

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I follow the trend...don't care it is white cat (good stock) or black cat (bad stock), the one know how to catch the rat (will go up & down/swing) is the good cat!
biggrin.gif

This post has been edited by investmentlink: Jan 13 2007, 06:35 PM
mucklampir
post Jan 13 2007, 07:06 PM

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QUOTE(cherroy @ Jan 13 2007, 05:48 PM)
All are needed

PE, DY, ROE, NTA, 5 years past performance, industry comparison, gearing, cashflow (also very important), industry prospect etc.

A single or two factor will lead to mis-evaluate the company. If you look at PE and NTA alone, several company has low PE as low as 5-7 but the particular industry porspect is on the way down so the low PE has its reason. Eg. some oil stock has low PE now below 10 but oil price is dipping so PE of 10 seems not cheap anymore due to bearish of oil price. So several factors need to be considered before making a judgement.
*
i'm just wonderring if small retail investor in our country seriously considered all those things

QUOTE(investmentlink @ Jan 13 2007, 06:34 PM)
I follow the trend...don't care it is white cat (good stock) or black cat (bad stock), the one know how to catch the rat (will go up & down/swing) is the good cat!
biggrin.gif
*
y not change ur nick to tradelink instead tongue.gif

TSckeenkheong85
post Jan 13 2007, 11:23 PM

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QUOTE(cherroy @ Jan 13 2007, 11:55 AM)
It can be sum up like that

1. Correct fundamental & correct TA
- Gain through the particular stock & maximise the return rate by better timing of entry or exit.

2. Correct  fundamental & poor TA
- still can gain through the stock since investing a well-managed and good prospect company but return rate is down a bit compared to (1) due to wrong timing of entry & exit.

3. Wrong fundamental & correct TA.
- might as well gain since get the timing right but invested in wrong company so risk is a bit high compared to above (1) & (2)

4. Wrong fundamental & wrong Ta
- disastrous

For speculating or speculate in futures, you can totally ignore the fundamental since you are speculating only for short term, TA can do it alone since you just look for price differential to gain, Genting or Iris, don't actually bother as long as there is price differential. (not to promote speculate since history tell us speculators always lose out due to human nature of 'greed')

But for long term investing, totally different case, fundamental part is essential since you don't want to invest in a no prospect and poor managed company, isn't it. For long term investing, fundamental is essential while TA as a supplement will be the better strategy

But sadly, people always mix up between speculating the investing which led to poor decision making. Eg. people rush to buy stock when market is hot to try their luck but if market turn against then they keep it for years become investing.

You must set whether you are investing or speculating.
If speculating then it market turn against, you need to cut lose, no matter what.
If for investing, don't actually care the short term movement since if company is good then surely the stock price will be on the upward trend for long term as well as getting handsome dividen rate.
*
yes using TA and fundamental is the essentials to make sure everything u do is right, without a good management, the company will collapse in no time, some of the stocks until now doesn't move at all, there r many reason. smile.gif most of retail traders, estimate 80%-90% r following the trend, tips to jump into the market, when loss, will scold stock broker, this and that. I agree with you as a long term investor, stock with a good fundamental and good management team, the stocks will perform better.

QUOTE(mucklampir @ Jan 13 2007, 06:01 PM)
for those who use fundamental analysis, how far u use dis method? just look at the PE, DY, ROE onli or thoroughly study their 5 years financial reports?
*
For using fundamental, do some homework, don't hope people will spoon feed you in investment. Using PE is useless, cause the PE doesn't reflect the truth projected growth of the company, better use PEG, ROE etc. Try to google, nowadays is very easy to learn this stuff compare to last time. haha



QUOTE(investmentlink @ Jan 13 2007, 07:34 PM)
I follow the trend...don't care it is white cat (good stock) or black cat (bad stock), the one know how to catch the rat (will go up & down/swing) is the good cat!
biggrin.gif
*
haha, u kinda risky fellow, erm... as for me, better study back and have a strong understand before i putting my money in.



Does anyone here believe in CANSLIM model in investing?
luqmanz
post Jan 14 2007, 12:43 PM

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QUOTE(chaoshero @ Jan 12 2007, 10:06 PM)
I would still think that fundamentalist prevail....otherwise if everyone claim that they can predict the price patter and forecast future prices I bet nobody is going to office and work....cos everybody will be instant millionare since they can tell the direction of "fortune"..........

This is also in-line with what Warren Buffet quotes....
*
Fundamental and technical both works as long as they are being applied at the right time.

Market is driven by people and people can be
- rational - they follow the fundamentals (fundamental works best at this time)
- emotional - they follow their fear and greed (technicals works best at this time)

For stocks .. fundamentals is very important because there are methods to somewhat estimate the value of the stocks so market is rational most of the time. But market still becomes emotional sometimes.

To use technicals in stocks, one must identify the time when the market become emotional. During this time, technical analysis is uncannily good.

Wrong timing of each technique may produce bad results.

For stocks, fundamentals is probably easier but slow and technicals is much harder but fast profit.

No free lunch in any case.

This post has been edited by luqmanz: Jan 14 2007, 12:45 PM
ts1
post Jan 14 2007, 12:45 PM

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in msia, we use 6th sense analysis...

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