Investors can tend to polarize into 2 groups – fundamental and technical analysis, but we have come to learn and to understand what benefits the 2 stock-analysis disciplines, both fundamental and technical, could bring to them with their ambitions for share-market investment success.
To analyse, is to measure, to count. But to analyse well, you must measure what matters, and count what counts.
For the most part, stock-market analysts lock themselves into one of two very different analytical camps – Fundamental Analysis is one, and the other is Technical Analysis. It’s quite rare for a Technical Analyst (“TA”) to delve into the “fundamentals” of stock-picking, as this is the territory of a Fundamental Analyst (“FA”). In practice, the technicals are chiefly the domain of the “TA”, just as fundamentals are in the realm of the “FA”.
So, what are fundamentals, and what are technicals? And how do they each help investors to make better share-savvy decisions?
The first thing to know is that fundamentals assess a stock’s underlying business operation and its profit-related activities/outcomes – its financial returns. A “FA” places the business under a “financial-ratio microscope” to measure all possible issues relating to its operational profit-growth momentum and, as a consequence, its potential share-price growth.
The second thing to know is that technicals chart a stock’s share price upward or downward momentum. A “TA” maps’ share prices in order to align investors with on-coming positive or negative price action – that is to ready investors to BUY when share-price patterns and volume data are indicating potential sustained rising, and to SELL when charting is indicating a potential meaningful fall in a stock’s (or the market’s) share price/s.
In a nutshell, fundamental analysis “spots” academic reasoning for business earnings growth (business profit), and technical analysis charts and “spots” buying and/or selling (investor profit) share-price trends.
Measuring what Matters and Counting what Counts
It is only “measuring what matters” that enables investors to “count what counts”.
An investor’s ultimate count is the net-profit outcomes resulting from the timely, technicals-triggered, “when-to-buy” and “when-to-sell” trades of fundamentals -measured & -identified investment-grade “what-to-buy” stocks.
SuperBenefit’s investing/trading mentoring involves combining regular stock-market philosophies of:
- Longer-term “buy & hold” investing (fundamentals)
- And, shorter-term “buy & sell” trading (technicals)
- That will help investors construct investment-grade “quality-stock” portfolios with bullish long-term run-with-the market growth objectives, and bearish short-term retreat-to-safety cash options as time-to-time situations would warrant.
The below schematic shows a typical range of fundamental analysis financial ratios that would be applied by a “FA” to measure and assess the operational strength and profit-growth momentum of a business. A positive fundamental analysis assessment relative to these below financial ratios would point up a:
- Financially Healthy,
- Rationally-Valued “Growth” Company
- With “Standout” Superior Management.
Next time we will look at the Profit-Capture and Stop-Loss “Companion Power” of Technical Analysis when Applied in Conjunction with Fundamental Analysis
Want to learn the core issues of share investing? Our workshop “Navigate to Successful Share Investing” gives a 2.5 hour practical session to learn to easily understand Company Financial Statements, how tofind healthy companies, what tools and ratios to use, work on examples, and also includes how to get better investment outcomes. Other Bonuses as well. Check the next one see 2 Investment WORKSHOPS or call 0407 361 596