| Investors often fall into one of two categories: fundamentalists or technical analysts. Fundamentalists rely on company fundamentals, like earnings, debt, price-to-earnings ratio, etc. This information is typically released in a company's quarterly or annual statements. This helps an investor determine whether they should invest in a company. Technical analysts rely on chart patterns to determine the proper time to enter and exit a trade. This helps answer two of the biggest questions investors have: - When should I enter a position?
- When should I exit a position?
After more than two decades in the market, I've come to learn a secret: Fundamentals and technicals shouldn't be so polarizing. Both have a place in successful investing. After all, it's not enough to know just whether you should buy a company... You also need to know when to buy and when to sell. And depending on your time horizon and investing goals, you may want to lean more heavily on fundamentals than technicals or vice versa. You see, in my Safety Net column and in The Oxford Income Letter, I lean heavily on fundamental analysis. I look at metrics like income and cash flow to determine a company's ability to maintain its dividend, and I also study the competitive environment to gauge stocks' likelihood of rising. This is often the best way to look at a stock's viability for the medium to long term - and it's a skill I honed while working at the contrarian firm Avalon Research Group. But when I started my career as an assistant on a trading desk, executing trades and watching the "tape" for trends, I needed to find a way to help make sense of all the data flying across my screen. Thus, I began to rely on technical analysis and chart patterns. | 
No comments:
Post a Comment