Question: Do you value fundamental analysis over technical analysis, or vice versa? Also, could you explain your reason why?
Answer: My view is that both are important to know. I like to see that a stock is technically at a new low (within 20% of a 1 year low.) Afterwards, I verify that the company can continue to operate as a business using fundamental analysis.
Basically, the technicals provide the symptoms of the patient while the technicals determine of the subject is going to live through the underlying condition. If everything checks out then you determine how much of your capital you'd like to commit. Personally, I like to commit a minimum of 20% of investment capital...otherwise it just isn't worth it.
I practice many kinds of technical analysis but my specialization is in Dow Theory. Dow Theory happens to be the basis of all modern American technical analysis and therefore provides a greater level of insight.
Although I use fundamental analysis, I have to admit that I am a skeptic of fundamental analysis for many reasons. The main reason is the fact that all financial data can be manipulated. Therefore, I focus on the one thing that has never been manipulated and that is dividend payments. In all the history of manipulation of financial information, the dividend payment is the only thing that has never been revised or taken back after it has already been paid out. Either the dividend has been paid or it hasn't. This is not the same for other types of company data that is reported.
If a company claims to pay a dividend but somehow doesn't, then I ignore that company. This is the reason why I focus on companies that have a history of dividend increases. These companies have established their reputation as being trustworthy. In the world of finance, trust is everything.
Now, don't get me wrong I still run all the numbers for fundamental analysis. It's just that I don't get too excited about how good the results might be. Additionally, with fundamental data I always assume the worst case scenario just in case.
I hope my response is helpful and leads you to examine the aspects of both technical and fundamental analysis further.
Answer: My view is that both are important to know. I like to see that a stock is technically at a new low (within 20% of a 1 year low.) Afterwards, I verify that the company can continue to operate as a business using fundamental analysis.
Basically, the technicals provide the symptoms of the patient while the technicals determine of the subject is going to live through the underlying condition. If everything checks out then you determine how much of your capital you'd like to commit. Personally, I like to commit a minimum of 20% of investment capital...otherwise it just isn't worth it.
I practice many kinds of technical analysis but my specialization is in Dow Theory. Dow Theory happens to be the basis of all modern American technical analysis and therefore provides a greater level of insight.
Although I use fundamental analysis, I have to admit that I am a skeptic of fundamental analysis for many reasons. The main reason is the fact that all financial data can be manipulated. Therefore, I focus on the one thing that has never been manipulated and that is dividend payments. In all the history of manipulation of financial information, the dividend payment is the only thing that has never been revised or taken back after it has already been paid out. Either the dividend has been paid or it hasn't. This is not the same for other types of company data that is reported.
If a company claims to pay a dividend but somehow doesn't, then I ignore that company. This is the reason why I focus on companies that have a history of dividend increases. These companies have established their reputation as being trustworthy. In the world of finance, trust is everything.
Now, don't get me wrong I still run all the numbers for fundamental analysis. It's just that I don't get too excited about how good the results might be. Additionally, with fundamental data I always assume the worst case scenario just in case.
I hope my response is helpful and leads you to examine the aspects of both technical and fundamental analysis further.
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