Problems with FA

[Titan]

I am a pure TA, hardly looking at the fundamentals. Here is where you fundamentalists go wrong.

If share prices fall people look to the fundamentals and try to figure out why the share price is falling, some of you may average down telling your self that the stock is brilliant and buying here at this lower price is a great buy. But if its a great buy why is the share price falling?

Because there are more people wanting to sell than buy. What you need to do is try and understand whats driving buyers and sellars. You can focus on intrinsic value but it doesn't matter much if the shareprice is falling.

You need to be subjective and look at both sides - the bull and the bear.

[thereslifeafter87]

Titan,
You are right and wrong.
If the share price is falling, there is generally good reason.
However, a lot of the time a fall will be overdone, or simply a case of profit taking/market weakness/change in sentiment.

This is where you TA's get it wrong. TA's cannot pick the bottom anymore than FA's can, so TA's wait for it to bottom out, and start a new uptrend before buying in. This can cost a lot in % gains. Whereas an FA will keep buying so long as the fundamentals are strong.

I think to some extent it takes more expertise to be a successfull (emphasis on the successfull) FA than a TA. This is because putting your money on the line with no stop loss is inherently more risky if you don't know as much about what you are doing.

However, if you know what you are doing, you can make a helluva lot of money by exploiting situations others avoid - like illiquid stocks (ATR), and stocks temporarily out of favour (ION).

[Halebop]

I use both to varying degrees of success and I can be right or wrong with either. Preferring qualitative thinking I gravitate more naturaly to FA and can say this has earned me bigger profits - but this is only because I use it more.

Ultimately the act and "whys" of doing is more important than the "hows". All kudos to those who take on the sacrifices, risks and worries of providing for themselves and thinking about the future.

[MeNoBatty]

Pretty generalised statement, Titan. Depends on your time horizon, how often you trade and how much spare time you have, amongst other things, as to which is the better strategy.