30.06.2019
AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 14
Fundamental
v/s technical analysis
Fundamental v/s technical
analysis are the two different basic ways to analyze a stock.
ü Fundamental
analysis believe that market price of the stock doesn’t always match with its true value of that represent. It
may be overvalued or undervalued by
studding fundamentals we can come to conclusion that we will bye it or to avoid it.if it is
undervalue then we will buy (after discountling
time value and inflection) and if overvalue in market then avoid it.
here we are in a right track on
investment decision.
ü Technical
analysis believe that the fundamental elements of the stock value the (true value) of that stock are already
reflected or accounted for in stock market
trading price that prices are move in trends and their historical patterns in the market and it’s stock prices tends to
repeat. here we will get more clear idea
about at what market price this stock should by at any period of time (after premiering time value and inflection
from issue date and price)
ü So mixture of
this two valuation and if u find such stock which will give give u in both a positive outflow u are in a win win
point.
To Conclude I will tell u a brief
story of TOM and JOE which will be
easily understandable for all group of community with a sensible meaning
and picture in there mind. To understand
the difference, imagine fundamental analyst TOM ,and the technical analyst JOE they goes in the shopping mall to
buy one companies shares. they use their
analysis to which company they buy from the bundle of companies listed in
the mall(stock market) TOM, goes in to each
selected stock studies the product being sold, layout, companies financial statements overall
economic condition, industry growth and
decide weather to buy that companies stock. Tom looking for a stock with
best fundamentals. He looks in to good product,
responsible management & so on. JOE sits on the bench of the mall opens his
laptop & check out the selected stocks
charts of various companies. He looks to see which company is performing
in the past base on the price of the
stock & see the historical patterns which stock is reflected of strong upward trends years on
year. In this case JOE does not consider
the stock product or it’s financial situation but believed that
fundamental factor are already factor in
current market price. In fact JOE doesn’t need to be mall to make his choice.
Tom basic his decision on the company
itself & his believe that it is true price will be more that it stock
price suggest.JOE will buy a stock because
of its historical trends suggest the price likely to up not because of anything he sees in the
company itself. At the end TOM & JOE may closely choose the same company stock
but their reasons for investing in the
stock are different. TOM reasons are store layout, financial statements, products.JOE reasons are
historical trends, stock prices.
To Conclude Fundamental & Technical
analysis are two different wing’s for
investments in shares and both are useful to different different type of
investors.from this studies I will give you
my points of view recommendation to different type of investors.
RECOMMANDATION:
|
INVESTOR TYPE
|
FUNDAMENTAL
|
TECHINICAL
|
|
Retail
|
||
|
Short term
|
ü
|
|
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Long term
|
ü
|
|
|
Mid term
|
ü
|
ü
|
|
Iintra day trader
|
N.A
|
ü
|
|
Mutual funds
|
ü
|
|
|
FII
|
ü
|
ü
|
|
Hedge funds
|
N.A.
|
N.A*
|
|
Corporate companies
|
ü
|
|
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NBFCS
|
ü
|
ü
|
|
Banks
and financial intuitions’
|
ü
|
*partial hedge required technical
support
for
more such type of education joint our online series and batches and be a pro
trader contact on 7028 421 786.
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