My recent research and public presentations led me to conclude that since the GFC, the best way forward is to use FundaTechnical Analysis - it is the analysis method of the future.
FundaTechnical Analysis states two key things about stock selection:
- Fundamental Analysis - Should be used to identify quality companies in which you would be happy to invest; and
- Technical Analysis (charting) - This is the tool to use to optimise the timing of both your purchase of the stock, and your eventual disposal.
This approach is based on the idea that quality companies should not go bust - like a few large companies did during the recent GFC.
And it is based on the idea that the buy-and-hold strategy is not useful for optimising your available capital. This is because bear markets and market corrections come around far too often, and can decimate your funds.
Now, what about the details? How should we use Fundamental and Technical Analysis to do all this? Well, that is not so straight forward.
The key idea here is to use a BLEND of the two analysis methods.
All of the old buy-and-hold investors need to bend a little and adopt some charting tools. And the chartists / technical analysts could benefit from using some fundamental analysis to choose only quality companies.
Stay tuned for more details soon.