Australian (ASX) Stock Market Forum

Fundamental or Technical Analysis?...Which is the best predictor of Price?

6 January 2011
Hello All
First post, first Forum and first time beginner investor...Hope to learn from all your wisdom :)
Actually participated twice in the ASX Investors Sharetrading end of the last game I ranked 6000/11595 nationally...not really what i had hoped....although at one point (prob half way) I was roughly 1500/11000+)...then I went all emotional and changed my portfolio...oops :confused:
Anyway Im at Macquarie Uni (city campus) doing a Masters International Business (MIB) and one of my units is Business Analysis & Valuation.
A topic for an assignment is which of fundamental or technical analysis best predicts,explains,justifies etc Price of a given stock....
Of course its easy to say do both and hence should compliment each other...
My research so far has covered the random walk theory, Shapiro-Gordon Constant growth model (and many variations) and of course Fundamental experts Warren name a few
I realise also theres prob a myriad of Technical charting experts who prob know nothing about fundamentals (let alone care about management of the companies) and who makes millions!!
So, what do you think?
Tell me about your experience... Are you Charting experts who live in the world of elliot waves, ceilings and floors, resistance, candles or are you an Asset less Liabilities = Equity :):cool:
Interesting to note that when ASIC banned Short selling during the GFC little did we know it was influenced by Macquarie Bank powers that be...can you imagine had ASIC not banned it for that short period, hmm wonder where MAQ would be now? Point is, would Fundamental Analysis have helped, and do you think the Technical Analyst (ie Sharetraders) did not get a fair go what with ASICS intervention? :):banghead:

What do you think?
Thanks in advance:)
4 March 2007
topic with many themes

Start with very modest expectations about what a chart or fundamentals can do

read these short PDFs for such modest uses of chart

before worrying about Prediction

and this ones important !==>

Another interesting fact about
the JCG data is that 51% of the days
were up and 49% were down. That is
very close to flipping a coin. The trend
is revealed by the fact that the up days
gained 3.48% on average while the
down days lost considerably less at –
2.27% on average.

The average daily
gain turned out to be +0.683%. The
buyers were evidently more willing to
pay up to buy the stock and the sellers
did not have to forfeit as much when
they sold.

12 November 2007
Fundamental / Value Analysis makes no attempt to predict price.

Value Investings aim is simply to find the true intristic value of a business and buy at prices below that amount.

The theory goes that if you hold a range of good businesses that you have bought at sensible prices you will do well over time.

Value investors don't buy hoping a certain stock will be worth X amount by X date.
6 August 2010
Are you a long term investor who is interested in value? If so, then fundamental is your thing.

Are you a short term trader who is interested in timing the next market leg and believes that the necessary information needed for decisions is embedded in the market? If so, then technical is your thing.

There is, of course, a continuum. The longer the holding period the more important fundamentals are and the shorter the holding period the more important technicals become. Both approaches can be profitable and both approaches can lose, reflecting in part (in large part?) the skill of the individual.

So what is the individual? Investor? Trader? A mixture? Know yourself is the starting point.

To answer your specific question, I lean more toward the trader side using analyses simultaneously from different technical groups (e.g., momentum, volatility, price pattens, etc.) which look at the market from different perspectives and then look for confluence between them (a very democratic society :)).