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Re: Technical Analysis vs Fundamental Analysis

Hi rafa

Accounting has changed at it has now gone off into specialised areas...it aint just BODMAS anymore...what i am saying with tech analysis you usually find the formulas given in the books where as real business degrees you go to uni and if you like finance you go heavy on economics and stuff and do finace maths and statistics actually you have to do a specialised subject on it now.

I started off doing tech analysis and then realised i wanted to know business fundamentals and that has helped me heaps...i combine both...i have always seen sound business fundamentals is what the share market is based on and these set the trends and different times for different stocks and find when stocks begin to move from them it gets riskier and costly some time there after.

When i traded dot coms i relied totally on tech analysis i would actually sit with tech analysis books ready to reference patterns and trends as soon as they apeared and hey it worked even on the way down....the mining sector is now behaving like this as well patterns forming fast right before your eyes actually so many you just cant work out which ones to jump on or which one will go off with a bang next.

I noticed something else the other day in a business paper the analyst section of a broking house sent a junior worker out to give views on the best mining picks to the business paper and i reckon they were laughing at him and so am i because mining stocks are valued on NPV in other words they use the life of the mine until its resources are full consumed and shareholders should get their money back over time or if you have been there from the beginning a lot better...but this guy from the analyst section qoted picks based on p/e of them...now this is incorrect because the p/e's actually were just an occurence from the NPV's that naturally occurred from this calculation. Now there are a lot of people out there who have been reading all about p/e's which are deprived thru fundamental analysis now these stocks had low p/e's real low and they were not valued on p/e but on the life of there resource and they would have gomne out and bought and this would have given signals on the charts.

The brokers didnt care they didnt say it but they have profited from it, This same behaviour occurred during dot com.

The mining sector is now shooting off and it is now starting to  defy business fundamentals and valuations and you should know what that will mean in the end?? dot coms did the same they moved from sound business fundamentals and anticipation on future earnings so future earnings became became the price models for a while and then bang it happpened so fast.