THE 2 Main Branches of Investing
INVESTING is a skill that ought to be learnt if one really wants to see one’s wealth grow.
Some of us either buy into the stock market and hold it for the long term. Warren Buffett does that.
Some of us buy and sell shares very quickly in the stock market. Or for the advanced, we “do” forex or manage futures and options. George Soros did that.
The above 2 examples, though vague and does poorly to realy describe what investing is all about, are actually the 2 main branches of investment techniques.
Warren Buffett practices Fundamental Analysis for his investment strategy. Speculators, like George Soros who does short term trading, practices Technical Analysis. Basically in summary,
- is based on studying the cashflow, income and balance sheet of a company
- takes into account company management
- is characterized by a lot of ratios
- focuses on growth and profitability of the company in the long run
- Assumes all information is revealed by the price
- Focus on trend analysis
- is hugely based on behavioral finance and pattern reading
- is characterized by a lot of charts
- has many indicators for prediction
Many people take the middle way approach to investing these days by incorporating the two together.
For me, I do that too – by using fundamental analysis to pick out the good stocks or markets to invest in and using technical analysis to time my entry. I don’t say i am good at it but at least i am learning to get better at it.
Follow me on Twitter and be the 1st to know what I post here.
For regular updates, Subscribe to me here
Recommended Program for the Month
Other Posts
- Charting my Blogging Way Forward
- Besides Equities….
- Why Invest in Equities (and Why Not)
- Investment – Personal Risk Assessment
- Investing is Enjoyable and Funny
- Endowment Plans for U?
- How to Get Started in Investing- the Admin and what nots
