Analysis of Financial Markets

Fundamental and Technical Methods 
for Gauging Assets

The analysis of a financial market can be divided into two broad types: fundamental and technical. The former approach explores the prospects for an enterprise in the real economy in order to fathom its securities in the financial arena. In this light, prime examples of corporate assets are found in stocks and bonds.

By contrast, the technical mode examines the past and current behavior of a security in the financial forum. The object is to scrutinize the patterns in the market as a way to divine the future.

Myriads of investors swear by one form of analysis or the other. Depending on the choice, a player in the field may be pegged as a fundamentalist or a technician.

Each school of thought boasts a host of followers in the financial community. Given the difference in focus, though, the two camps are often viewed by the members themselves as well as outside observers to be distinct and opposing sects.

Upon closer inspection, though, the divergent methods are largely complementary rather than conflicting. As a rule, the fundamental mode is most useful in sizing up the direction of the market over the long haul. Meanwhile, the technical scheme shows its mettle in picking out the turning points in the market over the shorter range.

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