Fundamental vs. Technical Analysis

James Nguyen
A free video tutorial from James Nguyen
Professional Money and Lifestyle Manager
4.6 instructor rating • 2 courses • 3,683 students

Lecture description

A beginner's guide to the difference between fundamental and technical analysis of stocks, which is better, and the strengths and weaknesses.

Learn more from the full course

Technical Analysis Made Simple

The Step-by-Step System to Making Smart Buy and Sell Decisions in Stock Trading and Investing

02:59:32 of on-demand video • Updated July 2019

  • The essentials of technical analysis and stock trading taught by an experienced hedge fund manager.
  • The powerful 3 Cs Stacking System - a step by step process to analyze stock charts and confidently know when to buy and sell
  • Master the Single most important signal in technical analysis.
  • Into the wild: Live, hands-on video walkthroughs of actual trades and stock chart analysis.
  • Watch technical analysis applied to stocks, penny stocks, Bitcoin, cryptocurrency.
  • Why charts give you an edge in investing, day trading, swing trading and options trading.
  • How to use common, consistent technical indicators like MACD, RSI and DMI to your advantage.
  • What the most common stock chart patterns really tell you.
English [Auto] Let's talk about the difference between technical and fundamental analysis. Basically fundamental analysis is what most people think about when they talk about investing in and buying and selling stocks. And fundamental analysis I'll admit in my view is the key to most winning stock picks over the long term. Basically fundamental analysis is the analysis of a company's products management team its industry and you know basically the company how much sales it's making how much money they're making their growth prospects. Right. So when someone says oh I want to invest in Apple because I think the iPhone is great or I won't buy Disney stock because I love those Avengers movies and I think it's going to make a lot of money. That's fundamental analysis and that's what the average person does when they're when they're buying a stock. Professional investors a big hedge funds and mutual funds will kind of do the same thing though. I mean it'll be at a different level though right. So they'll say things like Well I met with apples V.P. of product development and he gave me this great roadmap or I have these contacts in Asia semiconductor foundries and it looks like their book to bill or some blah blah blah stat is better than most people think. So we'll have all these kind of in-depth analysis that they'll do. But it's still a fundamental analysis and it's basically still the same idea. Right you're analyzing and just kind of making a judgment on a company and fundamental analysis really is the core of long term investing. And so that part is most people have right. Right. So if you buy stocks in great companies generally the stock price over time will go up and that's what fundamental analysis is is fundamental analysis is the analysis of the company. Meanwhile technical analysis is the analysis of the stock price and there's sometimes a big difference technical analysis basically adds an extra layer to analyzing a stock you're not just looking at the company and the fundamentals you're actually looking at the stock and there's often a difference between what a stock price is doing and what the fundamentals of a company are stocks do often move for fundamental reasons but stock prices don't always reflect fundamentals especially in the short term. Prices are driven by short term events all the time and market movements and a lot of these have no relation to the fundamentals of a company. So I mean if you think about it does the main investment case for any stock you know the main reason you're investing the stock your long term fundamental thesis does it really change every single day and every single second. Probably not but obviously the stock price definitely does I mean stock prices move daily based on all sorts of things. Sometimes it's just the overall positioning of a stock. Is everyone log it is everyone you know crowded into it. It moves on just overall sentiment and these days it trades a lot of just robots trading. And by that I mean just black box programs and algorithms that these big hedge fund and these big investment firms just have automated to trade. That's my general view that fundamentals and technicals matter and in many ways Technicals Matter more so today than ever before. And obviously traders because of that both traders and long term investors need to pay attention to both.