If you are currently in a position to begin investing in for your future, you may be interested in the stock market. I have written many articles regarding the topic of investing, but we have not yet touched on the techniques that many use to make their selection.
Many of us are Fundamental Investors at heart. Since we are searching for an investment that will have steady growth and have great longevity, we decide to own stocks in the ‘solid companies’. These are companies that have plenty of liquid assets (in the event of an emergency), they do not have much debt, and they have shown stable earnings in the past and are projected to do the same in the future.
A Technical Investor doesn’t need to look at any cash flow or income statements like the Fundamental Investor would. All they need are the historical stock prices and volume of stocks traded. With this information they begin to chart the data and discover patterns and trends that may repeat again in the future. Mostly, this technique is used for short-term trading and I would not recommend this method for most individuals.
Both methods carry a certain amount of risk; I mean, it’s the stock market. No one truly knows what will happen from day to day. Warren Buffet has done quite well with his fundamental approach, but there are many others that create algorithms as a technical investor and do quite well for themselves.
Please understand that these techniques are not 100% proven, that is why they are still called techniques and not guarantees. There are some companies out there that have incredibly numbers in regards to their company, but their stock price has not risen in 10 years, yet there are others that show the exact trend that made money thousands of times, and it turns out to be a flop.
Did this article interest you? If so, please make sure to leave a comment! I would love to dig deeper into this topic and show you what patterns the technical investors look for!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.