History[ edit ] The principles of technical analysis are derived from hundreds of years of financial market data. In Asia, technical analysis is said to be a method developed by Homma Munehisa during the early 18th century which evolved into the use of candlestick techniquesand is today a technical analysis charting tool. In Robert D. Edwards and John Magee published Technical Analysis of Stock Trends which is widely considered to be one of the seminal works of the discipline.
When an investor wishes to invest in a business for the long term say 3 — 5 years it becomes extremely essential to understand the business from various perspectives. It is critical for an investor to separate the daily short term noise in the stock prices and concentrate on the underlying business performance.
Over the long term, the stock prices of a fundamentally strong company tend to appreciate, thereby creating wealth for its investors.
We have many such examples in the Indian market. Higher the CAGR faster is the wealth creation process. Therefore, you can imagine the magnitude, and the speed at which wealth is created if one would invest in fundamentally strong companies.
Do remember these are just 3 examples amongst the many that you may find in Indian markets. At this point you may be of the opinion that I am biased as I am selectively posting charts that look impressive.
You may wonder how the long term charts of companies such as Suzlon Energy, Reliance Power, and Sterling Biotech may look? Well here are the long term charts of these companies: These are just 3 examples of the wealth destructors amongst the many you may find in the Indian Markets.
The trick has always been to separate the investment grade companies which create wealth from the companies that destroy wealth. All investment grade companies have a few common attributes that sets them apart.
Likewise all wealth destructors have a few common traits which is clearly visible to an astute investor. Fundamental Analysis is the Fundamental analysis of banking stocks that gives you the conviction to invest for a long term by helping you identify these attributes of wealth creating companies.
Of course you can be. It is a common misconception that only chartered accountants and professionals from a commerce background can be good fundamental analysts.
This is not true at all.
A fundamental analyst just adds 2 and 2 to ensure it sums up to 4. To become a fundamental analyst you will need few basic skills: Understanding the basic financial statements Understand businesses with respect to the industry in which it operates Basic arithmetic operations such as addition, subtraction, division, and multiplication The objective of this module on Fundamental Analysis is to ensure that you gain the first two skill sets.
Technical Analysis TA helps you garner quick short term returns. It helps you time the market for a better entry and exit. However TA is not an effective approach to create wealth.
Wealth is created only by making intelligent long term investments. To give you a perspective, let me reproduce the chart of Eicher Motors: Let us say a market participant identifies Eicher motors as a fundamentally strong stock to invest, and therefore invests his money in the stock in the year As you can see the stock made a relatively negligible move between and The real move in Eicher Motors started only from This also means FA based investment in Eicher Motors did not give the investor any meaningful return between and The market participant would have been better off taking short term trades during this time.
Technical Analysis helps the investor in taking short term trading bets.
Let us say, a market participant has a corpus of Rs. This corpus can be split into two unequal portions, for example the split can be 60 — Specifically you would need the following: Annual report of the company — All the information that you need for FA is available in the annual report.
A good business news paper or services such as Google Alert can help you stay abreast of the latest news MS Excel — Although not free, MS Excel can be extremely helpful in fundamental calculations With just these four tools, one can develop fundamental analysis that can rival institutional research.
In fact even at the institutional level the objective is to keep the research simple and logical. Key takeaways from this chapter Fundamental Analysis is used to make long term investments Investment in a company with good fundamentals creates wealth Using Fundamental Analysis one can separate out an investment grade company from a junk company All investment grade companies exhibit few common traits.
Likewise all junk companies exhibit common traits Fundamental analysis helps the analysts identify these traits Both Technical analysis and fundamental analysis should coexist as a part of your market strategy To become a fundamental analyst, one does not require any special skill.
Common sense, basic mathematics, and a bit of business sense is all that is required A core satellite approach to the capital allocation is a prudent market strategy The tools required for FA are generally very basic, most of these tools are available for free.A Peek Under the Blue Coat.
Blue Coat ProxySG systems are widely deployed in big corporations to handle web traffic proxying and filtering. While they are very common, no work has ever been published regarding the internals of the system.
Indian Pharma - Live Stock Quotes and Analysis, Share price Updates from timberdesignmag.com Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide.
Technical analysis - when buy and sell stocks the traders, no investors Fundamental Analysis - how expensive the stock and how strong the enterprise must be. Not all the tools of fundamental analysis work for every investor on every stock. If you're looking for high-growth technology stocks, they're not likely to turn up in any stock screens you might run looking for dividend-paying characteristics.
If you're a value investor, however, or if you're. ABOUT EQUITYMASTER. Since , Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day.