Question

Investors are often grouped into two categories, those investors who invest based on specific company information, known as “fundamental investors,” and those who pay more attention to market movements and factors based on general market psychology, known as “technical investors.” Which method do you feel is more likely to serve your needs best? Why? (Substantive paragraph response)

Answer 1

The method you choose for selection of investment depends on the investment objective and investment horizon. If your investment time horizon is long and investment objective is to earn capital appreciation, in this situation it would be better to study the fundamentals of the company and then go for investment decision because a fundamental strong company will provide you good return over the period of time and investment would be much safer in comparison to low fundamentally strong company.

On the other hand if investment horizon is short term and investment objective is to earn profit in short run, it would be better to go for technical analysis. Technical analysis study the price movement and pattern of stock price and do prediction on the basis of past price, volume data. it works on market rumors and investors sentiments.

In my opinion it would be better to go with fundamental analysis as it results in safe investment and based on facts or fundamentals of company