Wednesday, October 5, 2011

Analysis of Financial Markets

Fundamental and Technical Methods
for Gauging Assets

The analysis of financial markets 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 gauge the outlook for its securities such as stocks and bonds. Meanwhile, the latter scheme examines the past and current behavior of a security in the financial arena as a way to divine the future.

To many folks, these two methods appear to be diametrical opposites. For this reason, along with personal tastes, investors tend to concentrate on one methodology or the other with scant regard for the competing scheme.

On the other hand, each approach has its strengths as well as limitations. For this reason, there is no need for anyone to rely solely on one or the other. In fact, a number of wily investors do take up both types of analysis to a greater or lesser degree. A case in point is the gamer who selects a stock based on the prospects for the underlying company, then draws on technical cues in order to pinpoint the best times to buy or sell the security.

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