Monday, August 11, 2008

Response to Rambhai's Comment

My dear Naveen

I would like to post a reply on what you side, well do you think an technical analysis of any company is possible without doing a fundamental analysis of what the company is all upto?

Moreover do not say that short term gains cannot be made by fundamental analysis. People even make short term gains with help of fundamental analysis..

My Opinion

Rambhai the basic assumption of technical analysis is "price discounts everything". That means you dont have to do fundamental analysis, since in price itself reflects fundamentals.

And about short term, most of the time technicals are used not fundamentals. You also know, if u want make a profit in short term(like intra day or a week) u will not calculate its PE ratio, EPS, dividend, arnitrage theory, efficient frontier curve and etc. Just u will see how the stock is moving. And thats the technical analysis.

And most of the time fundamental analysts are bothered whether the stock is overvalued or undervalued. But according to me market does not care much for this argument. For example see the graph below

I dont know how the fundamentals of the companies or share market suddenly changed so suddenly that market plunged from 16000 to 21000 in just a matter of 2 months. Most of the fundamentalists were worried about overvalued this time but technical analysts were made profit like anything in this 2 months. Why to go for others? Bacha like me (in technicals) made profit like anything. Its all about trend!!!!!!!!!!

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