Timeline

Fundamental and technical analysis are both good for different things. Technical analysis, while it may be useful for short term trading, is not good for long term investment. Fundamental analysis, while it excels in long term investment, is not good for short term trading. Technical analysis deals with charts, which deal with patterns. Patterns are impossible to predict over a long period of time, so technical analysis is useful only in the short term. However, fundamental analysis deals with the overall potential of a company, so it is more useful for the long term; with fundamental analysis, one can invest in very long term ventures, such as ten or twenty years. In fact, fundamental analysis works best this way.

Two Schools

There are two main schools of stock investment: technical and fundamental analysis. Technical and fundamental analysis differ from each other greatly in that they are completely different ways of analyzing stock. Technical analysis deals with charts and trends, while fundamental analysis deals with facts such as financial statements, management, and geographical location of the business. Technical analysis is generally better for short term, while fundamental analysis is more appropriate for the long term. It must be noted that the world's richest investor is a practitioner of fundamental analysis. He himself advocates fundamental analysis, and he thinks technical analysis is silly. We will go into more detail about fundamental and technical analysis throughout this blog.