Ishfaaq PeerallyTechnical Analysis Doesn't Work
โ๐ ๐ง๐๐๐ก๐๐ฏ๐๐ ๐ฉ๐๐๐ฉ ๐ฉ๐๐๐๐ฃ๐๐๐๐ก ๐๐ฃ๐๐ก๐ฎ๐จ๐๐จ ๐๐๐๐ฃ'๐ฉ ๐ฌ๐ค๐ง๐ ๐ฌ๐๐๐ฃ ๐ ๐ฉ๐ช๐ง๐ฃ๐๐ ๐ฉ๐๐ ๐๐๐๐ง๐ฉ ๐ช๐ฅ๐จ๐๐๐ ๐๐ค๐ฌ๐ฃ ๐๐ฃ๐ ๐๐๐๐ฃ'๐ฉ ๐๐๐ฉ ๐ ๐๐๐๐๐๐ง๐๐ฃ๐ฉ ๐๐ฃ๐จ๐ฌ๐๐งโ
- ๐๐๐ง๐ง๐๐ฃ ๐ฝ๐ช๐๐๐๐ฉ๐ฉ
๐ There are two main approaches to investing, ๐๐ช๐ฃ๐๐๐ข๐๐ฃ๐ฉ๐๐ก ๐๐ฃ๐๐ก๐ฎ๐จ๐๐จ ๐๐ฃ๐ ๐ฉ๐๐๐๐ฃ๐๐๐๐ก ๐๐ฃ๐๐ก๐ฎ๐จ๐๐จ. A fundamental analyst will look at the income statement, cash flow statement, balance sheet and all other information about a certain business to make their analysis. A technical analyst will look at patterns on the price charts and try to predict future price movements.
๐ For example, for a fundamental analyst, investing in copper miner, FreePort-McMoran $FCX to know about the demand/supply of copper along with inventories and from these try to see how the business will do in different scenarios. The technical analyst will just look at some patterns on how the stock did in the past and try to predict the future.
"๐พ๐๐๐ง๐ฉ๐จ ๐๐ง๐ ๐๐ง๐๐๐ฉ ๐๐ค๐ง ๐ฅ๐ง๐๐๐๐๐ฉ๐๐ฃ๐ ๐ฉ๐๐ ๐ฅ๐๐จ๐ฉโ - ๐๐๐ฉ๐๐ง ๐๐ฎ๐ฃ๐๐
โ Most people, however, are technical analysts and there are some good reasons for that. People don't want to be bored and ๐๐ค๐ค๐ ๐๐ฃ๐ซ๐๐จ๐ฉ๐๐ฃ๐ ๐๐๐จ ๐ฉ๐ค ๐๐ ๐๐ค๐ง๐๐ฃ๐. So, they would rather look at charts everyday. If millions of people react to the same trend the same way, it works. Does it?
๐ According to the ๐๐๐๐๐๐๐๐ฃ๐ฉ ๐๐๐ง๐ ๐๐ฉ ๐๐ฎ๐ฅ๐ค๐ฉ๐๐๐จ๐๐จ (๐๐๐), stock investing should not work and everybody are better off investing in the S&P 500 $SPX500 . But we know that this is not true. I saw a market inefficiency in GameStop $GME and made over 3300% profits. Warren Buffett wrote an article, "The Superinvestors of Graham and Doddsville" explaining why EMH is not true. Then, those economists came up with three versions of the EMH and in the weak version, technical analysis only is not supposed to work while fundamental analysis works.
๐ค Fundamental analysis works because you can find market inefficiencies while reading financial reports. The inefficiencies with GameStop that I saw were that the losses were not real and were just because of impairment of goodwill and also over 200% of float was short. The ๐๐๐จ๐ฉ ๐ฉ๐๐๐๐ฃ๐๐๐๐ก ๐๐ฃ๐๐ก๐ฎ๐จ๐ฉ๐จ ๐ฉ๐ค๐๐๐ฎ ๐๐ง๐ ๐๐ค๐ข๐ฅ๐ช๐ฉ๐๐ง๐จ which will never find these market inefficiencies. And trying to beat these computers as a technical analyst is getting harder and harder and is not worth the time.
Maybe sometimes technical analysis works, but fundamental analysis is much more reliable, can make you much more and with less work.
Watch the full video on YouTube:
https://www.youtube.com/watch?v=vyPFNCdTAkI&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=2
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