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Fundamental vs. Technical Analysis

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This article addresses the following key points:

  • Technical analysis is based on the belief that the market is not efficient.
  • Technical analysts use indicators that are independent of the company's financial condition.
  • Fundamental analysts focus on the financial health of companies.
  • Fundamental analysis chooses stocks to buy; technical analysis chooses when to buy for analysts who use both.
  • Proponents of strong form efficient market theory and technical analysts are at opposite ends of the philosophical spectrum.

About the Author(s)

Cynthia Harrington CFA

Cynthia Harrington, CFA, is principal at Cynthia Harrington & Associates, a Los Angeles-based firm that provides executive coaching for investment professionals.