CFA Institute Magazine Jan-Feb 2003 Volume 14 Issue 1
Fundamental vs. Technical Analysis
Controversy between the two schools is still alive and well
Fundamental vs. Technical AnalysisView the full article (PDF)
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, is principal at Cynthia Harrington & Associates, a Los Angeles-based firm that provides executive coaching for investment professionals.