The controversy between those who follow technical analysis (charting) versus those who believe the fundamentalist (financial) theories
has raged for many years. What both sides desire is a Holy Grail of investment advice, an infallible barometer of a stock's
price if you will.
A fundamental analyst, for example, studies the income statement and other financial documentation of one
company and compares the critical ratios against other companies and industry standards to formulate investment decisions. From
these comparisons an investor can tell if a given company is better or worse than another.
A chartist on the other hand will
ignore a company's financials and focus on the past price performance. Her rationale is that while a fundamentalist approach
indicates what a company's market price might do, a technical approach shows what investors are doing with their money and so what
they probably will continue to do.
The solution to this dilema is obvious. Use both methods to make a decision. The
Prophet always says, "Get as much information on a company before making an investment decision."
