Why do we focus on TA

Our analists at the-wiseguy.com focus mainly on long term technical analysis. Meaning we look at the charts of, at least, the last 5 years to determine how the stockprice will behave in the near future. We do not care so much for the fundamentals. The market is always right and the truth is in the graph.

Let me explain: A lot of starting investors focus strongly on fundamental analysis. They spell out the balance sheet, look at the management and read all the company news. They will try to read a company as best as they can and hope to know how the stockprice will develop. But the value of a company is not mainly affected by their own doing. And let’s not forget the main source of information is send out by the company itself. There is a dutch saying: “Wij van wc-eend adviseren wc-eend” (“We from the WC-Duck company recommend WC-Duck” ). For that reason alone, it is biased and you have to be very careful with that information.

There are 3 primary things that influence a stock price:

  • The sector accounts for 50% of the move. 
  • The market, 30%. 
  • So company fundamentals is only responsible for 20%. 

Most beginners focus on company fundamentals. It is the least important. It is 80% of the battle to focus on the sector and the market. But it is a *** lot of work to research every market and compare every sector. Mistakes get easily made. The best way to view this is by looking at the graph of the company and checking out the sector that they are in. The graph speaks the truth. A company can have a great PR department but if the chart tells us the stockprice is going down for a certain period of time (at leats 5 years in our case) it is a sell.

We want to make money. We don’t do charity, we cann’t tell the future but we can look at a chart and (hope to) predict what the stockprice will be. Nobody knows what the future will bring but we can narrow our chances by looking at how they have been doing for (at least) the last 5 years.

Over the Wiseguy

Stock trader, Owner and Administrator of "the-wiseguy.com". . . "TA is like surfing. You don't have to know a lot about het physics of tides to catch a good wave. You just have to be able to sense when it's happening and have the drive to act at the right time"

Eén reactie

  1. Nice explanation. I totally agree. Thanks for that!

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