Charles Dow of Dow-Jones fame was a technical investor. That
is why the Wall Street Journal, the paper he helped found, is primarily a paper written for technical investors, and not necessarily for fundamental investors.
The difference between the two investment styles is dramatic. The fundamental investor analyzes the company from its financial statements to assess the company’s strength and potential for
future success. In addition, the fundamental investor tracks the economy and the industry of the company. Warren Buffett has been acknowledged as one of the best fundamental investors.
A technical investor invests from charts that track the price and volume trends and patterns of the company’s stock. The technical investor may review the put/call ratio for the stock as well as the short positions taken in the stock. George Soros is often recognized as one of the best technical investors.
While both types of investors invest from the facts, they find their facts from different sources of data. Also, both types of investors require different skills and a different vocabulary. The frightening thing is that most of today’s investors are investing without either technical or fundamental investor skills.
In fact, I’ll bet most new investors today do not know the difference between a fundamental and technical investor.
Qualified investors need to be well versed in both fundamental analysis as well as technical analysis.
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Quoted from Robert Kiyosaki
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