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Why Fundamental Analysis & Technical Analysis Are the Same

By Master J, Founder - MastersoEquity.com, published Feb 28, 2008
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For years, I have been asked this same question over and over again, "Which is better, fundamental analysis or technical analysis?".

For decades, analysts of one camp argued about the ineffectiveness of the other and provided reasons and evidences how one method of analysis can be used at the exclusion of the other. For decades, fundamental analysts; people who dig deep into the business model and financial statements of companies, gave proof to the ineffectiveness of technical analysis. For decades too have technical analysts; people who read charts to find trends, patterns and investor behaviors, gave proof to the ineffectiveness of fundamental analysis.

Suddenly, it feels like there are 2 different worlds existing simultaneously, talking about the same stocks, same markets with views that are supposed to have nothing to do with one another. How is that possible?

If fundamental analysis is truly ineffective, why have fundamental analysis existed for so many centuries? If technical analysis is truly ineffective, why are technical analysis and chartists still paid so much money in Wall Street? If fundamental analysis is ineffective, why does earnings releases move stocks so much? If technical analysis is ineffective, why do resistance levels and support levels prove to be accurate time and time over again? What if both methods are truly one and the same thing?

Yes, fundamental analysis and technical analysis are really two sides of the same coin, two perspectives on the same issue and two components making up a full picture.

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