Technical vs Fundamental

[i4value]

I found this trend when I was comparing technical analysis with fundamental analysis for my article A comprehensive guide on how to learn investing

I took this to mean that there are more technical investors than fundamental investors. So it is good for the fundamental investors as there are less competition.
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Do you have an alternative interpretation?
 

[ghchua]

Hi i4value,

Actually, I know many investors are using a combination of fundamental and technical analysis. It is not one or the other. Fundamental to analyze the company, and technical to determine enter and exit points.

[Wildreamz]

Need to be cautious when comparing Google Trends. Firstly, people interested in fundamental analysis, might not use "fundamental analysis" as their search term, they could be using terms like "PE ratio", "FCF", or "Value Investing" etc. Same goes for "technical analysis".

Assuming that the two terms can be used as a proxy for relative search interest, then it might be more informative to plot the ratio of 1 search term with respect to another:



Not conclusive. But this shows some pick up in interest in fundamental analysis over the decades.

I have uploaded this tool to extract and visualize Google Trends data, feel free to try it out yourself: https://github.com/Wildreamz/Google-Trends-Visualizer

[Wildreamz]

That said, here is perhaps a more interesting data: 



A major shift in recent years among retail investors, is towards Index (i.e., passive) Investing. This can be confirmed by fund flows: https://www.sciencedirect.com/science/ar...5X22001143

This might support the hypothesis, that stock-picking as a whole is going out of fashion, and there could be "less competition" today.

[i4value]

Hi i4value,

Actually, I know many investors are using a combination of fundamental and technical analysis. It is not one or the other. Fundamental to analyze the company, and technical to determine enter and exit points.

I have a different view. Fundamental analysis is about thinking about the business. Technical is about thinking about crowd behaviour. Both require different mindset. So while people may use both, I think that one style tends to dominate.

My analogy is driving. I use both hands to drive, but I know I am right handed for most things eg writing, playing badminton.

There may be some people who are equally good with both hands. But most people tend to be either right handed or left handed.

The same applies to investing. Technical and fundamental requires different skill sets that may have to do with your mindset.

[i4value]

Need to be cautious when comparing Google Trends. Firstly, people interested in fundamental analysis, might not use "fundamental analysis" as their search term, they could be using terms like "PE ratio", "FCF", or "Value Investing" etc. Same goes for "technical analysis".

Assuming that the two terms can be used as a proxy for relative search interest, then it might be more informative to plot the ratio of 1 search term with respect to another:



Not conclusive. But this shows some pick up in interest in fundamental analysis over the decades.

I have uploaded this tool to extract and visualize Google Trends data, feel free to try it out yourself: https://github.com/Wildreamz/Google-Trends-Visualizer

I was informed by people from Share Investor that there are more fundamental investors c/w technical investors in Singapore. But it is the opposite in Malaysia. Any thoughts. I think most newbie gravitate towards technical as it seems easier - look at charts, pictures, trends. But looking at business performance and valuing them?

[Wildreamz]

No idea. In general, individuals having the skill and temperament to be truly long-term and fundamental-focused are few and far between, regardless of the country. 

Anecdotally, I haven't encountered many fundamental investors myself. 99% of my friends have a short-term, get rich quick mindset, instead of trying to build a balanced portfolio that last a long time. The other 1% tried fundamental investing for a few years, and settled on investing in indexes, which isn't a bad move.

[smallcaps]

Almost zero interest in value nowadays, personally don't know anyone who is Gen Y and after and keen on learning about value. Most gravitate towards options, trading popular US stocks. The value approach for SGX seems same as before, not much competition, especially if able to avoid being bullied by management. Perhaps all the value investors in sg can be counted for through valuebuddies.

[i4value]

The only reason you want to be a stock-picking value investor is that you can do better than the index. If you cannot, there is no reason to spend the time and effort.

[weijian]

The only reason you want to be a stock-picking value investor is that you can do better than the index. If you cannot, there is no reason to spend the time and effort.

I seek to defer. Life will be too monotonous if we only have such simple rules (and so it isn't)

Learning to pick stocks may help a person to become a business owner, either directly or indirectly. One may directly leverage the skill set to become a trainer, book seller or content creator. Well, that business might be actual one making money and the stock picking is just the loss leader  Also the skillsets (capital allocation, accounting etc) and habits may aid one to become a better business owner, whether they start or inherit one.