ACC201 Week 5 Discussion 1 Fundamental Versus Technical Analysis

The stock that I have chosen to investigate is Apple NASDAQ: AAPL. I will be reviewing their financial statements by using the fundamental analysis and technical analysis to determine the value of the stock.

Discuss the differences between fundamental analysis and technical analysis techniques you will employ to select the stock of your preferred publicly traded company.

 Fundamental analysis is the method that evaluates the securities by measuring the intrinsic values of the stock. The fundamental analysts study the overall economy and industry to financial conditions and the management of a company. Earning, expenses, assets, and liabilities are all important when it comes to fundamental analysis.

Technical analysis differs from fundamental analysis when it comes to the stock price, and volume is the only input. The core assumption of the technical analysis is that all known fundamentals factors in the price; therefore, there is no need to pay close attention to them. Technical analysis does not attempt to measure an intrinsic security value but uses stock charts to identify the patterns and trends the suggest what will happen to the stock in the future.

 Dive deeper into the details of how these two approaches differ, the criticism against technical analysis, and how professional and fundamental analysis can be used.

It seems to me that a fundament analysis appears to be a deeper dive into the company’s financial stability. Technical analysts typically begin their study with charts, while fundamental analysts start with a company’s financial statements. Usually, technical analysts start their analysis with graphs, while fundamental analysts begin with a company’s financial statements. Fundamental analysts try to determine a company’s value by looking at its income statement, balance sheet, and cash flow statement. Technical analysts generally believe that there’s no reason to analyze a company’s financial statements since the stock price already includes all relevant information. Instead, the investor focuses on analyzing the stock chart itself for hints about where the cost may be headed.

Reference

Drakopoulou, Veliota. (2015). A Review of Fundamental and Technical Stock Analysis. Journal of Stock & Forex Trading. 5:1. Retrieved from: https://www.longdom.org/open-access/a-review-of-fundamental-and-technical-stock-analysis-techniques-2168-9458-1000163.pdf