How does stock selection based on ‘fundamentals’ differ from stock selection based on technical analysis?
In our book we have tried to show that the divide between technical and fundamental analysis is not as large as most people tend to think it is. Fundamental analysts are trying to identify undervalued assets while technical analysts are looking for stocks where the share price is showing upward momentum. Most of the time — but not always — these stocks will tend to be growth companies. In the long run, technical analysis is essentially a visual representation of the economic process of creative destruction. What is the best way to choose a stock, following the trend or its relative strength against the index? We like to see the trend line supported by relative line. How true is the adage ‘Sell in May and go away’? Do business cycles have any link to that statement? The early summer months are historically a vulnerable period for stock markets. But this is not to say that there will be correction every year at this time. As far as seasonal trends are concerned, the stock market is rathe
