Difference between fundamental and technical analysis?

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Technical analysis and fundamental analysis are the two main schools of thought in the financial markets. Technical analysis looks at the price movement of a security and uses this data to predict its future price movements. Fundamental analysis, on the other hand, looks at economic factors, known as fundamentals. Fundamental analysis is a method of evaluating securities by attempting to measure the intrinsic value of a stock. Fundamental analysts study everything from the overall economy and industry conditions to the financial condition and management of companies. Technical analysis is the evaluation of securities by means of studying statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value but instead use stock charts to identify patterns and trends that may suggest what a stock will do in the future.

Fundamental analysis is the cornerstone of investing. In fact, some would say that you aren't really investing if you aren't performing fundamental analysis. Because the subject is so broad, however, it's tough to know where to start. Fundamental Analysis is geared primarily at new investors who don't know a balance sheet from an income statement. The biggest part of fundamental analysis involves delving into the financial statements. Also known as quantitative analysis, this involves looking at revenue, expenses, assets, liabilities and all the other financial aspects of a company. Fundamental analysts look at this information to gain insight on a company's future performance. But there is more than just number crunching when it comes to analyzing a company. This is where qualitative analysis comes in - the breakdown of all the intangible, difficult-to-measure aspects of a company. When talking about stocks, fundamental analysis is a technique that attempts to determine a security's value by focusing on underlying factors that affect a company's actual business and its future prospects. On a broader scope, you can perform fundamental analysis on industries or the economy as a whole. The term simply refers to the analysis of the economic well-being of a financial entity as opposed to only its price movements.
Fundamental analysis seeks to determine the intrinsic value of a company's stock. But since qualitative factors, by definition, represent aspects of a company's business that are difficult or impossible to quantify, incorporating that kind of information into a pricing evaluation can be quite difficult. On the flip side, as we've demonstrated, you can't ignore the less tangible characteristics of a company.


Technical Analysis is method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.Technical analysis studies supply and demand in a market in an attempt to determine what direction, or trend, will continue in the future. In other words, technical analysis attempts to understand the emotions in the market by studying the market itself, as opposed to its components. If you understand the benefits and limitations of technical analysis, it can give you a new set of tools or skills that will enable you to be a better trader or investor. Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. Technical analysis can be used on any security with historical trading data. This includes stocks,options, futures and commodities etc. One of the most important concepts in technical analysis is that of trend. The meaning in finance isn't all that different from the general definition of the term - a trend is really nothing more than the general direction in which a security or market is headed.

In a shopping mall, a fundamental analyst would go to each store, study the product that was being sold, and then decide whether to buy it or not. By contrast, a technical analyst would sit on a bench in the mall and watch people go into the stores. Disregarding the intrinsic value of the products in the store, the technical analyst's decision would be based on the patterns or activity of people going into each store.</div>

Digging Deeper Into Mutual Fund!

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A mutual fund is a type of professionally managed investment fund that pools money from investors and invests the money in stocks, bonds, money market instruments and similar assets. The combined holdings of stocks, bonds or other assets the fund owns are knows as its portfolio. Each investor in the fund owns shares, which represent a part of the holdings. For example: If a particular mutual fund includes Everest Bank stock among its portfolio holdings, the mutual fund investor does not directly own Everest bank stock. Instead the mutual fund investor owns shares of the mutual fund.

Mutual fund can offer the advantages of diversification and professional management. Most investors do not have the knowledge, time or resources to build their own portfolio of stocks and bonds. Stock investors often have extensive knowledge with fundamental analysis or technical analysis. However, buying shares of mutual fund enables an investor to own a professionally managed, diverse portfolio with little or no knowledge of investing concepts and strategies. All investors, be in beginners or pros, they all know that putting all of their eggs in one basket is not wise. Thus, leading to the investment in diversification of mutual fund. It is a rare occasion when all the stocks decline at the same time and in the same proportion. Thus, a reduced portfolio risk is achieved through the use of diversification. Mutual funds provide a variety of schemes that will suit your needs over a lifetime. As a small investor, you may not find possible to buy shares of larger corporations. Mutual funds generally buy and sell securities in large volumes which allow investors to benefit from lower trading costs. The smallest investor can get started by investing of mutual funds since the minimal investing prices is just Rs 1,000. With open end funds you can redeem the shares at any point of time you wish and receive the current market value.

Investing on a mutual fund is apparently trusting someone else with your money. Its like handing over your money to someone legally to generate more money. And since the management takes place by that particular person, at times it  might be difficult for you to manage your portfolio if you want to because the allotted person has been buying and selling stocks by then.Investment on a mutual fund is beneficial. It helps to generate more money through money with least knowledge about share market. Though knowledge about the stock market is required, a considerate amount of research is required before investing in any mutual fund; but if you have an evaluated investment, chances are pretty high that you will get positive returns.


There are two primary forms of mutual fund companies: open-end and close-end companies. With an open-end fund, the fund itself will sell new shares to anyone wishing to buy and will redeem (i.e., buy back) shares from anyone wishing to sell. When an investor wishes to buy open-end fund shares, the fund simply issues them and then invests the money received. When someone wishes to sell open-end fund shares, the fund sells some of its assets and uses the cash to redeem the shares. As a result, with an open-end fund, the number of shares outstanding fluctuates through time. With a closed-end fund, the number of shares is fixed and never changes. If you want to buy shares, you must buy them from another investor. Similarly, if you wish to sell shares that you own, you must sell them to another investor from secondary market.


Until now there are already five  closed end mutual funds scheme, Siddhartha Investment growth scheme, Siddhartha Equity Oriented Scheme, Nabil Balance Fund and NMB Sulav Investment Fund and NIBL Samriddhi Fund to be invested. Laxmi Capital is also managing issue of the first Mutual Fund Scheme - Laxmi Value Fund -1. They have announced this product for NFO to the individual investors as well as institutional investors within the last week of this Nepali Calendar month. First announcement notice has been published on 03 February, 2015.


As investors can invest in professionally managed portfolios with little capital, it is thus suitable for inexperienced and risk aversive investors. For those with little knowledge and time crisis, mutual fund can turn out to be the best way to invest money in shares. this way you do not even have to have the thorough knowledge about the stock market since a professional is there to manage all your funds that you have invested. Therefore, investment in mutual fund helps in gaining positive returns in long term without a lot of hardwork.</div>

Investment with knowledge is not gambling!

Investing in stock market is not gambling. Both the terms are sort of just arbitrary milestones on the continuum of risk. It is the level of risk that differentiates them. A defender of investing will tell you with the experience he has that the risk in investing is pretty much managed where as the one associated with gambling is matter of a pure chance. If you pick up a random stock and hope it goes up (or down in a short sale), you are pretty much playing a roulette then because this is pure gambling. It becomes an investment when you have enough knowledge about the stock to make an educated guess that you will not lose your money. Gambling and stock market investing both involve risk-taking, but this does not equate the two. Taking risk is inherent to diligent and productive work. Gambling is consumption — it is done for the entertainment value of taking a risk. Stock market investing contributes to production — it is the taking on of risk as part of providing a valuable service. Because gambling is consumption, a gambler can expect to lose money, on average. An investor in the stock market can expect a considerable return, on average. Gambling, reduced to its essence, is the exchange of a rupee for an expected return of somewhat less than a rupee, sometimes accompanied by blinking lights and spinning wheels. Now, we cannot say that gambling is wrong because it is entertaining, nor can we say that it is wrong because it is risky. We cannot even say that it is wrong because the gambler is likely to wind up poorer, for there are plenty of legitimate activities that cost money. A gambler is engaged in morally questionable activity because he is deriving entertainment from that which ought to have no entertainment value, like one who laughs at a car accident. A gambler takes that which is certain — a bird in the hand — and exchanges it for that which is uncertain — a less than 50-50 chance at the two in the bush. Gambling is entertainment for people who enjoy risk and uncertainty for their own sake. People who believe stock market is a gambling apparently misunderstand the source of fluctuations in the stock prices. What seems like random movements or the product of mass psychology actually has a rational economic explanation. So, basically for a person who understands the business cycles and the strategies dealing with the stock market has the potential to earn long term returns. Investment is merely to put the money to use by purchase or expenditure, in something offering profitable returns. It is to commit money or capital to gain financial returns. It involves the ownership of something tangible and a net positive economic effect results. Diversification is a benefit associated with investing. In a nutshell, by investing in a range of assets, you reduce the risk on one investment's performance severely hurting the return of your overall investment. It aims to maximize return by investing in different areas that would each react differently to the same event. Although it does not guarantee against loss, it still is one of the most important component of reaching long range financial goals by minimizing risk. Stock Market Returns are generated out of the stock market by the investors. This return could be in the form of profit through trading or in the form of dividends given by the company to its shareholders from time-to-time. These returns are not fixed ensured returns and are subject to market risks. They are not homogeneous and may change from investor-to-investor depending on the amount of risk one is prepared to take and the quality of his Stock Market Analysis. In opposition to the fixed returns generated by the bonds, the stock market returns are variable in nature. The idea behind stock return is to buy cheap and sell dear. Therefore, all I would like to state is investing is completely different from gambling. It is the rumors and the psychology of people which merges the both and the above points completely states the difference. Investing without knowledge is a pure gambling but an investment done with prior knowledge and research is not more liable to called a gamble because then it is an educated evaluation.