Tastylive: If You’re Losing Money with Fundamental Analysis, This is Why

Investing involves trade-offs. The decision to buy one stock means not buying another. Or an asset class. So on some level, investors need financial and economic data to make that determination. That’s why fundamental analysis matters.

Fundamental analysis looks at data specific to an asset, such as the earnings of a stock or the par value of a bond. It can also include other factors such as an upcoming earnings report or a Fed meeting.

Investors tend to gravitate towards fundamental analysis, as it may point to reasons to buy or sell an asset. Traders may be more focused on other factors such as price and the trend in price.

More specifically, fundamental analysis can give investors an idea of what the market already sees and has priced into stocks. From there, they can either agree with the market’s assessment or not.

For traders, technical analysis can indicate price action and where it may make the most sense to enter or exit a trade.

Given the potential for a mismatch in the stock market between the price of a stock and its value, fundamental analysis plays a key role.

But investors should also employ technical analysis to reduce risk and avoid losses. That can help overall returns and improve an investor’s win rate.

To watch the full debate, click here.