Approaches to Financial Securities Analysis

adept analysts chart the prehistorical prices and trading volumes of paleness assembly lines. They find out tailors in these data, and they then map the trends to make predictions about future commercialize prices of the justice securities. slue extension is, however, a problem for practiced foul analysts. They grass use of goods and services a simple predictive equation; however, that approach would never predict a market shift. Therefore, good analysts attempt to identify patterns in the behavior of equity securities and the behavior of equity markets that go out allow them to compare the activity pattern in a current result to activity patterns in yesteryear period to predict future movements in equity stock prices.

Strengths and Weaknesses of Technical Analysts

The main(prenominal) strength of skillful foul analysts is that they numerate the behavior of an equity stock in a broader attitude than the narrow range of date related to the compevery underlying an equity stock. The broader perspective facilitates the assessment of indirect factors on the behavior of an equity warrantor. The principal weakness of technical analysts is that they rarely consider the characteristics of the underlying companies that retard the potential to behave at variance from a trend even in those instances when a predicted trend materializes.

Thus, a good thing about technical analysis is that the approach attempts to reduce the level of uncertainty entangled in predicting future behavior by eliminating from consideration those equity securities for which patterns cannot be set. A bad thing about technical analysis is the tendency of technical analysts to assume that repeating patterns exit continue to apply to equity securities (or equity markets) because such patterns were identified in past behaviors. ergodic events (or better stated, events stemming from changing conditions) can occur that will affect any equity security (or any equity market). After such an event, the assessment of technical analysis about an equity stock would change.

By that time, however, it would be too late for technical analysis to change any outcomes resulting from acting on the prior assessment.

Predicting the Future: Problems Confronting Analysts

Malkiel, B. G. (2004). A haphazard walk down Wall Street: Completely revise and updated. New York: W. W. Norton & Company.

Strengths and Weaknesses of Fundamental Analysts ........ 2

I do not consider myself to be a technical analyst. My personal view of technical analysts is that they belong in the class with religious nuts who tin on way corners preaching an unsupportable gospel. Nevertheless, even the street corner preachers have some grains of truth in their messages, and the homogeneous is true of technical analysts. Thus, I would recommend retaining the identification of past trends and patterns of market behavior to provide perspective for assessing current market activity, but I would not recommend the application of technical analysis in the prediction of future market activity.Reference

Random walk refers to the process of determining whether or not a statistical pattern is present in a special dynamic activity, or whether movements within the activity are stochastic. The random walk concept, as it is used in common stock portfolio analysis and i
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