STREET DOGS: Fundamentals lead and prices follow
Wesley Gray says buying based on fundamentals seems more reasonable than examining recent price charts — seeking out patterns where none might exist, writes Michel Pireu
For value investors, fundamentals lead and prices follow, albeit noisily. For technical investors, prices lead — fundamentals are not the core driver of stock movements. The number of fundamental analysts is more limited than the number of technical analysts. Buying based on fundamentals seems more reasonable than examining recent price charts — seeking out patterns where none might exist. The technical analyst is assumed to have a simpler job because a history of prices is a limited and simplistic signal, whereas for the fundamental analyst, there is a much wider and deeper array of financial information to digest and consider. But in the end, does effort and sophistication really matter? Taking a step back, the mission for active investors is to beat the market. Active investors should focus on a basic question: what works? Warren Buffett obviously showed that value investing, irrespective of technical considerations, can work. But George Soros and Paul Tudor Jones also showed tha...
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