return-on-investment Creative Commons Nick Youngson

Picture by Nick Youngson, Creative Commons, 2016


My path in investment started in fundamental analysis followed by technical analysis and behavioural finance.  Today, I use a synthesis of these approaches in a multi-dimensional approach.

As a certified accountant obsessed with investments, I started out studying the fundamentals.

I soon found out that fundamentals work best in the longer term and that in the short-term many other factors came into play.  The fundamentals may indicate that it is likely to prove profitable to buy Coca Cola stock  but the next questions were: When should I buy?  When should I sell?

I wanted to have another measure, other than the fundamentals, to indicate to me when it is best for me to invest money and when it is best to leave.

I wanted to know what is going to happen tomorrow and next week rather than next year and realized that markets are driven day-to-day by sentiment.

To understand sentiment I had to understand market psychology and I thus started reading on behavioural finance which is principally concerned with the study of  human decisions under uncertainty.

Finally, I realized that the footprints of the crowds making up the markets could be found in price graphs and this lead me to study technical analysis.

It took me a long time to traverse this route but the reading, testing and thinking I was forced to do made it possible for me to combine all three approaches into practical ways of trading and investing, from the long term to the very short term, including intra-day trading.

This synthesis, especially the combination of behavioural finance and technical analysis, provided me with various methods that I use in trading and investing.