Many people today want to know more about technical stocks and bonds investing to achieve their financial goals. Actually, the truth is this: technical investing applies more to stocks than bonds, because of the longer term nature of bonds.
Here’s a brief overview of technical investing: this is essentially investing trying to predict a pattern about a stock price, and capitalize on that. For instance, if a technical investor sees that a particular stock has been going up for a week, then they will generally look at its’ past history.
If generally speaking, the stock historically goes up for 2 weeks in a row, then follows that by dipping, then now would probably be a good time to buy, as it would likely go up for another week before starting it’s decline. Obviously, there are some other factors at play here, but essentially that is what technical investors try to do-capitalize on the patterns of a particular stock price. They will not look at the companies’ financial statements, as there is no need for this because they aren’t planning on holding their investment long term.
Remember, the market essentially is a voting machine. Short term, a stock price can be affected by all kinds of variables unrelated to how the company itself is actually performing, like how many investors are jumping on and off the bandwagon. However, long term the market will always value a stock according to how the company is performing.
Obviously, technical stocks investing stands in stark contrast to value investing, which is investing for the long term based on a particular companies’ performance. This is the method that Warren Buffet and Peter Lynch, among others, have used to achieve tremendous success, and virtually risk free. You see, when you focus on a companies’ past and likely future performance and how well they are doing financially, you can essentially eliminate risk when you invest in only well run companies.
So which investing method is best? You have to decide that for yourself. Now that you have the basic knowledge of technical stocks and bond investing, as opposed to value investing, you need to do your own research and determine which method you want to follow.
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