Stack The Odds
Fundamentals tell us what to own. Technicals help us decide when to act.
What This Means
One of the biggest mistakes investors make is believing they have to choose between fundamental analysis and technical analysis.
They don’t.
In our experience, they work best together.
We always start with fundamentals.
We’re looking for companies with strong earnings, growing revenue, healthy balance sheets, and businesses we believe have the potential to continue creating value over time.
Fundamentals help answer one simple question:
What deserves our attention?
If the fundamentals aren’t there, we move on.
Once we’ve identified quality investments, we turn to technical analysis.
Technicals help us understand what the market is actually doing.
We study things like:
- trends
- momentum
- volume
- support and resistance
- relative strength
This isn’t about day trading or predicting every market move.
It’s about using the information the market is giving us to help make more informed buying and selling decisions.
Fundamentals tell us what we want to own.
Technicals help us decide when we may want to act.
Neither is perfect by itself.
Together, they help stack the odds in our favor.
Common Questions
Why not just use fundamentals or technicals?
Because we think each one has a different job. A company can have great earnings and strong growth, but if the market is pulling back or investors aren’t believing the story, the stock can still go down.
On the flip side, a stock can look great on a chart, but if the business itself is weak, that move may not last.
We’d rather use both. We think it helps stack the odds in our favor that we’re not only making a good investment, but also making it at a good time.
What matters more—fundamentals or technicals?
If I had to pick one, I’d choose technicals. The market is constantly giving us information. If a stock keeps trending lower and lower, I think it’s worth paying attention to.
Why not just buy and hold forever?
Facts change. We are all about long-term investing, but don’t believe you can blindly hold EVERYTHING forever.
Why do many anlaysts ignore, or even frown at technical analysis?
Many analysts are trained to focus almost exclusively on fundamentals. We just see it differently. We think the market itself provides valuable information, and ignoring price action means ignoring part of the story.
Remember This:
Fundamentals tell you what to own. Technicals help you decide when to act.