Both fundamental and technical analysis can be helpful to investors in deciding when it is a good idea to buy or sell.
Fundamentals generally change fairly slowly - over a period of quarters or years.
Technical analysis are used by some as guide to profitable action in the nearer term.
Prices tend to overshoot both too high and then too low in their attempts to reflect proper reality.
This tendency towards volatility, which seems to have increased in the age of trading at the speed of the internet, can either hurt you or help you.
How it affects us is driven by how well or badly we understand and handle price volatility.
This is a simple realization: that crowd behaviour frequently drives unsustainable and extreme price behaviour at tops and bottoms.
It follows from that observation that extra net returns can be earned by those who constantly watch for the crowd and who think of the market not from their own viewpoints alone but rather in terms of what the crowd is thinking.
Crowd size can be readily observed in trading volume and , with some lag, in net money flows to/from equity mutual funds.
Standing back and discerning where the crowd's often collectively muddled head is will always help you make a better decision.
Well written
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