Understanding Fundamental Vs. Technical Analysis
there are two basic and distinctly different ways to analyze a stock, technical analysis and fundamental analysis. fundamental analysis believe the market price of a stock doesn't always match the true value of the company that stock represents. technical analysis believe that the fundamental elements of a stock's value are already accounted for in a stock's price. that prices move in trends and that historical patterns in the market and in stock prices tend to repeat. to understand the difference, imagine a fundamental analyst tom and a technical analyst joe and a shopping mall trying to decide which store to invest in. tom goes into each store, studies the product being sold, the layout, the company's financial statements, and then decides whether to buy that company's stock. tom is looking for the store with the best fundamentals. things like a good product, responsible management and so on. joe sits on a bench ? his laptop. so then he can check the stock charts for the various companies. joe looks to see which company has been performing the best, based on the price of its stock, and then looks for patterns that indicate a store with strong upward trend. in this case, joe does not consider the store's products or its financial situation, but instead assumes that these fundamental factors are already ? into its current share price. in fact, joe doesn't even need to be in the mall to make his choice. tom will base his decision on the company itself, and his believe that it is or soon will be worth more than its stock price suggests. joe will buy a stock because historical trends suggests the price is likely to go up, not because of anything he sees on the company itself. in the end, tom and joe may choose to invest in the same store, but their reasons for investing will be very different.
- account for・・・～を構成する