- Purpose: To compare two key approaches for analyzing and selecting investments: fundamental analysis and technical analysis.
- How to Expand:
- Fundamental Analysis: Describe how investors look at financial statements (income statement, balance sheet, cash flow statement) to evaluate a company’s financial health. Discuss valuation metrics like P/E ratio, earnings growth, and dividends.
- Technical Analysis: Explain how technical analysts use historical price data, charts, and technical indicators (e.g., moving averages, RSI) to predict future price movements.
- Strengths & Weaknesses: Provide examples of when one method might be better than the other (e.g., long-term value investing vs. short-term trading).
- Blending the Two: Suggest how investors can use both methods together for a more comprehensive view.
