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Technical Analysis - Course I

(Softwares: MetaStock, Matriks, Bloomberg)

Analysis in Security Market: I -   Fundemetal Analysis
                                                 II -  Technical Analysis

I - Fundamental Analysis

Fair Value (The price that ought to be)

*PCE (Personal Consumption Expenditure): A measure of price changes in consumer goods and services. Personal consumption expenditures consist of the actual and imputed expenditures of households; the measure includes data pertaining to durables, non-durables and services. 

( Read more: Personal Consumption Expenditures (PCE) Definition | Investopedia  )
"If interest rates increase, money will gain value."

*Increasing interest rates would lead to increase in debts and equity.

*Increased cost of capital reduces the value of shares.

For example: 1-year term
                      12% simple interest
                      100 TRY nominal value

     time value of money = 100 TRY / (1 + 12%)

     20% simple interest

     time value of money = 100 TRY / (1 + 20%)

i. Studies the overall economy
ii. Industry
iii. Financial statements (Balance Sheet, Income Statement, Cash Flow, etc.)
iv. Using same valuation methods to reach a "fair value".
v. For long term horizon.
vi. Purpose of investment (not a trade).

II. Technical Analysis

First principle: Deals with probabilities, never certainities.

Principle of Technical Analysis

i. Price reflects everything.
   "If inflation occurs higher than the market expectations, prices are going to decrease.

ii. Price moves in trends.
   "Trend is your friend."

iii. History tents to repeat itself.

Glossary of Technical Analysis

impute: to lay the reponsibility or blame for often falsely or unjustly
durable: staying strong and in good condition over a long period of time
pertain: to relate to someone or something : to have a connection to a person or thing.

This post first appeared on Robert Kaiser's Blog | Understanding Body Armour, please read the originial post: here

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Technical Analysis - Course I


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