Boot Camp Day 5
The Daily Breakdown has now conducted its second boot camp, talking about Fundamentals, Technical Analysis, Dividend Investing, and Passive Investing.
Now, we’re going to put it all together and talk about Blending.
A lot of investors have gotten good at a certain type of analysis or strategy — and that’s great! But the reality is that many investors borrow other strategies, implement little components from someone else’s approach and tailor things to their liking. They adapt. They evolve. Then experience comes into play and you start to recognize certain patterns, opportunities, and red flags.
Blending
Say a certain stock has great fundamentals but a bad chart with a bearish trend. For some investors, that will render the stock a “no touch,” as the technicals don’t confirm that it’s a buy. Others will ignore the broken technicals, concluding that the fundamentals are too good to pass up.
But some investors will do a blend — they’ll use fundamental analysis to determine what to buy and they’ll use technical analysis to determine when to buy it.
Everybody is different in this regard.
For instance, if I’m trading on shorter timeframes, I put a lot of emphasis on the technicals. Risk management is critical to me in these instances and I try to use well-defined levels on the charts to help me navigate.
But when I’m investing with a long-term mindset, I don’t put as much emphasis on the charts; I’m more focused on a good business or good opportunity.
What type of investor are you? Explore different approaches in the eToro Academy.
What blending means for you
Maybe you read these boot camps and, as a certain type of investor, might try to incorporate some new elements into your investment approach.
For example, perhaps you’re a short-term trader who never bothered with the fundamentals, but now you want to put an emphasis on trading stocks that are profitable and growing revenue and profits.
Or maybe you’ve had a fairly active approach to investing so far and you’re looking to steady the ship a bit by exploring some passive investing options.
The Bottom Line
The beauty and difficulty of investing is that there is no “one size fits all.” Everyone has different tolerances toward risk, different timeframes, goals, and interests. And the market environment is always changing, too.
In this light, try to keep an open mind as you go through your investing journey. A little shake here, a little bake there. Don’t be afraid to mix it up, learn — always learn! — adopt, and evolve.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.