Why Perceived Value Has Failed the Investor
The Vital Difference Between Fundamentals and Technicals
Fundamental analysis only ever identifies perceived value. Let’s repeat that, fundamental analysis only ever identifies perceived value.
Actual value, real value, or realized value is only ever achieved when the four components of technical analysis come into play.
The level of value must reach an area of support or resistance…
it must also be at a level within the structure of the market cycle…
where buyers and sellers create buying and selling pressure…
based upon the probability that exists.
Without buyers and sellers perceived value continues to become more or less valuable, i.e. the price continues to drop or rise. This is the problem that Fundamentalist, like Ackerman and Grantham talk about when they buy in at perceived value and it gets even more valuable, i.e. the price drops further, taking heat. Ackerman says he often takes as much as 30% heat at the entry and misses as much as 30% of the value at the exit.
Without technical analysis entries and exits based upon fundamental analysis are always too early, they enter before perceived value has reached the level of support, and they exit on perceived overvaluation before the instrument has reached resistance.
If you do not know how to identity these four components of technical analysis. Or if you are uncertain when to enter or exit these volatile markets and want to learn about this. Then join us at the Mastermind Group and get free access to the Trade Like a Pro course.
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