- Technical analysis can help investors follow the right market trends
- Fundamental analysis is still the best way to pick the best stocks
- Combining the two is difficult but can help juice extra returns out of your portfolio
Is technical analysis a load of old cobblers? Some investors certainly think so. Peter Lynch, the famous manager of the Magellan fund, described it as “the science of wiggles”. Warren Buffett says he came to doubt price charts’ predictive power “when I turned the chart upside down and didn't get a different answer".
To an outsider, technical analysis – the practice of discerning patterns in market data to forecast future price moves – seems to possess some pseudo-scientific hallmarks.