Article Reader
APS: Is it Based On Fundamental or Technical Analysis
Our website visitors often write to us to know whether we follow fundamental analysis or technical analysis behind APS system. Our short answer to their query is we use none of them. APS is based on statistical analysis. Honestly, we use both of them in principle but without copying their exact mathematical models. APS emphasizes on diversification of portfolio and avoid penny stocks (stocks beyond top 500). Portfolio diversification should match the stock market sectorial weightage. This approach is purely fundamental in nature. We take care of macro-economic scenario and select mostly successful companies (otherwise they can’t be in top 500). However, we do not subscribe the philosophy to buy and sell based on fundamental analysis mathematical models like p/e ratio, EPS, dividend etc. One of the basic problem with fundamental analysis is that you get three months stale data. So, folks belonging to other schools often criticize that fundamental analyst drive the car by looking in the rear view mirror. For retail investors quarterly report based analysis become irrelevant because institutional players have access of those reports much ahead of time. So, if basic input parameter is not fair to you then how can you compete with others in the same race? On technical analysis side there is an issue because technical analysts are too obsessed with predicting the stock behavior in short term and miss the bigger picture. Our experiences conclude that every stock is unique and they change their behavior with time. Expecting all stocks to oscillate between 20 and 80 RSI/Stochastic/xyz limit is just like expecting all kids to like two slice of veg pizza as lunch. Nevertheless information generated through price action is not totally absurd. Best part of such information is that it is truthful to retail investors and access of such data is simultaneously for institutional as well as retails. We consider chart and graph based on price action is just like ECG report. It tells the state of your heart without performing open heart surgery. ECG chart cannot match numerically for two different healthy persons but pattern will definitely do. APS treats all stocks individually and re-scans the stocks behavior periodically. It has its own mathematical model (Rule-X) to predict buy/sell time. It tunes the parameters of the model periodically and evaluates success rate of the model for each stock under strict statistical analysis. Hence, users of APS get best of the two worlds. Overall investment strategy has a fundamental analysis approach while buy and sell decision is derived from price actions.
Do you have any query? Please write to us:
Did you like this article? Please share it with your social network
