Market Strategies: Value Investing, Technical Analysis

By Mark Hulbert N. Y. Times News Service | THE JOURNAL RECORD, September 1, 1999 | Go to article overview

Market Strategies: Value Investing, Technical Analysis


Mark Hulbert N. Y. Times News Service, THE JOURNAL RECORD


"In the long run, we're all dead," John Maynard Keynes once said. And many investors may want to similarly dismiss their value-oriented financial advisers, who often admonish them to shun the high-priced stocks that have led the market to new highs and, instead, focus on shares that are cheap on the basis of fundamentals.

Sure, these investors think, a company's stock price will eventually reflect its earnings and book value. But how long are they supposed to wait for those so-called value stocks to climb?

I have a suggestion for such investors: Try supplementing your value investing with technical analysis, which focuses on historical patterns of a stock's price and trading volume. In contrast to value advisers, who look at how the market ought to behave, technicians examine how it does behave. Technical analysis can help keep a value investor from stubbornly fighting the market for years on end. There are many types of technical analysis, but the most basic tools are known as "support" and "resistance" levels. A stock's support level is the price from which previous rallies have sprung; a technically inclined investor who misses one rally will be inclined to buy the stock if it falls back to the support level. Enough such buying, of course, makes it difficult for the stock to fall beneath that level. Conversely, a stock's resistance is the price where previous rallies have failed. Technically minded owners of a stock who didn't sell at the peak of a previous rally will be likely to sell if the stock rebounds to that price. With enough selling pressure, a stock will have difficulty penetrating its resistance level.

Many value investors may find all this sacrilegious. For years, such investors -- focused on fundamentals -- have ridiculed technical analysis as little better than reading tea leaves. Yet several academic studies have shown that there is something to it. The best known of these was published in 1992 by the finance professors William Brock and Blake LeBaron of the University of Wisconsin and Josef Lakonishok of the University of Illinois. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Market Strategies: Value Investing, Technical Analysis
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.