Disadvantages of fundamental analysis

Know the basics of fundamental analysis and be able to apply them in practice skill-only units. Materials of the merits of this method of the Internet is not so much, and the literature on the basic analysis is much less than the technical . Moreover, this approach assess the situation on the financial markets, there are also disadvantages, know and consider which are not less important than respect.

Try to understand what the fundamental flaws inherent in the approach, and how to avoid their negative effects. The most significant drawback of assessing the market situation based on financial, economic and political news are time-consuming. In order to make an objective picture of the trader should consider and explore a lot of factors, issues and conditions, and a process for a few hours, days or even weeks to complete, unfortunately, is impossible. Many people just do not find enough time to engage in the analysis of this format.


In this case, the information received by the trader in the course of their work, can only talk in general terms about the life of an individual company, industry, or the market in general. However, guarantees the reliability of the findings in this case no one gives. That is why the results are perhaps the most unusual and unpredictable at times, and this is one minus the fundamental method.

Eating is one drawback - the specifics approach. It is the need to develop new tactics and strategies each time. Exhaust formulas, laws or theories exist. Some factors affect the economy positively, while others do not. How to behave with the charts is only by thinking the logical conclusions. If a trader is analyzing new industry or corporation required him to re-rebuild plan, as Previous in this case is no longer relevant.

Subjective perception also can be referred to the category of flaws. Without exception, all traders hope for a certain outcome, and market participants are using the fundamental approach is no exception. Even in the case when the analysis is the method of predicting a triple, with an attempt to predict the pessimistic, optimistic and neutral scenario is the actual result is often taken by surprise even the most experienced market participants. Quite a large part of the bad weather ends favorable outcome for the economy and vice versa. And the level of absolute or relative error in this do not exist.

An integrated approach assessment of the market situation, do not forget about the above disadvantages of fundamental analysis, or you'll feel like Warren Buffett, whose pockets were empty for unknown reasons.