Why Don't Fools Discuss Technical Analysis?

In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who asks: "I have been wondering about technical analysis (TA). I never see it mentioned by the Fool because it seems to be used mainly by traders, rather than investors."

Jason and Brendan both agree that technical analysis ultimately runs counter to Foolish investing, as it focuses more on trading patterns and less on business fundamentals. While there are plenty of traders who see technical analysis as a way to play the markets, it fails to take into account the individual investor's advantage, which is time. Long-term investing also allows investors to minimize frictional costs such as transaction costs and taxes, which can eat into overall returns. At the end of the day, each investor must decide which style suits them best, and Jason and Brendan both see long-term investing as the most rewarding.

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  • Report this Comment On March 26, 2014, at 4:32 AM, Interventizio wrote:

    I use TA as last tool in my stock picking process. If a stock I like is bouncing on the 200-day average line, I consider this a good entry point, provided of course the stock meets the valuation criteria to begin with.

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