Expert: Paul Henneman - 1/14/2009

Question
Hi Paul,

I am set on doing my own future investing & read where evaluating stocks using both technical & fundamental analysis is sometimes better than only one method.

There must be many books written regarding the subject of fundamental versus tecnical analysis. From your experience, would you be able to recommend any of the best one(s)? I like Amazon.com reviews but I might miss some that aren't on their site.

Thank you greatly.

Mike E.  

Answer
Mike,
  Thank you for your question!
Yes, I do have some reading suggestions for you. I am not aware of any books that specifically address both technical and fundamental investing in a meaningful way in the same text, but there are some key books that address each topic individually that would be essential reading.
   For technical analysis, any of the books by William O'Neil would be a good start. He is the founder of Investor Business Daily (IBD), an industry leading financial newspaper that publishes technical data for its readers. If you go to Amazon and search by "technical analysis investing" there are some interesting looking hits. Several new books are out that I am not familiar with, but look promising.
   For fundamental analysis, you unfortunately should start with "Securites Analysis" by Graham and Dodd. I say unfortunately because of the length! But this is the grandfather of fundamental analysis, and is essential (but tedious) reading. It was written a generation ago, but is still relevant, and most of today's fancy footwork when it comes to fundamental analysis arises out of this. It will give you the foundation to do more detailed analysis using fundamental approaches to investing.

These should definitely keep you busy! But you will be off to a great start.  I do not recommend that you go out and purchase the latest and greatest technical or fundamental analysis study until you read the above to ground yourself in the over topic with the most established authors in the fields. Only then do you have something to compare any newer works to. If you don't have this type of background, it will be difficult to tell the good from the bad, the 'get rich quick but bound to fail' strategies from the more thought out and likely to succeed approaches. The overall goal is to build your methodology over time. Research for a bit, begin some tentative trading using your ideas to combine technical and fundamental, and slowly scale up if your results are promising.

Please do not hesitate to follow up with me if I can be of any additional service,

Sincerely,
Paul Henneman
President
ValuEngine Inc