It’s easy to get consumed in the world of stock market valuations. From Key Numbers to Earnings Per Shares to Price-to-Earnings ratios, the list goes on. But you should remember this golden rule: When it comes to investing, the charts are the ultimate arbiters of success.
When dealing with stocks, one should consider the bigger picture. Analyzing the technicals and fundamentals of a stock gives you a better sense of what’s happening and where it’s headed. That means forgetting the numbers and looking at the actual movement of the stock itself. From uptrends and downtrends to bear markets and bull markets, the chart has the key information.
Charts can tell you a lot. Can you identify support and resistance? Can you spot bullish and bearish flags or crossovers? They also can give you an indication of whether a stock is overbought or oversold. You can even use certain indicators to get a better sense of what a stock is doing and make more informed decisions.
Valuations only provide part of the picture. It’s the chart that reveals the actual story. By looking at the bigger picture and incorporating technical analysis, you can make better decisions when making investments.
Don’t forget to remember the charts! They are the ultimate arbiters of success when it comes to investing. Pay attention to the technicals and use patterns, trends, and indicators to your advantage. Once you’re familiar with the charts, everything else — including valuations — will fall into place.