Fundamental Analysis vs Technical Analysis vs Macro Analysis

Ever bought a stock just because someone on Twitter said it was going to the moon, and then it crashed right after? Yeah, you're not alone. That's the problem. Most people jump into the market with zero strategy. They're either guessing, copying someone else, or relying on vibes. The truth is, that's not how experienced investors do it. They use one or a mix of three core strategies, fundamental analysis, technical analysis, and macro analysis. By the end of this video, you'll know how each one works, real examples, and their advantages and limitations. Welcome to Martik Finance, where we explain investing concepts in a simple way. But first of all, a quick disclaimer. This is not financial advice. Let's start with the most popular method for long-term investors, fundamental analysis. If you've ever heard someone say, I invest in companies, not stocks, this is what they're talking about. As Warren Buffett once said, never invest in a business you cannot understand. It's basically the process of figuring out what a company is actually worth, not just what the stock price says. You're trying to answer the questions. Is this a strong business? Is it profitable? Is it growing? Does it have a future? And you answer those questions by looking at two main things, quantitative and qualitative factors. Quantitative analysis is all about the numbers, the stuff you can measure. It comes straight from a company's financial statements, the income statement, balance sheet, and cash flow report. Investors look at lots of different numbers to understand how a company is doing. These numbers generally focus on areas like how much money a company makes, how much debt it carries, or how well it's investing in its future. Each metric offers a different angle to understand the business better, helping investors decide if the company is strong, stable, and worth investing in. So the more you learn and practice, the sharper your quantitative analysis will become. I already have some videos on my channel explaining some of these so you'd better check them out. Numbers are great, but they don't tell you everything. That's why you need to look at the stuff you can't always put a number on, but still makes a big difference. That's where qualitative analysis comes in. Things like brand strength. Is the company well known and trusted? Or leadership? Is the management team experienced and honest? You also want to consider competitive advantage. Does the company have something unique that others can't easily copy? And don't forget industry trends. Is the company playing in a market that's growing, or one that's shrinking? Take Netflix for example. Imagine their subscriber growth slows down a bit, and earnings aren't quite as strong as before. Even so, they still have a powerful brand people trust, a huge library of popular shows and movies, and they're always trying new things, or reaching new audiences around the world. These are some of the main advantages of analysis. First, fundamental analysis might help you see the true value of a company. It's perfect for long-term investing, because it looks at the company's overall health, not just the short-term market swings. Plus, it gives you real numbers to base your decisions on, things like revenue, earnings, and cash flow. Lastly, it's the method that top investors like Warren Buffett and Peter Lynch rely on. Now let's talk about what fundamental analysis can't do. First, qualitative analysis is subjective. It's based on opinions that can vary from person to person. Fundamental analysis also depends on past performance and future predictions, and those predictions don't always turn out the way analysts hope. Finally, sometimes companies manipulate their numbers or hide bad news. Take Enron for example. They looked solid, until everything fell apart. So even the strongest fundamentals can sometimes lead you the wrong way. Alright, let's dive into the world of technical analysis. This approach is all about reading charts. Instead of digging into financial reports or company news, technical traders focus on how the stock is moving, its price, its volume, and the patterns those movements create. Everything starts with price, that's what you see moving up and down on the chart. Then there's volume, which tells you how many shares are being traded. Volume basically tells you how much energy is behind a move. Stocks usually don't move all over the place for no reason, they often follow a direction, or what traders call a trend. If a stock keeps going up over time, making new highs and not falling as much in between, that's called an uptrend. If it keeps dropping and struggling to bounce back, that's a downtrend. Before we dive deeper, let's talk about two key ideas that help technical traders understand how prices move, support and resistance. Support is like the floor, it's a price level where the stock usually stops falling, because many buyers are ready to jump in and buy, which helps the price bounce back up. Resistance is like the ceiling, it's a price level where the stock often stops going up, because lots of sellers start to sell, taking profits and causing the price to pull back down. And here's where it gets interesting. When a stock breaks above resistance or below support, that's called a breakout. It can signal the start of a new trend in that direction. But not all breakouts are real. Sometimes the price breaks out, but then quickly snaps back. This is called a fakeout. It can trap traders who jumped in too soon. Obviously, there are lots of patterns which I don't feel like explaining in this video. The great thing about technical analysis is that it is relatively easy and visual to follow, rather than digging through company reports. Plus, it doesn't take a lot of time to get the hang of. However, technical analysis shows what the price is doing, but doesn't explain why. It doesn't take into account company fundamentals or news. Sometimes, patterns and breakouts don't lead to the moves traders expect, which can be misleading. It also relies on past data and assumes history will repeat itself. But the market can be unpredictable and influenced by new events. Finally, let's zoom out and look at the big picture – the economy itself. Macro focuses on things like government policies, global events, inflation, and economic health indicators. One of the biggest forces in the market is monetary policy, which is controlled by central banks, like the Federal Reserve in the US. One of the main ways they do that is by adjusting interest rates. When interest rates are low, borrowing becomes cheaper for both businesses and consumers. Companies can take out loans to expand, and people are more likely to spend money. That often pushes the stock market higher. On the flip side, when rates go up to fight inflation, borrowing slows down, spending drops, and stocks usually take a hit. On the other hand, fiscal policy is about how the government spends money and collects taxes. If the government boosts spending, that can give the economy a short-term push. But high taxes or spending cuts can slow things down. Other important economic indicators are Gross domestic product, which shows how much the economy is growing. When it's growing, that's usually good news for stocks. The unemployment rate tells us how many people don't have jobs. When more people are out of work, spending drops and businesses usually make less money. Consumer confidence measures how people feel about the economy. If they're feeling positive, they tend to spend more, which helps companies. And manufacturing reports show how busy factories are. When factories are producing a lot, it's a sign that businesses are doing well. You can actually track a lot of these big economic events on something called an economic calendar. Websites like investing.com have one for free. Finally, geopolitical events like wars, trade tensions, or tariffs can shake up the market fast. Even elections can move markets on what investors expect the winning party to do. As an advantage, macroanalysis helps you see the big picture of the whole economy and global markets. It's great if you want to invest in broad things like index funds or ETFs, because it shows you which markets or regions might do well overall. On the downside, it doesn't look at the details of individual companies, like their earnings or financial health. Now you've got a better idea of how fundamental, technical, and macroanalysis work. If you found this video helpful, please consider liking and subscribing to help grow this community. And if you liked this one, you'll probably enjoy this video too. Thanks for watching, and I'll see you very soon. Bye.