In investing, two main approaches are distinguished: fundamental analysis and technical analysis.
Fundamental analysis relies on economic indicators and allows for strategic assessments over a long planning horizon.
Technical analysis, on the other hand, is based on the asset’s price chart. It enables tactical predictions over a short-term horizon.
A rough estimate of fundamental analysis is relatively simple.
Successful use of technical analysis requires constant attention and a high level of competence.
A similar principle exists in chess.
If you find yourself in an unfamiliar position, a good strategy is simply to make good moves.
These thoughts were prompted by reflections on purchases.
Just good things I’ve bought bring daily satisfaction when used.
But if a purchase was made based on some tactical impulse, it almost always turned out to be a useless item—too good to throw away, but impossible to sell.
There’s a common pattern in all of this:
The higher your level of expertise and understanding of the situation, the more risk you can reasonably afford to take.