Today's Quote: “True knowledge exists in knowing that you know nothing." - Socrates.

Over the period of time you receive these Daily Trading Letters you will collect an enormous amount of information on various topics from this opening section, ‘The Daily Lesson’. These topics will range from details of technical items to the most abstract psychological issues. We are going to take the next few issues and discuss a topic that is very controversial because it has been at the heart of investing and trading since the beginning of time. It is the age-old debate between fundamental and technical analysis.

Let's get right to the conclusion first. Technical analysis is not only the superior view; it is the only view of the marketplace. Some of you may look at this information as only an opinion and in a sense, perhaps it is. We respect anyone who has the ability to make money trading and there are certainly an infinite variety of ways to make money in the market. However the typical novice trader that comes to the market with the view that if they understand the fundamentals of our economy or a particular company well enough, they will certainly be able to make money.

Unfortunately virtually everyone coming to the market initially goes through this phase. And even more unfortunate is the fact that probably well over 99% of the people who come with this philosophy, will never make money using it. There are exceptions of course, but suffice it for now to say that if you think you're going to walk into this vast marketplace, read a couple of articles on the Internet, and then come to bat with some of the sharpest minds in the business and make money from them, you are sadly mistaken.

Now, that is not to say that you will never find a relationship whereby profitable companies do have increasing stock prices at some point in time. The issue is, can you use this information to time your buy and sell decisions in a way that makes money on a consistent basis? You see, we believe that all of the fundamental information that there is, ever was, and most of what will be, is already built into the chart pattern to varying degrees.

We will discuss the various reasons in the upcoming sessions. But it should be made clear on day one that we do not allow fundamentals to determine our watch list of stocks or to in any way be involved in the decision-making process. As a matter of fact it can even be seriously detrimental to look at the fundamentals as they only provide confusing information that can never be used to make proper decisions. Powerful words, but we will discuss these issues over the next three days.