股市： TA，FA，and MA

Stock trading normally follows technical analysis (TA) or fundamental analysis (FA) or both. TA is focused on studying stock price, stock trend and stock patten. It is also referred to as chart analysis.  TA people believe that all the information is embedded in the price.  FA is focused on studying fundamental aspects of the company, such as product, service, revenue growth,  earning potential (P/E analysis). FA people believe that as long as the company of interest havs a good product and good potential of revenue growth, the price of the stock will eventually go up. TA/FA people use both methods to evaluate stocks. TA is used as an operational tool for entry or exit from the stock, while FA is used from a long term perspective.

While both of these two stock analysis methods are useful, they are not sufficient. Without any fundamental change of the underlying company, the market value (stock price) of a company varies dramatically between bull market and bear market. This indicates that stock prices are primarily determined by market condition, regardless stock patterns or fundamentals of individual stocks. Therefore, market analysis (MA) is the most important analysis to stock investment. MA is to study market condition, which includes major news events (such as wars, bank crisis, currency, debt), macroeconomics (quarterly GDP growth, Jobless claims, interest rate), Federal reserve meetings and option expiration dates.  

Stocks behave like sheeps in that they all go in the same direction. Most of the stocks follow the market conditions. In a bull market, almost all stocks go up and in a bear market, most of the stocks go down. In order to be successful in stock market, one needs to pay attention to the market condition, not just individual stocks. 

Stock market condition, whether is bullish or bearish, is determined by investor's confidence at the moment. Investor's confidence is like a balloon which can be filled up quickly with air (dream and greed) and busted in one second (fear and panic).   

As the market condition is determined by the investor's emotion, stock market is inherently an emotional beast. When the condition is good, human greed easily expands to an unsustanable level and then the hope gets busted. When the condition is bad, fear sets in and then panic leads to market crash. This happens at the individual level as well as the market level. So when playing with stocks, one needs to understand oneself's emotion as well as others. Otherwise, one will get seriously hurt in the market.