Where is ROI? (Technical Analysis & Fundamental Analysis: finding ROI in difficult times)

Where is ROI? Where can he be? Has anyone seen him?

I swear I saw him when I was reviewing my investment's last year's performance! But now, all's quiet on the front and ROI is AWOL...hmm.

Have you been feeling a little stressed lately because your Retirement Fund just hasn't passed muster in the last quarter? Do you feel like the price of everything is going up, except for your investments?

Frankly, I'm right there with you and totally understand. I believe that's because there exists a wide misconception among Americans on what is a viable investment. That misconception exists in overanalysis. We love information, we live in an age of free information. And, I believe, that too much information can swing what would be an otherwise credible investment decision into a poorly chosen investment decision.

We believe that the best investments are those that had mutliple technical factors to back them up. For instance, this means that I should be investing in stocks that have bullish Fibonacci indicators; stocks that are not testing any ceilings of resistance but have just bounced off floors of support based upon 25, 50, and even 200 moving day averages; and stocks that conform to a whole set of bullish indicators.

We rely on mounds and mounds of data in order to make an investment decision. Yet, isn't it odd that the S&P 500 Index outperforms over 70% of all mutual fund managers? We rely on computers to calculate all these recent trends, and believe that past performance is an indicator of future performance. (Right! Tell that to people who were bullish on US Financial Stocks in 2008 due t 2006 & 7 performance!)

Is it because we don't really know how to conduct fundamental analysis? We don't really understand how to read a financial statement, and essentially underwrite a company's short-term and long-term debts, assets & liabilities, cashflow, and overall condition?

Is it because we live in an Internet age of immediate gratification, are largely educated off the public dollar at the lowest-cost denominator, and simply either don't know how to analyze fundamentals out of lack of knowledge or just because we're lazy?

Warren Buffet said it best at the Berkshire Hathaway meeting just a couple weeks ago, "We like [investment] ideas you don't have to carry to three decimal places" He goes on to jokingly add, "If someone walked in here and weighed 350 pounds, I might not know he weighed 350 pounds, but I would know he was fat." (thanks to the guys at Agora Financial for this quote)

While I believe that technical analysis defintely does serve a purpose, I also believe that's it's somewhat like removing a mosquito with a rocket-launcher. I vie for a more minimalistic approach, for who's to say which technical tool is the most useful?

Ultimately, I prefer fundamental analysis over technical analysis because it's not so showy, less sexy, has a beergut, and grey hair.