Determinants of Novice Investors in Deciding to Use Fundamental or Technical Analysis when Buying Shares
DOI:
https://doi.org/10.26740/jaj.v15n1.p26-38Keywords:
Fundamental, investors, shares, technicalAbstract
Introduction/Main Objectives: This study aims to see what factors decide novice investors in using fundamental and technical analysis when buying shares, that no one has researched novice investors and also what are the determinants of novice investors in deciding to use the analysis used by them, so this needs to be examined in order to prove what become a determinant of novice investors regarding the analysis used when buying shares. Background Problems: One of the things that makes young people interested in investing in financial markets (such as shares and bonds) is because of the return they receive as a return on the investment they make. In buying shares, novice investors should use analysis that is suitable for use, such as fundamental and technical. Novelty: This research provides an overview of starting to invest in shares so that they use an appropriate analysis for the shares of the company they want to buy, this research also provides an overview of evidence of how novice investors buy shares so that this can be used as a lesson for other people who want to invest in stocks, and this research give an overview related to fundamental and technical analysis in financial markets. Research Method: Data analysis use mean comparison to see each indicator's average score and significance in the decision to use fundamental or technical analysis when buying shares. Finding/Results: The research findings show that the main determinants of novice investors in deciding to use fundamental analysis when buying shares are liability, total equity, debt-to-equity ratio (DER), return on investment (ROI), and dividends, while the main determinants of novice investors in deciding to use technical analysis when buying shares namely price, moving average convergence divergence (MACD), and trading volume. Conclusion: The practical implications, namely research findings are useful for understanding novice investors who buy shares in the money market and also for people who want to get involved in the money market so as to help make the decisions they make.
References
Al?Ajmi, J. (2009). Investors' use of corporate reports in Bahrain. Managerial Auditing Journal. 24(3), 266-289. https://doi.org/10.1108/02686900910941140
Alzahrani, M., and Lasfer, M. (2012). Investor protection, taxation, and dividends. Journal of Corporate Finance, 18(4), 745-762. https://doi.org/10.1016/j.jcorpfin.2012.06.003
Anghel, G. D. I. (2015). Stock market efficiency and the MACD. Evidence from countries around the world. Procedia economics and finance, 32, 1414-1431. https://doi.org/10.1016/S2212-5671(15)01518-X
Arnold, D. M., Burns, K. E., Adhikari, N. K., Kho, M. E., Meade, M. O., and Cook, D. J. (2009). The design and interpretation of pilot trials in clinical research in critical care. Critical care medicine, 37(1), S69-S74. https://doi.org/10.1097/CCM.0b013e3181920e33
Baresa, S., Bogdan, S., and Ivanovic, Z. (2013). Strategy of stock valuation by fundamental analysis. UTMS Journal of Economics, 4(1), 45-51. http://hdl.handle.net/10419/105304
Barraclough, K., Stoll, H. R., and Whaley, R. E. (2012). Stock option contract adjustments: The case of special dividends. Journal of Financial Markets, 15(2), 233-257. https://doi.org/10.1016/j.finmar.2011.10.001
Bettman, J. L., Sault, S. J., and Schultz, E. L. (2009). Fundamental and technical analysis: substitutes or complements?. Accounting and Finance, 49(1), 21-36. https://doi.org/10.1111/j.1467-629X.2008.00277.x
Bondia, R., Biswal, P. C., and Panda, A. (2019). The unspoken facets of buying by individual investors in Indian stock market. Review of Behavioral Finance. 11(3), 324-351. https://doi.org/10.1108/RBF-12-2017-0121
Cheng, C. M., YiHou Huang, A., and Hu, M. C. (2019). Investor attention and stock price movement. Journal of Behavioral Finance, 20(3), 294-303. https://doi.org/10.1080/15427560.2018.1513404
Coe, T. S., and Laosethakul, K. (2010). Should Individual Investors Use Technical Trading Rules to Attempt to Beat the Market?. American Journal of Economics and Business Administration, 2(3), 201-209. https://doi.org/10.3844/ajebasp.2010.201.209
Dechow, P. M., Hutton, A. P., Meulbroek, L., and Sloan, R. G. (2001). Short-sellers, fundamental analysis, and stock returns. Journal of Financial Economics, 61(1), 77-106. https://doi.org/10.1016/S0304-405X(01)00056-3
de La Bruslerie, H., and Deffains-Crapsky, C. (2005). Takeover bids, unconditional offer price and investor protection. Review of Financial Economics, 14(2), 103-126. https://doi.org/10.1016/j.rfe.2004.07.001
Deng, L., Li, S., and Liao, M. (2017). Dividends and earnings quality: Evidence from China. International Review of Economics & Finance, 48, 255-268. https://doi.org/10.1016/j.iref.2016.12.011
French, J. J., and Naka, A. (2013). Dynamic relationships among equity flows, equity returns and dividends: Behavior of US investors in China and India. Global Finance Journal, 24(1), 13-29. https://doi.org/10.1016/j.gfj.2013.03.005
Hair, J. F., Black, W. C., Babin, B. J., and Anderson, R. E. (2019). Multivariate data analysis. Cengage Learning. Hampshire, United Kingdom.
Heale, R., and Twycross, A. (2015). Validity and reliability in quantitative studies. Evidence-based nursing, 18(3), 66-67. http://dx.doi.org/10.1136/eb-2015-102129
Hsieh, H-C. S. (2014). The causal relationships between stock returns, trading volume, and volatility: Empirical evidence from Asian listed real estate companies. International Journal of Managerial Finance, 10(2), 218-240. https://doi.org/10.1108/IJMF-10-2013-0103
Huang, S., Liu, X., and Yin, C. (2019). Investor target prices. Journal of Empirical Finance, 54, 39-57. https://doi.org/10.1016/j.jempfin.2019.07.009
In, J. (2017). Introduction of a pilot study. Korean journal of anesthesiology, 70(6), 601-605. https://doi.org/10.4097/kjae.2017.70.6.601
Levy, R. A. (1966). Conceptual foundations of technical analysis. Financial Analysts Journal, 22(4), 83-89. https://doi.org/10.2469/faj.v22.n4.83
Lowe, N. K. (2019). What is a pilot study?. Journal of Obstetric, Gynecologic & Neonatal Nursing, 48(2), 117-118. https://doi.org/10.1016/j.jogn.2019.01.005
Lui, Y. H., and Mole, D. (1998). The use of fundamental and technical analyses by foreign exchange dealers: Hong Kong evidence. Journal of International Money and Finance, 17(3), 535-545. https://doi.org/10.1016/S0261-5606(98)00011-4
McNulty, Y., De Cieri, H., and Hutchings, K. (2013). Expatriate return on investment in the Asia Pacific: An empirical study of individual ROI versus corporate ROI. Journal of World Business, 48(2), 209-221. https://doi.org/10.1016/j.jwb.2012.07.005
Naik, P. K., and Sethy, T. K. (2022). Stock Returns, Trading Volumes and Market Volatility: A Study on the Indian Stock Market. The Indian Economic Journal, 70(3), 406-416. https://doi.org/10.1177/00194662221104753
Nguyen, T. H., Shirai, K., and Velcin, J. (2015). Sentiment Analysis on Social Media for Stock Movement Prediction. Expert Systems with Applications, 42, 9603-9611. https://doi.org/10.1016/j.eswa.2015.07.052
Park, C.-H., and Irwin, S.H. (2007), What Do We Know About The Profitability of Technical Analysis?. Journal Of Economic Surveys, 21, 786-826. https://doi.org/10.1111/j.1467-6419.2007.00519.x
Petrusheva, N., & Jordanoski, I. (2016). Comparative analysis between the fundamental and technical analysis of stocks. Journal of Process Management and New Technologies, 4(2), 26-31.
Sharpe, W. F., Alexander, G. J., and Bailey, J. W. (1995). Investments (6th ed.). New Jersey: Prentice Hall.
Solaiman, S. M. (2006). Investor protection and criminal liabilities for defective prospectuses: Bangladeshi laws compared with their equivalents in India and Malaysia. Journal of Financial Crime, 13(4), 467-492. https://doi.org/10.1108/13590790610707582
Stankovi?, J., Markovi?, I., and Stojanovi?, M. (2015). Investment strategy optimization using technical analysis and predictive modeling in emerging markets. Procedia Economics and Finance, 19, 51-62. https://doi.org/10.1016/S2212-5671(15)00007-6
Suresh, A., S. (2013). A study on fundamental and technical analysis. International Journal of Marketing, Financial Services & Management Research, 2(5), 44-59.
Teplova, T., and Tomtosov, A. (2021). Can high trading volume and volatility switch boost momentum to show greater inefficiency and avoid crashes in emerging markets? The economic relationship in factor investing in emerging markets. The Quarterly Review of Economics and Finance, 80, 210-223. https://doi.org/10.1016/j.qref.2021.01.018
Thabane, L., Ma, J., Chu, R., Cheng, J., Ismaila, A., Rios, L. P., et al. (2010). A tutorial on pilot studies: the what, why and how. BMC medical research methodology, 10, 1-10. https://doi.org/10.1186/1471-2288-10-1
Tooranloo, H. S., Azizi, P., and Sayyahpoor, A. (2020). Analyzing causal relationships of effective factors on the decision making of individual investors to purchase shares. International Journal of Ethics and Systems. 36(1), 12-41. https://doi.org/10.1108/IJOES-03-2019-0053
Wang, J. N., Liu, H. C., Du, J., and Hsu, Y. T. (2018). Economic benefits of technical analysis in portfolio management: Evidence from global stock markets. International Journal of Finance & Economics, 24(2), 890-902. https://doi.org/10.1002/ijfe.1697
Waworuntu, S. R., and Suryanto, H. (2015). The Complementary Nature of Fundamental and Technical Analysis Evidence from Indonesia. International Research Journal of Business Studies, 3(2), 167-184.
Wright, C., and Swidler, S. (2023). Abnormal trading volume, news and market efficiency: Evidence from the Jamaica Stock Exchange. Research in International Business and Finance, 64, 101804. https://doi.org/10.1016/j.ribaf.2022.101804
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Blasius Erik Sibarani
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Abstract views: 339
,
PDF Downloads: 251
