There are two main schools of thought in analyzing the capital markets. Fundamental Analysis, the use of the company’s books and economic data to determine it’s value, and Technical Analysis, where the supply and demand of an issue, contract, commodity, etc. is being analyzed to forecast future results.

There are a lot of disparities between the two schools of thought. Fundamentalists would go long or short because of valuations while technicians go long or short because of trend continuations or reversal. A Fundamentalist could buy shares of an issue that is nose-diving with his belief that it’s getting cheaper, while a technician would definitely not like it in his portfolio because it broke major trend lines or averages.

There has been an unspoken conflict between the two schools of thought for the past years. A Fundamentalist could be buying the company because of its valuations while a Technician could be shorting it because of its trend.

Fundamentalists call Technical Analysis a “self-fulfilling prophecy” while Technicians do believe that all data are already discounted into the market and books can be cooked. While both of them can be true, the fact is, both of these schools of thought make money.

Ultimately, it’s for the investor to choose what he would like to believe in as long as it makes him money. After all, it’s the profits that really matters in the bloody streets.

The Nikkei 225 index slipped 38.29 points, or 0.3 percent, to 13,540.87 Thursday as cautious investors awaited the release of corporate earning results.

“The consensus is companies will report conservative forecasts but with perceptions that the credit crisis is easing, we look to be at a comfortable level for the overall market,” said Yoji Takeda, head of Asian investments at RBC Investment Management.

As worries about the global credit crunch starts to ease, Tokyo shares will likely be anchored around the 13,000 mark over the coming weeks.

Among blue chip stocks, shares in Japan’s top automaker, Toyota Motor Corp., edged down 0.2 percent to 5,130.00 yen.

The company on Wednesday announced its global sales in the January-March quarter rose 2.7 percent from a year ago to 2.41 million vehicles, beating its U.S. rival and the world’s top automaker General Motors, with 2.25 million units.

Shares in Japan’s No.2 automaker, Honda Motor Co. rose 0.3 percent to 3,210.00 yen, but Nissan Motor closed 0.5 percent lower to 870.00 yen.

The Topix index of all the Tokyo Stock Exchange First Section issues fell 6.82 points, or 0.5 percent, to 1,307.57.

In currencies, the dollar slipped against the yen, standing at 103.52 midafternoon in Tokyo from 103.68 late Wednesday in New York. The euro was quoted at 1.5851 to the dollar from 1.5896.

Photo Credit: Petrick2008

The mutual fund is an intermediary firm that collects money from many investors to invest in stocks, bonds, short-term money market instruments, and/or other securities.

Each share represents an investor’s proportionate ownership of the fund’s holdings and its generated income.

What are the advantages of mutual funds?

• Professional Management - Professional money managers research, select, and monitor the performance of the securities the fund purchases.
• Diversification - when one investment is losing another might be gaining. This setup spreads your investments across a wide range of companies and industry sectors, greatly reducing your risk.
• Affordability - some mutual funds accommodate investors who don’t have a lot of money to invest by setting relatively low amounts for purchases.
• Liquidity - mutual fund investors, after paying charges and fees, can readily redeem their shares at the current net asset value (NAV) at any time.

What are the disadvantages of mutual funds?

• Costs despite negative returns - investors must pay sales charges, annual fees, and other expenses regardless of how the fund performs.
• Lack of control - investors cannot ascertain the exact make-up of a fund’s portfolio, nor can they directly influence which securities the fund manager buys and sells or the timing of those trades.
• Price uncertainty - with an individual stock, you can obtain real-time pricing information, but not so with a mutual fund. The price at which you purchase or redeem shares depends on the NAV, which might not be calculated until after the closing of major U.S. exchanges.

So, is investing in mutual funds for you?

Every investment has advantages and disadvantages, and features that may be important to one investor may not be important to you.

Whether or not any particular feature of mutual funds is advantageous to you will pretty much depend on your unique circumstances