Guide to Analysing Companies

Technical analysis
The art of predicting future price movements of stocks, se-
curities or markets by looking at past price movements. Not
to be confused with fundamental analysis, which is concerned
with the financial position of a company and therefore the rela-
tive value of its shares. Technical analysis, also called char-
tism, involves looking for recurring patterns in price
movements (such as head and shoulders), which provide
clues as to whether the underlying demand for a stock may
be about to change. Most technical analysts concentrate on
the short to medium term but some believe that long-term pat-
terns can also signal turning points in financial markets. When
they do, such analysts issue “buy” or “sell” recommendations to
their clients.
Technical rally
A surge in share (or commodity) prices for technical
reasons. This may be because analysts have spotted, for
example, that a certain market index has reached a natural
plateau. Or it may have something to do with the way the
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TECHNICAL RALLY
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market itself operates; for example, some markets move errati-
cally in the run-up to settlement date. (See also witching
hour.)
Many of the core technologies of computing – processing power, storage
capacity, graphics capabilities and network connectivity – are all
continuing to advance at a pace that matches or even exceeds Moore’s
law (which famously, and correctly, predicted that the number of
transistors on a computer chip would double every two years).
Bill Gates, 
The World in 2003
Technology, media and telecommunications
A stockmarket sector which enjoyed the biggest rise
during the dotcom boom that began in the late 1990s and suf-
fered the brunt of the bust that followed. In the belief that de-
veloped economies had entered a new paradigm, in which
technology would propel productivity for evermore, investors
pushed up the prices of technology, media and telecommunica-
tions (tmt) stocks to unsustainable levels. This led to huge
amounts of overinvestment as companies rushed to satisfy a
seemingly insatiable demand for new technology. Easy to say in
retrospect, but of course it could not last. Demand outstripped
supply, profits wilted and share prices crumbled. Many tmt
companies are still living with the consequences of the huge
amounts of debt they built up during the boom years.
When your business depends on technology – whether it’s aerospace,
computer and electronics firms in the 1960s or internet, telecom and
networking companies in the 1990s – volatility is a fact of life.
Michael Milken