What is stock fundamental analysis?

If you are "long term" investor and looking for a way to build a "buy and hold" portfolio of stocks, fundamental analysis will help to you make a decision on what to buy or stock pick.

Fundamental analysis also known as quantitative analysis, is one of the most popular stock valuation method used to evaluate the worth of a business by studying the financial data of the company, it involves read and interpret financial statements such as income statement, balance sheet and cash flows statement. It looking at the company revenue, expenses, assets, liabilities, management and operation efficiency and all the other financial aspects of a company by using financial ratio as an analysis tool. In other words, it focuses on the "basics" of the business.

Fundamental analysis require massive amount of numbers in a company's financial statements and you will rely heavily on annual report also known as 10-K report and quarterly report also known as 10-Q reports. Fundamentalist use fundamental analysis to analyze the historical financial performance data to estimate the future performance of a company and  looking for financial sound companies with solid foundation before they make an investment decision. This process also known as stock screening.

Fundamental Analysis transforms figures from financial statements into meaningful ratios to evaluate company financial conditions and measure business performance.

Fundamental Analysis using Accounting-based financial ratios as an analysis tool to evaluate company financial health and measure business performance by transforms financial statements numbers into meaningful ratios that highlight strengths and weaknesses of a business. This fundamental analysis model does not require a thorough understanding of accounting or finance to used.

The beauty of fundamental analysis is because it does not require a thorough understanding of finance or accounting. What you need to know in order to perform fundamental analysis is know how to interpret financial statements especially income statement, balance sheet and cash flow statement.

Introduction to the Stock Market

Before start investing, understanding the stock market is the first step to learn in investing. Introduction to stock market tell you what is stock market and why stock market exist, this provide a foundation for stock market newbie on how they should look at stock market from investor point of view.

 

What is Stock Market?

Most people think that the market is NASDAQ, NYSE or in New York, London. The market is not physical. It is an invisible amalgamation of global mind. The market exists in the minds of all the participants, from the smallest individual to the largest institutional investors or traders. It is their perceptions of value and the emotions accompanying fear and greed that give the market dynamic motion.