Fundamental analysis is an investing term. If you know nothing about investing, it's likely that you've never heard of fundamental analysis. Fundamental analysis is a type of stock analysis.
You wouldn't take a job without first finding out the pay, benefits, if you need to work overtime, or what the working conditions are like, right? The reason why you get a job is to make money, but that doesn't mean you should work somewhere that you won't be happy.
The same goes for stock investing. The purpose of buying stock is to earn money and increase your wealth, but without prior research, you could lose money instead of make money.
Technical analysis focuses on researching stocks using charts, whereas fundamental analysis looks into the fundamentals of a corporation. Let's start by discussing financial statements. Chances are, unless you are an accounting or have taken business classes, you probably don't know what financial statements are.
Financial statements are exactly what they sound like. They are the statements that describe the corporation's financial whereabouts. These include the Balance Sheet, Income Statement, Retained Earnings Statement, and Cash Flows Statement. It's important to be able to reads these. Get a good investing book that will teach you what these mean.
A financial statement can tell a lot about a company. The balance sheet shows how much they own and how much debt they have. The income statement tells how much money they made in the past year. The retained earnings statement shows how much money they are retaining in the business, and the statement of cash flows details where they are spending their cash on and where it is coming from.
It's also important to look at management. What is the history of the CEO and other management authority? Do they look promising? Have they made many good growth-related decisions in the past? The managers of a corporation can make or break a company and you need to know they are going in the right direction.
Fundamental analysis is basically looking at the past and seeing the effects it has had on the present. Then, using this information, you must decide if this in addition to what their plans are in the future are promising for growth in the future. Also, look at their dividend payments over the years. If you are looking for a company that pays high consistent dividends, choose a company that has done so in the past. Researching stocks can make all the difference. - 16036
You wouldn't take a job without first finding out the pay, benefits, if you need to work overtime, or what the working conditions are like, right? The reason why you get a job is to make money, but that doesn't mean you should work somewhere that you won't be happy.
The same goes for stock investing. The purpose of buying stock is to earn money and increase your wealth, but without prior research, you could lose money instead of make money.
Technical analysis focuses on researching stocks using charts, whereas fundamental analysis looks into the fundamentals of a corporation. Let's start by discussing financial statements. Chances are, unless you are an accounting or have taken business classes, you probably don't know what financial statements are.
Financial statements are exactly what they sound like. They are the statements that describe the corporation's financial whereabouts. These include the Balance Sheet, Income Statement, Retained Earnings Statement, and Cash Flows Statement. It's important to be able to reads these. Get a good investing book that will teach you what these mean.
A financial statement can tell a lot about a company. The balance sheet shows how much they own and how much debt they have. The income statement tells how much money they made in the past year. The retained earnings statement shows how much money they are retaining in the business, and the statement of cash flows details where they are spending their cash on and where it is coming from.
It's also important to look at management. What is the history of the CEO and other management authority? Do they look promising? Have they made many good growth-related decisions in the past? The managers of a corporation can make or break a company and you need to know they are going in the right direction.
Fundamental analysis is basically looking at the past and seeing the effects it has had on the present. Then, using this information, you must decide if this in addition to what their plans are in the future are promising for growth in the future. Also, look at their dividend payments over the years. If you are looking for a company that pays high consistent dividends, choose a company that has done so in the past. Researching stocks can make all the difference. - 16036
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