What is Fundamental Analysis?

Fundamental analysis is the analysis of financial condition and business situation of the investment company relying on the balance sheet accounts and income statement of the company to review the company's quality as the company's development over time, which predict changes in stock prices. The value is the primary goal of fundamental analysis. ...
Fundamental analysis is the analysis of financial condition and business situation of the investment company relying on the balance sheet accounts and income statement of the company to review the company's quality as the company's development over time, which predict changes in stock prices. The value is the primary goal of fundamental analysis.Some analysts often use discounted cash flow method to determine the value of the company, while some people use the price earnings ratio (P / E) ... Thus, if the distribution closely integrated into the technical rules of supply and demand of securities on the market, fundamental analysis goes deep into the internal affairs of the company issuing the securities. The basic analysis will evaluate a stock as value or the current value, and this will confirm the real value of a company with an intimate relationship like with the financial characteristics : capacity development, the risks that companies may encounter; cash flow ... Any deviation versus any real value is also indication that the stock is below or exceeds the value real. Therefore, analysts often see it as a guide for investment decisions in the future. For example, a long-term investment strategy should always cover all the elements of fundamental analysis as:
* The relationship between the current share price and financial factors that can be measured.* This relationship is stable over a long enough period.* The deviation of the relationship has been revised at the appropriate time.
Also a lot of investors are using the basic analytical methods to choose the stock has good prospects but are undervalued market, ie a way of value investing.
If you have decided to play the stock, the investor make an intelligent and prudent. Make decisions based on information drawn not only from technical analysis (supply and demand), which mainly had to fundamental analysis (the capacity and operation of companies). Fundamental analysis to calculate market sales, the index of financial and legal situation and the system of corporate governance in order to find worthy business investment. Technical analysis to find the time to conduct a timely transaction. To pour money into a profitable place, investors need to know all about fundamental analysis and technical analysis can be calculated because the value of shares that do not exactly know where to choose the right time investment, the analysis also becomes meaningless. There are now many investors do not need to know the tools but still investing style is very dangerous chance. In the worst case, it is they who make the market collapse. To market the healthy development can investors need to have knowledge and experience on the stock market collective investment by small amounts prior to the stock liquid before and monitor marketing school carefully before investing large sums.
When fundamental analysis became common knowledge of all investors, the stock market work more effectively: continuous participation of institutional investors makes stock prices more reasonable listing; information from the listed companies have started creating immediate response to the stock price; investors more interested in production and business activities of enterprises and information daily on the market. And when fundamental analysis was the main basis for the price development is "playing" the stock will become the investment of the real financial investment.