User:BerryForPerpetuity/Fundamental Analysis

Fundamental analysis is a tool used to analyze a business's financial performance, such as the business's assets, debts, and earnings. Fundamental analysis also weighs the current overall state of the economy and other factors, like the business's competitors, interest rates, management, and employment. Fundamental analysis can be done on both old and current data, although the goal of fundamental analysis is to make future forecasts about the company.

There are several objectives for fundamental analysis, such as to estimate a company's current stock valuation, predict future stock valuation, or evaluate the company's management.

Analytical models

There are two main methods that investors use when using analysis to find what stock to buy and at what price to buy it at.

1. Fundamental analysis. Analysts using this method believe that markets may incorrectly price an investment lower than the "correct" price, but that the "correct" price will eventually be reached. Profits can be made by buying the investment for the lower price, and then selling when the market recognizes the "mistake" and corrects the investment's price.
2. Technical analysis. Analysts review trends and believe that trend changes confirm changes in investor outlook. Price chart patterns may be found because of investors' responses to price movements. Analysts using this method usually evaluate historical trends to forecast future price movement.

Investors can use one or more of these methods to find stocks to invest in. For example, many fundamental investors use technical analysis strategies to find when to buy and/or sell. Many technical investors also use fundamental analysis strategies to find "good" companies to invest in.

The individual investor's belief in the patterns of "how" the stock market works determines which analysis strategy they choose to use.

Fundamental analysis can be used for:

1. Economic analysis
2. Industry analysis
3. Company analysis

[[Category:Stock market]]