[HOME]
Sign-up for our 21 day free trial!

The contents on this page are a small sample of StockTradersHQ's member resources (FREE Trial!)


1. Our staff of professional technical traders analyze 1,000's of potential stocks every day to provide you with a list of stock picks with the greatest potential for explosive gains.

2. These stockpicks are traded with our real-time portfolio. Email alerts are sent for every entry and exit. Through the member-only website, you will have our support every step of the way.

3. Our subscription service provides all the resources, stock picks and tools an investor needs to make very profitable, consistent trades while maximizing gains and minimizing losses.

SEE OUR TOP PICKS FOR 2006...

Fundamental Analysis

A complete course on stock analysis is well beyond the scope of this commentary. However our goal in this commentary is to provide a basic understanding of the methods and theories behind stock analysis.  There are many excellent books devoted to the subject of how to analyze the value of stocks both from a fundamental and technical standpoint. 

Fundamental analysis and technical analysis are two fairly radically different approaches to investing and trading.  Normally investors use fundamental analysis and traders use technical analysis. 

The definitive work on fundamental analysis is widely considered to be the classic book Security Analysis by Benjamin Graham and David Dodd. First published in 1934 this book is considered by most on Wall Street to be the bible of stock analysis. In fact it was Benjamin Graham that Warren Buffet studied under when he first started in the stock market. Much of Berkshire Hathaway's success can be traced back to the information and ideas provided in the book Security Analysis and by the teachings of Benjamin Graham. 

Fundamental analysis is just as it sounds. It is based on examining the fundamental pieces of a business and its operation. There are no exotic formulas used. You do not need to be a mathematician. Anyone with a simple calculator and some basic information about a business should be able to employ fundamental analysis effectively. 

The Basic Idea
The basic idea of fundamental analysis is to invest in a company's stock with the expectation that the stock in undervalued at the time of purchase. How much return can you expect on your investment How much growth will the company experience based on the operation markets competitors and costs of the business These are questions you will need answered. 

Obviously not all aspects of these fundamentals can be quantified. Areas such as good will or changes in the economy or consumer spending can be difficult to nearly impossible to calculate. However to a large degree fundamental analysis throws these items out as uncertainties and simply looks at the cold hard facts which are available. This would include costs of goods sold margins tangible assets expenses etc. 

Armed with these basic and tangible numbers one should rather easily be able to calculate the value and profitability of any business given the numbers available and/or provided by the company are accurate.  The problem with fundamental analysis is that it assumes the company is honest and telling the real story and not falsifying the numbers (eg. WorldCom or Enron).  Once a valuation is arrived at you can decide whether or not the stock market is applying fair market value to the stock. 

The True Value
Certainly when attempting to make a profit in a stock it is advisable to search out stocks which are or at least appear to be improperly valued by the market. For the fundamental investor once an undervalued stock is found it is simply a matter of buying the stock and waiting for the market to realize the true value of the stock assuming of course they are correct in their assumptions.  Find a cheap security buy it and hold it until you become wealthy. If only it were that simple. Or perhaps it is Just ask Mr. Buffet. 

We at STHQ are partial to technical analysis because we are traders and not investors.  Fundamental analysis does have its purpose but there are a lot of flaws with it.  As mentioned above investors are at the mercy of the company and must trust them to tell the truth.  Even if everything is fine with the company's books there is no guarantee that a stock will not remain undervalued for a number of years yielding very little return on investment.  Fundamental analysis can be good and should be used in any long term investments.  Long term investing is where fundamental analysis is most valuable.  It is of little value to the short term trader.







Copyright 2003-2006 StockTradersHQ.com is owned and operated by The Winners Edge a subsidary of DMC Systems LLC. All rights reserved.   This web site is optimized for Internet Explorer 5.0 or greater!DISCLAIMER  [Articles| Bulletins| Charts]

^GoTo Top^

 
Buy Outlet Canada Goose Jackets Parka Online Buy Replica Prada Clutch Bags Online Buy Replica Hermes Birkin Bags Online Buy Replica Celine Clutch Bags Online Buy Replica Christian Louboutin Shoes Heels Online prada bags replica celine bags replica christian louboutin shoes replica hermes birkin replica canada goose jackets outlet Replica Canada Goose Jackets Parkas Coats Vests Outlet Sale Replica Hermes Birkin Bags Kelly Handbags Replica Prada Clutch Bags Messenger Handbags Outlet Sale Replica Celine Luggage Tote Bags Replica Christian Louboutin Shoes Heels Sandals Pumps Outlet Sale Canada Goose Jackets Sale Prada Mini Luggage Tote Bags Sale Hermes Birkin & Kelly Bags Sale Celine Mini Luggage Tote Bags Sale Christian Louboutin Shoes Heels Sale Celine Bags Luggage Tote Mini Outlet Sale Prada Bags Clutches Purses Outlet Sale Canada Goose Jackets Outlet Sale Toronto Christian Louboutin Shoes Boots Outlet Sale Hermes Bags Birkin Purses Outlet Sale Canada Goose Jackets Canada Goose Jackets Outlet Authentic Canada Goose Outlet Buy Canada Goose Outlet canada goose outlet cheap canada goose sale Canada Goose Online Jackets Canada Goose Parkas Outlet Buy Canada Goose Parkas Cheap Canada Goose Jackets Canada Goose Outlet online Cheap Canada Goose Men Jackets canada goose cheap canada goose men outlet canada goose outlet canada goose jackets sale Official Canada Goose Jackets Men Online Shop Official Celine Bags Luggage Tote Mini Online Shop Official Prada Bags Luggage Tote Online Shop Official Hermes Bags Birkin 30Cm Online Shop Official Christian Louboutin Heels Shoes Online Shop Designer Christian Louboutin Shoes Heels Sale Outlet Designer Celine Bags Luggage Tote Sale Outlet Designer Hermes Bags Birkin Sale Outlet Designer Prada Bags Messenger Sale Outlet Designer Canada Goose Jackets Men Sale Outlet Cheap Canada Goose Parka Canada Goose Jackets Online Hermes Bags Birkin replica Prada Bags Clutch Sale Replica christian louboutin shoes outlet Canada Goose Men Jackets Outlet celine Luggage Tote bags Canada Goose Outlet Store canada goose outlet Hermes Birkin Handbags Outlet Sale Celine Handbags Trapeze Outlet Christian Louboutin Shoes Outlet Sale Prada Handbags Clutch Outlet Sale Canada Goose Parka Outlet Sale canada goose mens parkas Christian Louboutin Shoes Outlet Celine Micro Luggage Tote Bags Outlet Canada Goose Jackets Men & Women Outlet Prada Clutch Bags Outlet Hermes Birkin Bags 30Cm Outlet hermes replica birkin, celine tote bags, Designer Replica bags, outlet canada goose, Canada Goose sale Canada Goose outlet in ontario Canada Goose People louis vuitton shoes for men's and women's Moncler http://www.chickenpoppod.com/ 2015 Canada Goose femmes doudoune moncler en Ligne Canada Goose Outlet Jackets