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Fundamental Analysis

AnalyticsTrade Team
AnalyticsTrade Team Last updated on 2 May 2023

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Fundamental Analysis

Fundamental analysis is a method of evaluating a security by attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. It is used by investors to determine the value of a security in order to decide whether to buy, sell, or hold it. Fundamental analysis is often used in conjunction with technical analysis, which focuses on the study of price movements and chart patterns.

History of Fundamental Analysis

Fundamental analysis has its roots in the work of Benjamin Graham and David Dodd, two of the most influential investors of the 20th century. Graham and Dodd developed a system of investing that focused on the intrinsic value of a company, rather than its market price. They argued that by focusing on the underlying fundamentals of a company, investors could make more informed decisions about whether to buy, sell, or hold a security.

Since then, fundamental analysis has become an important tool for investors. It is used to assess the financial health of a company, as well as its potential for future growth. By analyzing a companyโ€™s financial statements, investors can gain insight into its profitability, debt levels, and other factors that can affect its stock price.

Table of Comparisons

Fundamental Analysis Technical Analysis
Focus on intrinsic value Focus on price movements
Analyzes financial statements Analyzes price charts
Long-term investment strategy Short-term trading strategy

Summary

Fundamental analysis is a method of evaluating a security by attempting to measure its intrinsic value. It is used by investors to determine the value of a security in order to decide whether to buy, sell, or hold it. Fundamental analysis is often used in conjunction with technical analysis, which focuses on the study of price movements and chart patterns. For more information about fundamental analysis, investors can visit websites such as Investopedia, The Motley Fool, and Seeking Alpha.

See Also

  • Intrinsic Value
  • Financial Statements
  • Technical Analysis
  • Price Charts
  • Investment Strategy
  • Trading Strategy
  • Value Investing
  • Growth Investing
  • Risk Management
  • Portfolio Management

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