Fundamental Analysis

• Fundamental Analysis

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Analysis - Business

1 * Fundamental analysis– a stock valuation method that uses financial analysis


Stock market - Investment strategies

1 Fundamental analysis refers to analyzing companies by their

financial statements found in SEC Filings, business trends, general

economic conditions, etc


Efficient-market hypothesis - Weak-form efficiency

1 Technical analysis techniques will not be able to consistently produce

excess returns, though some forms of fundamental analysis may still

provide excess returns


Efficient-market hypothesis - Semi-strong-form efficiency

1 Semi-strong-form efficiency implies that neither fundamental analysis

nor technical analysis techniques will be able to reliably produce excess

returns


Technical analysis

1 The efficacy of both technical and fundamental analysis is disputed by

the efficient-market hypothesis which states that stock market prices

are essentially unpredictable.


Technical analysis - General description

1 Some traders use technical or fundamental analysis exclusively,

while others use both types to make trading decisions.Ibidem Elder 1993 Part II Mass Psychology Chapter 17

Managing versus Forecasting pp


Technical analysis - Characteristics

1 Technical analysis stands in contrast to the fundamental analysis approach to security

and stock analysis. Technical analysis analyzes price, volume and other market

information, whereas fundamental analysis looks at the facts of the company, market,

currency or commodity. Most large brokerage, trading group, or financial institutions will typically have both a

technical analysis and fundamental analysis team.


Technical analysis - Characteristics

1 In the foreign exchange markets, its use may be more widespread than fundamental

analysis.Cross, Sam Y. (1998). [http://www.newyorkfed.org/education/addpu

b/usfxm/ All About the Foreign Exchange Market in the United States], Federal Reserve Bank of New York chapter 11, pp. 113-115.

This does not mean technical analysis is more applicable to foreign markets, but that

technical analysis is more recognized as to its efficacy there than elsewhere.


Technical analysis - Neural networks

1 This not only removes the need for human interpretation of charts or the

series of rules for generating entry/exit signals, but also provides a

bridge to fundamental analysis, as the variables used in fundamental

analysis can be used as input.


Technical analysis - Backtesting

1 fundamental analysis)


Technical analysis - Combination with other market forecast methods

1 One advocate for this approach is John Bollinger, who coined the term rational analysis

in the middle 1980s for the intersection of technical analysis and fundamental

analysis.http://www.researchandmarkets.com/reports/450723/the_capital_growth_letter.htm

Another such approach, fusion analysis,http://www.nyif.com/courses/tech_3002

.html overlays fundamental analysis with technical, in an attempt to improve portfolio

manager performance.


Stock valuation

1 Fundamental analysis may be replaced or augmented by market

criteria – what the market will pay for the stock, without any necessary

notion of intrinsic value


Adaptive market hypothesis - Implications

1 # Investment strategies—including mathematical finance|quantitatively, fundamental analysis|fundamentally

and technical analysis|technically based methods—will perform well in certain environments and poorly in

others.


Price signals - Speculation

1 It is also argued that financial speculation – particularly buying or

selling assets with borrowed money – can result in prices varying significantly

from their fundamental analysis|economic fundamentals; it is generally

accepted that credit bubbles can sometimes distort the price signal mechanism, causing large-scale

malinvestment and financial crises


Hedge funds - Relative value

1 Hedge fund managers can use various types of analysis to identify

price discrepancies in securities, including mathematical, Technical analysis|technical or Fundamental analysis|fundamental techniques


National Stock Exchange of India - Financial Literacy

1 The NCCMP or NSE Certified Capital Market Professional is a 100 hour program for over 3–4 months, conducted at the colleges, and covers theoretical and practical training in

subjects related to the capital markets. NCCMP covers subjects like equity markets, debt markets, derivatives, macroeconomics, technical analysis and fundamental analysis.

Successful candidates are awarded joint certification from NSE and the concerned

college.


Financial analysis - Method

1 * Fundamental analysis.[http://www.netmba.com/finance/fina

ncial/ratios/ Financial Ratios]


China International Capital Corp - History

1 Its research department focuses on fundamental analysis, industry

cycles, and corporate earnings on the prices of stocks and Bond

(finance)|bonds.[http://www.cicc.com.cn/CICC/english/about/index.htm

About /Official]


Audit report

1 Some have even stated that financial information without an auditor's report is essentially worthless for

investing purposes.[http://www.investopedia.co

m/university/fundamentalanalysis/auditorsreport.asp Fundamental

Analysis: The Auditor's Report] by Investopedia.com


Audit report - Unqualified Opinion

1 The third paragraph (commonly referred to as the 'opinion

paragraph') simply states the auditor's opinion on the financial

statements and whether they are in accordance with generally accepted

accounting principles.[ http://www.investopedia.com/university/fundamentalanalysis/auditorsrepor

t.asp Fundamental Analysis: the Auditor's Report] by Investopedia.com


Ayaks - Novel magneto-plasmo-chemical engine

1 The idea of thermally shielding the engine comes directly from the

fundamental analysis of an ideal turboject for maximum thrust

analysis in Oates textbook


The Theory of Investment Value

1 'John Burr Williams' (1900 – September 15, 1989), one of the first

economists to view stock prices as determined by “Intrinsic value

(finance)|intrinsic value”, is recognised as a founder and

developer of fundamental analysis.http://cepa.newschool.edu/het/schools/finance.htm#williams He is best known for his 1938 text The Theory of Investment Value, based

on his Ph.D


Stock - Stock price fluctuations

1 The fields of fundamental analysis and technical analysis attempt to

understand market conditions that lead to price changes, or even

predict future price levels


Speculation - Finding environmental and other risks

1 Hedge funds that do fundamental analysis are far more likely than other investors to try to identify a

firm’s off-balance-sheet exposures, including environmental or social liabilities present in a

market or company but not explicitly accounted for in traditional numeric valuation or mainstream investor analysis, and hence make the prices

better reflect the true quality of operation of the firms.[http://www.economist.com/businessfinance/d

isplayStory.cfm?story_id=15536305 Unlikely heroes - Can hedge funds save the world? One

pundit thinks so], The Economist, 16 February 2010


Speculative bubble - Other possible causes

1 Finally, others regard bubbles as necessary consequences of

irrationally valuing assets solely based upon their returns in the

recent past without resorting to a rigorous Fundamental analysis|

analysis based on their underlying fundamentals.


Bullish

1 'Market sentiment' is the general prevailing attitude of investors as to

anticipated market trends|price development in a market. This

attitude is the accumulation of a variety of fundamental analysis|

fundamental and technical analysis|technical factors, including price

history, economic reports, seasonal factors, and national and world

events.https://store.theartofservice.com/the-fundamental-analysis-toolkit.html

Rational expectations - Theory

1 In the strongest versions of these theories, where all profit

opportunities have been exploited, all prices in financial markets are correct and reflect Fundamental

analysis|market fundamentals (such as future streams of profits and

dividends)


Intermarket analysis

1 'Intermarket analysis' is a relationship, or a measurable

correlation between certain markets. It is a form of fundamental analysis, without a time delay. Supporters of

intermarket analysis state that it can be done by applying the statistical methods like correlation. Critics of

intermarket analysis refute statistical methods and use only price

indicators for fundamental analysis.https://store.theartofservice.com/the-fundamental-analysis-toolkit.html

Intermarket analysis

1 Hence, intermarket market analysis can be thought of as a type of

instantaneous fundamental analysis and is not really meant to work on a

tick by tick basis. It gives you a general bias and direction. Thus,

your intermarket work looks for times that these underlying relationships are moving opposite to the market

you are trading.https://store.theartofservice.com/the-fundamental-analysis-toolkit.html

Structural engineers - Education

1 The structural analysis courses which include structural mechanics, Structural Dynamics|structural dynamics and structural failure

analysis are designed to build up the fundamental analysis skills and

theories for structural engineering students


Fundamental analysis

1 When analyzing a stock, futures contract, or currency using

fundamental analysis there are two basic approaches one can use;

bottom up analysis and top down analysis


Fundamental analysis

1 Fundamental analysis is performed on historical and present data, but with the goal of making financial

forecasts. There are several possible objectives:


Fundamental analysis - Two analytical models

1 #Fundamental analysis maintains that markets may misprice a security in the short run but that the correct

price will eventually be reached. Profit (accounting)|Profits can be

made by purchasing the mispriced security and then waiting for the

market to recognize its mistake and reprice the security.


Fundamental analysis - Use by different portfolio styles

1 Investors may use fundamental analysis within different portfolio

(finance)|portfolio Investment management|management investor

profile|styles.



1 *'Buy and hold' investors believe that latching onto good businesses allows the investor's asset to grow with the business. Fundamental analysis lets them find 'good' companies, so they

lower their risk and probability of wipe-out.



1 *Managers may use fundamental analysis to correctly value 'good' and

'bad' companies. Eventually 'bad' companies' stock goes up and down,

creating opportunities for profits.



1 *'Contrarian investors' distinguish in the short run, the market is a voting machine, not a weighing machine. Fundamental analysis allows you to make your own decision on value,

and ignore the market.



1 *'value investing|Value investors' restrict their attention to under-

valued companies, believing that 'it's hard to fall out of a ditch'. The value comes from fundamental analysis.



1 *Managers may use fundamental analysis to determine future growth rates for buying high priced growth

stocks.


Fundamental analysis - Criticisms

1 *Economists such as Burton Malkiel suggest that neither fundamental analysis nor technical analysis is

useful in outperforming the markets


Financial analyst - Job

1 Writing reports or notes expressing opinions is always a part of sell-side (brokerage) analyst

job and is often not required for buy-side (investment firms) analysts. Traditionally,

analysts use fundamental analysis principles but technical chart analysis and tactical

evaluation of the market environment are also routine. Often at the end of the assessment of analyzed securities, an analyst would provide a rating recommending an investment action,

e.g. to buy, sell, or hold the security.


List of Securities Examinations - National Stock Exchange of India [http://www.nseindia.com/education/content/module_ncmp.htm

NCMP Certified Market Professional]

1 13 | 'Fundamental Analysis' Module


List of Securities Examinations - Mumbai Stock Exchange [http://www.bseindia.com/training/zedca.asp Training Certification]

1 9. | BSE Certification on Fundamental Analysis

('BCFA') | 120 Minutes | 828


Intrinsic value (finance)

1 In finance, 'intrinsic value' refers to the value (economics)|value of a company, stock, currency or Product (business)|product

determined through fundamental analysis without reference to its market value. It is

also frequently called 'fundamental value'. It is ordinarily calculated by summing the discounting|discounted future income

generated by the asset to obtain the present value. It is worthy to note that this term may have different meanings for different assets.


Intrinsic value (finance) - Options

1 In valuing Stock|equity, securities analysts may use fundamental analysis—as opposed

to technical analysis—to estimate the intrinsic value of a company. Here the

intrinsic characteristic considered is the expected cash flow production of the

company in question. Intrinsic value is therefore defined to be the present value of

all expected future net cash flows to the company; it is calculated via discounted cash

flow valuation.


Momentum (finance)

1 fundamental analysis)


Value investing

1 Although value investing has taken many forms since its inception, it generally involves buying security

(finance)|securities that appear under priced by some form of fundamental analysis.Benjamin

Graham|Graham, Benjamin (1934)


Floor trader - Steps to becoming a Floor Trader

1 Devoting time to studying fundamental analysis, as well as

other courses that will guide you to your career is essential


Stock trader - Stock speculator vs stock investor

1 They rely primarily on fundamental analysis for their investment

decisions and fully recognize stock shares as part-ownership in the

company


Stock trader - Methodology

1 Using the Internet, specialized software, and a personal computer,

stock speculators/investors make use of Technical analysis|technical and Fundamental analysis|fundamental

analysis to help them in making decisions


Stock trader - The efficient-market hypothesis

1 Although many companies offer courses in stock picking, and

numerous experts report success through technical analysis and fundamental analysis, many

economists and academics state that because of the efficient-market

hypothesis (EMH) it is unlikely that any amount of analysis can help an investor make any gains above the

stock market itselfhttps://store.theartofservice.com/the-fundamental-analysis-toolkit.html

Stock trader - Beating the market, fraud and scams

1 Whether they base their buy/sell decisions on fundamental analysis of

the markets, technical analysis of individual companies, personal intuition, or all of the above, the ultimate reason for their success

involves making the right trades at the right time


Market timing

1 'Market timing' is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future

market price movements. The prediction may be based on an outlook of market or

economic conditions resulting from Technical analysis|technical or Fundamental analysis|fundamental analysis. This is an investment

strategy based on the outlook for an aggregate market, rather than for a particular

financial asset.


Proprietary trading

1 They may use a variety of strategies such as index arbitrage, statistical

arbitrage, risk arbitrage|merger arbitrage, fundamental analysis,

volatility arbitrage or global macro trading, much like a hedge fund


Swing trading - Swing trading methods

1 Using a set of mathematically based objective rules for buying and selling is a

common method for swing traders to eliminate the subjectivity, emotional

aspects, and labor-intensive analysis of swing trading. The trading rules can be used to create a Algorithmic trading|trading algorithm or trading system

using technical analysis or fundamental analysis to give buy and sell signals.


List of topics characterized as pseudoscience - Finance

1 The efficacy of both technical and fundamental analysis is disputed by

the efficient-market hypothesis which states that stock market prices

are essentially unpredictable


John W. Henry - John W. Henry Company, Inc.

1 The firm's management methods make mechanical, non-discretionary trading decisions in response to systematic

determinations of reversals in each market's direction, with the explicit intention of precluding not only Behavioral finance|human emotion, but also any subjective

evaluation of such things as the so-called Fundamental analysis|fundamentals, to trigger each decision to be long or short

each market, or not


Being and Time - Heidegger's original project

1 In terms of structure, Being and Time remains as it was when it first

appeared in print; it consists of the lengthy two-part introduction, followed by Division One, the

Preparatory Fundamental Analysis of Dasein, and Division Two, Dasein and

Temporality.


Hikkake pattern - Conceptual basis

1 The pattern is not meant as a stand alone system for market speculation, but rather as an ancillary technique

to traditional technical analysis|technical and fundamental analysis|

fundamental market analysis methods.


Cryptocurrency - Criticism

1 * Some coins may be a project with little to no community backing and

no visible developer.[http://www.wallstreetcrypto.net/2014/01/fundamental-analysis-

for-cryptocurrency_10.html Fundamental Analysis for

Cryptocurrency], Wall Street Crypto, 10 January 2014


Systematic trading - Example

1 # Identify, using Fundamental analysis, which stocks and futures should be used for

replication.


Long/short equity - Overview

1 Typically, equity long/short investing is based on bottom up fundamental analysis of the individual companies,

in which investments are made. There may also be top down analysis of the risks and opportunities offered by industries, sectors, countries, and

the macroeconomic situation.


Paul Milgrom - Context and Overview

1 In terms of pure economic theory, Milgrom provided fundamental analysis of

“complements”, a set of variables that tend to move in the same direction because increasing

any one of them increases the payoff to increasing the others, in a very general setting. Milgrom provided formal analyses of strategic complementarities (complementarities among the choices of different players in a game)and supermodularity, and he went on to derive a

number of implications in various fields in economics.


Benjamin Graham - Career

1 “Security Analysis is the bible of fundamental analysis. Originally

published in 1934, the tome systematically lays bare the science

of security analysis.”


A Random Walk Down Wall Street - Investing techniques

1 Malkiel examines some popular investing techniques, including

technical analysis and fundamental analysis, in light of academic

research studies of these methods. Through detailed analysis, he notes significant flaws in both techniques, concluding that, for most investors,

following these methods will produce inferior results over passive

strategies.https://store.theartofservice.com/the-fundamental-analysis-toolkit.html

Macro risk

1 The other models that incorporate macro risk data are valuation

(finance)|valuation models or the closely related fundamental analysis

models


Share price - Behavior of share prices

1 Another school of thought, behavioral finance, attributes non-randomness to investors' cognitive and emotional biases. This can be

contrasted with fundamental analysis.


Financial data vendors - Types of data

1 The types of data offered varies by vendor, and most typically covers information about entities

(companies) and instruments (shares, Bond (finance)|bonds etc.) which companies might issue. Typically, pricing data is sold separately

from other related data, such as Corporate action|corporate actions and events, Valuation (finance)|valuation information, Fundamental analysis|fundamental data including company

performance and reference data on the entities and instruments themselves.


Fundamentally based indexes

1 In this sense fundamental indexing is linked to so-called Fundamental Analysis.


Intrinsic theory of value

1 For example, value investors that follow fundamental analysis look at both qualitative (business model, governance, target market factors

etc.) and quantitative (ratios, financial statement analysis, etc.) aspects of a business to see if the

business is currently out of favor with the market and is really worth much

more than its current valuation.https://store.theartofservice.com/the-fundamental-analysis-toolkit.html

Stanley Jordan - Papers and presentations

1 *Listening to the Market—an Introduction to Technical and

Fundamental Analysis by Sonification, keynote presentation, The Chicago Quantitative Alliance,

2009


Stock market prediction - Prediction methods

1 Prediction methodologies fall into three broad categories which can (and often do) overlap. They are fundamental analysis, technical

analysis (charting) and technological methods.


Stock market prediction - Fundamental analysis

1 Fundamental analysis is built on the belief that human society needs capital to make progress and if a

company operates well, it should be rewarded with additional capital and

result in a surge in stock price. Fundamental analysis is widely used by fund managers as it is the most

reasonable, objective and made from publicly available information like

financial statement analysis.https://store.theartofservice.com/the-fundamental-analysis-toolkit.html

Stock market prediction - Fundamental analysis

1 Another meaning of fundamental analysis is beyond bottom-up

company analysis, it refers to top-down analysis from first analyzing the global economy, followed by country analysis and then sector analysis, and finally the company

level analysis.


CAN SLIM - The investing mechanism and process

1 CAN SLIM is a growth stock investment strategy formulated from the study of the 500 best performing stock market winners

dating back to 1953 in the book [http://books.mcgraw-hill.com/getbook.php?

isbn=0071373616 How to Make Money in Stocks: A Winning System In Good Times or Bad, 3rd Edition (May 23, 2002) ISBN 0-07-

137361-6.] by William J. O'Neil. This strategy involves implementation of both technical

analysis and fundamental analysis.


Tom Piccirilli - Non fiction

1 *Deconstructing Tolkien: A Fundamental Analysis of the Lord of

the Rings (2004) (with Edward J McFadden, J.R.R. Tolkien and Jane

Yolen)


Robert Trivers - Career

1 Trivers was awarded the 2007 Crafoord Prize in Biosciences for his

fundamental analysis of social evolution, conflict and cooperation.


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Fundamental Analysis