Fundamental analysis and trade
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Competent investment analysis is not easy even for the professional and novice investors often do ignore the fundamental assessment of companies when trading in the stock market. For the speculator fundamental valuation and does not need many traders use technical analysis as well confess the principle that market movements on their own account for the entire range of fundamental data. It is assumed that a private investor, analyzing the fundamental information, is able to simply drown in the huge data flow, but this is not entirely true.
Fundamental analysis is the basis for long-term investment, because it is precisely fundamentals ultimately determine the movement of the stock, it is based on an assessment of the Issuer, its revenues, market position, mainly through the sales performance of the company's assets and liabilities. At the same time, it calculated the rate of return on equity and other indicators characterizing the effectiveness of the company. The basis of the analysis is to examine the balance sheet, profit and loss statement and other materials published by the company. In addition, we study the practice of company management and the Board of Directors. These numerous and time-consuming studies suggest - is overstated or understated the value of the securities of the Corporation compared to the real value of the assets and future profits.
With the help of fundamental analysis is revenue forecast, which defines the future value of the shares and therefore may affect the price. On this basis, the feasibility of the recommendations are buying or selling. The yield of the security, which was determined by fundamental analysts need to evaluate through the mechanism of the stock market. For profitable option required and statistical data and analysis of the industry, other indicators and intuition, but do not forget that all of this takes place under conditions of constant exposure to central banks to the financial markets by raising and lowering interest rates. In this regard, it is worth noting that the fundamental analysis helps determine not only the fair price of the shares, but also to give an outlook on the values of stock indexes.
Fundamental analysis covers all areas of the economy, from its micro to macro manifestations. On the basis of the macroeconomic analysis of the different markets, can potentially identify the most promising ones, and then turn to industry analysis, by the way, he is also part of the fundamental, and to identify an algorithm of actions, so as not to miss out on a profitable trend.
The analysis and forecasting price movements in the financial markets, it is necessary to pay attention to macroeconomic data, posted in the major regions of the world. No matter you are running either the stock market or in the global Forex market. Macroeconomic indicators are important guidelines to shed light on the upcoming changes in prices.
Serious investors in a variety of markets just need to pay attention to macroeconomic data, even if you are trading short term, the data can greatly affect the yield of the portfolio. Unexpected changes in the indices not rarely cause a surge of activity in the market that may result in a sudden movement of quotations. Data that investors use as a reference when working in the financial markets can be divided into two large groups. One piece is published by government agencies, the other independent institutions and agencies.
Information from the first group, as a rule, is more important, it includes data on the labor market, inflation, economic growth, ie, changes in GDP and more. Weekly US data is published on new applications for unemployment benefits. At the end of the month goes a long report, which reflects the level of unemployment, changes in hourly wages and average length of the working week, and most importantly, the number of new jobs outside the agricultural sector. With regard to inflation rates, here are the most important right index shows the dynamics of prices for consumers and producers. However, to extract information about the possible inflationary trends and other indicators, such as the dynamics of import prices and labor costs. By the way, inflation is important not only from the point of view of the general state of the economy, but also in terms of the analysis of the possible actions of the Federal Reserve System. Officials of the Central Bank are guided by the inflation in decision-making and delivery. In addition, it is also important indexes of business activity from the regional doses of US banks, which show the state of business in their respective regions. Regarding the indexes by private agencies, they are quite a large number, they cover a variety of sectors of the economy, ranging from consumer sentiment and ending with the growth rate of lending in the country. Recent incidentally, it has now become a big difference.
In times of crisis, investors tend to follow closely those sectors that have provoked the current recession. For example, now the focus of market participants focused on the financial sector (banks). But we should not yet overlook other sectors of the economy. An incomplete picture of what is happening in the market, can lead to serious losses.
In the investment environment there is a perception that technical analysis belongs to the arts rather than science. Indeed, even such authority as John Murphy agree with this statement…