| In our last segment we introduced several types of | | | | quantitative analysis, this involves looking at historical |
| stock market research. In this segment we will follow | | | | performance data to estimate the future |
| up our discussion of technical analysis and then | | | | performance. Followers of quantitative analysis want |
| continue on to fundamental analysis. | | | | as much data as they can find on things like revenue, |
| Technical stock research has become popular over | | | | expenses, assets, liabilities, etc. This information, and |
| the past several years, as more and more people | | | | not just its stock price, is what they believe will give |
| believe that the historical performance of a stock is a | | | | insight into how a company's share price will perform |
| strong indication of future performance. The use of | | | | in the future. |
| past performance should not come as a big surprise. | | | | Fundamental stock research makes extensive use of |
| People using fundamental stock research have always | | | | ratios (comparing two pieces of information against |
| looked at the past performance by comparing fiscal | | | | one another). These ratios can be broken down into |
| data from previous quarters and years to determine | | | | three primary areas: performance, activity and |
| future growth. The difference lies in the technical | | | | financing. Each of these areas has its own set of |
| analyst's belief that securities move with very | | | | ratios which indicate the company's performance in |
| predictable trends and patterns. These trends | | | | the given area. |
| continue until something happens to change the | | | | Conclusion |
| trend, and until this change occurs, price levels are | | | | The stock research you do prior to the purchase or |
| predictable. | | | | sale of a stock can save you money in the long run. |
| Fundamental Stock Research | | | | While no one stock analysis method can guarantee |
| The massive amount of numbers in a company's | | | | that you will always make money on your purchase, |
| financial statements can be bewildering and | | | | it can increase the likelihood of successful stock |
| intimidating to many investors. On the other hand, if | | | | trading. By using a combination of technical stock |
| you know what to look for, the financial statements | | | | research and fundamental stock research you can |
| are a gold mine of information. | | | | better gauge a stock's past performance and, |
| Financial statement analysis is the biggest part of | | | | hopefully, draw conclusions about its future |
| fundamental stock analysis. Also known as | | | | performance. |