• Fundamental Analysis
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Analysis - Business
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* Fundamental analysis– a stock valuation method
that uses financial analysis
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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
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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
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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
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Technical analysis
The efficacy of both technical and
fundamental analysis is disputed by
the efficient-market hypothesis which
states that stock market prices are
essentially unpredictable.
1
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Technical analysis - General description
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
1
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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.
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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/
addpub/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.
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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.
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Technical analysis - Backtesting
1
fundamental analysis)
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Technical analysis - Combination with other market forecast methods
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.ht
m Another such approach, fusion
analysis,http://www.nyif.com/courses/tech_30
02.html overlays fundamental analysis with
technical, in an attempt to improve portfolio
manager performance.
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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
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Adaptive market hypothesis - Implications
# 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.
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Price signals - Speculation
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
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Hedge funds - Relative value
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
1
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National Stock Exchange of India - Financial Literacy
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.
1
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Financial analysis - Method
* Fundamental
analysis.[http://www.netmba.com/finance/fin
ancial/ratios/ Financial Ratios]
1
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China International Capital Corp - History
Its research department focuses on
fundamental analysis, industry
cycles, and corporate earnings on the
prices of stocks and Bond
(finance)|bonds.[http://www.cicc.co
m.cn/CICC/english/about/index.htm
About /Official]
1
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Audit report
Some have even stated that financial
information without an auditor's report is
essentially worthless for investing
purposes.[http://www.investopedia.com/uni
versity/fundamentalanalysis/auditorsreport
.asp Fundamental Analysis: The Auditor's
Report] by Investopedia.com
1
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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/fun
damentalanalysis/auditorsreport.asp
Fundamental Analysis: the Auditor's
Report] by Investopedia.com
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Ayaks - Novel magneto-plasmo-chemical engine
The idea of thermally shielding the
engine comes directly from the
fundamental analysis of an ideal
turboject for maximum thrust analysis
in Oates textbook
1
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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/sc
hools/finance.htm#williams He is best
known for his 1938 text The Theory of
Investment Value, based on his Ph.D
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Stock - Stock price fluctuations
The fields of fundamental analysis
and technical analysis attempt to
understand market conditions that
lead to price changes, or even predict
future price levels
1
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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/businessfina
nce/displayStory.cfm?story_id=15536305
Unlikely heroes - Can hedge funds save the
world? One pundit thinks so], The Economist,
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16 February
2010
Speculative bubble - Other possible causes
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.
1
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Bullish
'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.
1
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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)
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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.
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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.
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Structural engineers - Education
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
1
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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
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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:
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Fundamental analysis - Two analytical models
#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.
1
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Fundamental analysis - Use by different portfolio styles
Investors may use fundamental
analysis within different portfolio
(finance)|portfolio Investment
management|management investor
profile|styles.
1
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Fundamental analysis - Use by different portfolio styles
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*'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 wipeout.
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Fundamental analysis - Use by different portfolio styles
*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
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Fundamental analysis - Use by different portfolio styles
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*'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.
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Fundamental analysis - Use by different portfolio styles
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.
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Fundamental analysis - Use by different portfolio styles
1
*Managers may use fundamental
analysis to determine future growth
rates for buying high priced growth
stocks.
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Fundamental analysis - Criticisms
*Economists such as Burton Malkiel
suggest that neither fundamental analysis
nor technical analysis is useful in
outperforming the markets
1
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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 buyside (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.
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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
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List of Securities Examinations - Mumbai Stock Exchange
[http://www.bseindia.com/training/zedca.asp Training Certification]
9. | BSE Certification on
Fundamental Analysis
('BCFA') | 120 Minutes | 828
1
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Intrinsic value (finance)
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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.
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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.
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Momentum (finance)
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fundamental analysis)
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Value investing
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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)
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Floor trader - Steps to becoming a Floor Trader
Devoting time to studying fundamental
analysis, as well as other courses that will
guide you to your career is essential
1
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Stock trader - Stock speculator vs stock investor
They rely primarily on fundamental
analysis for their investment decisions and
fully recognize stock shares as partownership in the company
1
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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
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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 itself
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Stock trader - Beating the market, fraud and scams
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
1
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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.
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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
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Swing trading - Swing trading methods
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.
1
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List of topics characterized as pseudoscience - Finance
The efficacy of both technical and
fundamental analysis is disputed by the
efficient-market hypothesis which states
that stock market prices are essentially
unpredictable
1
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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
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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 twopart introduction, followed by Division
One, the Preparatory Fundamental
Analysis of Dasein, and Division Two,
Dasein and Temporality.
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Hikkake pattern - Conceptual basis
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.
1
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Cryptocurrency - Criticism
* Some coins may be a project with
little to no community backing and no
visible
developer.[http://www.wallstreetcrypto.
net/2014/01/fundamental-analysis-forcryptocurrency_10.html Fundamental
Analysis for Cryptocurrency], Wall
Street Crypto, 10 January 2014
1
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Systematic trading - Example
1
# Identify, using Fundamental analysis, which
stocks and futures should be used for
replication.
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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.
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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.
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Benjamin Graham - Career
“Security Analysis is the bible of
fundamental analysis. Originally
published in 1934, the tome
systematically lays bare the science
of security analysis.”
1
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A Random Walk Down Wall Street - Investing techniques
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
1
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Macro risk
1
The other models that incorporate macro
risk data are valuation (finance)|valuation
models or the closely related fundamental
analysis models
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Share price - Behavior of share prices
Another school of thought, behavioral
finance, attributes non-randomness to
investors' cognitive and emotional biases.
This can be contrasted with fundamental
analysis.
1
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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.
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Fundamentally based indexes
1
In this sense fundamental indexing is linked to socalled Fundamental Analysis.
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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.
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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
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Stock market prediction - Prediction methods
Prediction methodologies fall into
three broad categories which can (and
often do) overlap. They are
fundamental analysis, technical
analysis (charting) and technological
methods.
1
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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.
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Stock market prediction - Fundamental analysis
Another meaning of fundamental
analysis is beyond bottom-up
company analysis, it refers to topdown analysis from first analyzing the
global economy, followed by country
analysis and then sector analysis, and
finally the company level analysis.
1
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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.mcgrawhill.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 0-07-1373616.] by William J. O'Neil. This strategy
involves implementation of both
technical analysis and fundamental
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Tom Piccirilli - Non fiction
*Deconstructing Tolkien: A
Fundamental Analysis of the Lord of
the Rings (2004) (with Edward J
McFadden, J.R.R. Tolkien and Jane
Yolen)
1
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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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