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Learn Fundamental Analysis
To be successful in long term investing it is important to learn fundamental analysis. Fundamental analysis is the use of financial information about companies and economic information and forecasts applying to market sectors to predict future stock price. Investors learn fundamental analysis in order to profit from investing. The longer term the investment horizon the more important it is to learn fundamental analysis and use it. The shorter the investment or trading horizon the more important it is to learn and use technical analysis of stocks. Even for the long term investor it is important to understand both fundamental and technical analysis.
An investor will pick a stock with a substantial margin of safety, excellent price to earnings ratio, and price to sales ratio. Then he or she will want to buy the stock in the most cost efficient manner. This may entail placing limit orders at a given stock price or buying call options on the stock. In either case the investor will likely not buy at market price and will likely use technical analysis tools such as Candlestick pattern formations in order to purchase stock, and eventually sell stock at the most advantageous price. For successful long term investing the first step is to learn fundamental analysis.
It is not necessary to learn fundamental analysis in all of its intricacy all at once. The investor will find that in picking stocks that he or she will develop criteria. Looking for stocks with a low price to earnings ratio is a good place to start. It is also a very good idea to start by investing in things one already knows something about. In this way the investor already has done fundamental analysis without even thinking about it. For example, a sports enthusiast who plays softball may have a preference for a certain brand of glove, bat, or ball which everyone on his team likes. Finding a good product is a good first step in fundamental analysis.
2. To be successful in long term
investing it is important to learn
fundamental analysis.
Fundamental analysis is the use of
financial information about
companies and economic
information and forecasts applying
to market sectors to predict future
stock price.
By: www.CandleStickForums.com
3. Investors learn fundamental
analysis in order to profit from
investing. The longer term the
investment horizon the more
important it is to learn
fundamental analysis and use it.
By: www.CandleStickForums.com
4. The shorter the investment or
trading horizon the more
important it is to learn and use
technical analysis of stocks. Even
for the long term investor it is
important to understand both
fundamental and technical
analysis.
By: www.CandleStickForums.com
5. An investor will pick a stock with a
substantial margin of safety,
excellent price to earnings ratio,
and price to sales ratio. Then he or
she will want to buy the stock in
the most cost efficient manner.
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6. This may entail placing limit
orders at a given stock price or
buying call options on the stock.
By: www.CandleStickForums.com
7. In either case the investor will likely
not buy at market price and will likely
use technical analysis tools such as
Candlestick pattern formations in
order to purchase stock, and
eventually sell stock at the most
advantageous price. For successful
long term investing the first step is to
learn fundamental analysis.
By: www.CandleStickForums.com
8. It is not necessary to learn
fundamental analysis in all of its
intricacy all at once. The investor
will find that in picking stocks that
he or she will develop criteria.
Looking for stocks with a low price
to earnings ratio is a good place to
start.
By: www.CandleStickForums.com
9. It is also a very good idea to start
by investing in things one already
knows something about. In this
way the investor already has done
fundamental analysis without even
thinking about it.
By: www.CandleStickForums.com
10. For example, a sports enthusiast
who plays softball may have a
preference for a certain brand of
glove, bat, or ball which everyone
on his team likes. Finding a good
product is a good first step in
fundamental analysis.
By: www.CandleStickForums.com
11. The next step would be to
investigate the company that
makes the products. What are their
cash flow ratios? Do they have
money in the bank or a lot of debt?
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12. What has their stock price been
doing recently? If a company has a
low level of debt that means it is
financing operation with its cash
flow and not by borrowing.
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13. Another measure of liquidity and
company health is the quick ratio.
This is current assets minus
inventory and the result divided by
current liabilities. This is a
measure of how much cash and
equivalents that the company has
to work with.
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14. By starting with stocks that make
products that you know about you
will not need to learn fundamental
analysis all at once. However, with
time the investor learns to
successfully evaluate everything
from hot penny stocks to high tech
startups.
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15. Value stock investing is based
upon successful analysis of a
company’s prospects, its forward
looking cash flow. Learn
fundamental analysis and learn
how to invest in stocks successfully
over the long term.
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