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Fundamentals Section for Fundamental Analysis

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Old 16-12-2009, 01:47 PM
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investigate Fundamental Analysis abstract

Another fascinating area of investing/trading which is based on Fundamental Ananlysis .This school includes many great investors like Warren Buffet,Benjamin Graham to name a few.

One can write a book on this subject.No need to elaborate these. Enough material is available on this subject almost everywhere.
Still a few beginning words would not be out of place.

Quote:
When talking about stocks, fundamental analysis is a technique that attempts to determine a security’s value by focusing on underlying factors that affect a company's actual business and its future prospects. On a broader scope, you can perform fundamental analysis on industries or the economy as a whole. The term simply refers to the analysis of the economic well-being of a financial entity as opposed to only its price movements.


So all are welcome to contribute to this thread.
Now Technofundamental analysis is in vogue, which combines both the arena , of Technical analysis and Fundamental analysis.Therefore posting a price chart should be thought to be an out of place affair.

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Old 16-12-2009, 01:51 PM
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A schematic chart showing different stages of cycle ...


Source - web
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Old 16-12-2009, 01:52 PM
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How does an investor determine if a stock is undervalued, overvalued, or trading at fair market value? With fundamental analysis, this may be done by applying the concept of intrinsic value. If all the information regarding a corporation's future anticipated growth, sales figures, cost of operations, and industry structure, among other things, are available and examined, then the resulting analysis is said to provide the intrinsic value of the stock.

To a fundamentalist, the market price of a stock tends to move towards its intrinsic value. If the intrinsic value of a stock is above the current market price, the investor would purchase the stock. However, if the investor found through analysis that the intrinsic value if a stock was below the market price for the stock, the investor would sell the stock from their portfolio or take a short position in the stock.

There are several steps associated with fundamental analysis. The investor must make an examination of the current and future overall health of the economy as a whole. Attempt to determine the short-, medium- and long-term direction and level of interest rates. This may done through interest rate forecasting. An understanding of the industry sector involved, including the maturity of the sector and any cyclical effects that the overall economy have on it, is also necessary.

Once these steps have been undertaken, then the individual firm must be analyzed. This analysis must include the factors which give the firm a competitive advantage in its sector (low cost producer, technological superiority, distribution channels, etc.). As well, an in-depth look at the firm must be undertaken. Such factors as management experience and competence, history of performance, accuracy of forecasting revenues and costs, growth potential, etc., must be examined.

All the steps above give a qualitative overview of the firm's position within its sector and the economy as a whole. This is necessary in order to understand whether a quantitative analysis should be undertaken. If numbers must come into play, there are two relatively simple models which can be helpful for the investor willing to better understand the firm being investigated for investment. The two most commonly used methods for determining the intrinsic value of a firm are the dividend discount model, and the price/earnings model. Both methods if employed properly should produce similar intrinsic values.

Source- web
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Old 16-12-2009, 02:00 PM
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The 'Restocking Phase' (late phase of the early-recovery cycle) will hopefully benefit our exporters Today export figs for Nov were up y-o-y (first time in many mths) but seasonality & low base effect had a role to play.
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Last edited by kkseal; 16-12-2009 at 06:10 PM.
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Old 16-12-2009, 06:12 PM
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Originally Posted by novicetrader View Post
A schematic chart showing different stages of cycle ...


Source - web

NT, would you mind posting a link to the source?
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Old 16-12-2009, 07:27 PM
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Originally Posted by kkseal View Post
NT, would you mind posting a link to the source?

KKseal brother, sure...here goes the link...


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Old 16-12-2009, 07:46 PM
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At a Forex site of all places! Thanks. (Nothing much other than that pic though You grabbed the right piece )
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Old 09-01-2010, 03:33 PM
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Some views on 2010
Link

Selected quotes:
Quote:
... people who are looking carefully at equities must recognize that they have virtually no margin of safety right now.

Quote:
2010 is going to be tough. There is no apparent asset class choice because equity seems fairly priced or little bit over fairly priced; gold is almost running at all time high level; fixed income is almost running at on a rising interest rate cycle level. So you have to be very careful and select your asset classes at the right entry point. People will have to catch the falling knife without worrying about little bit of blood, which may come out, in order to make money in 2010.

Quote:
See there are 2-3 things with midcap stocks, which are important, one is that very often the liquidity disappears in midcap stocks at the slightest hint of adversity. Second, the ability to understand two critical elements before you make an investment is generally of a lower level in midcaps as opposed to largecaps. One is what are management’s priorities, how does management allocate capital, what is their agenda, much less well understood in midcap stocks. Second and equally important at some level is the fact that a lot of midcap stocks tend to be irrational allocators of capital because there is no one to discipline them. They don’t have a large investor breathing down their neck and many of them are overwhelmed by their growth and their desire to become largecap. So the need to transition from midcap to largecap can lead to a very irrational behavior by people running those companies and that causes investors unanticipated and severe pain.

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I think the way to make money in 2010, if the market takes a bath at some point because certain realities that have got a high probability of materializing come about then have the courage to go out there.

Quote:
But at today’s point in time for example we do not have too many ideas in the largecap liquid universe. The limited ideas that we do have are all midcap stocks because there are still opportunities there, so we see the opportunity. I do not think the definition in midcap, largecap frankly makes sense. Can you find good companies? I find the good companies in the large liquid universe are adequately if not more than adequately priced. That is the reason.

Quote:
for example telecom there is a short-tem pain over here because there is tariff war. Everyone believes that telecom companies have become charitable trust, they only work for consumer, and they do not work for lenders and shareholders. So there is value over there. Like detergents war, like airlines war some day telecom war will come to an end and it will come sooner than later. It is a classical investment. What you learn in Buffet or Peter Lynch industry is going through a real pain, competitors are losing money valuations are reasonable. You have short-term pain because tariff wars are not going to end tomorrow. Can you bear that short-term pain for long-term gain? I think this will make a difference in 2010.

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Old 24-01-2010, 12:00 PM
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Any place to find earnings estimates other than by brokerage firms ???
looking for managements comments on growth expectations
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Old 24-01-2010, 01:20 PM
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You can find some on moneycontrol & indiaearnings But it's haphazard.
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