| In a previous article we learned that fundamental and | | | | influenced by interest rates. |
| technical analyses are two types of research to do. | | | | * Visit and to see how the investment world is doing. |
| Technical analysis is the most popular but fundamental | | | | Industry analysis: Now it's time to turn your attention to |
| analysis is the better kind because it looks at a variety | | | | the general industry in which your target stock |
| of factors to help you make good decisions. In this | | | | operates. If they fabricate steel for automakers, don't |
| article, we're going to look more closely at fundamental | | | | just look at how other steel fabricators but also |
| analysis and see what you want to look at if you want | | | | consider how automakers are doing. Consider, also, |
| to perform good fundamental analysis. | | | | their suppliers. If you are looking to buy stock in a |
| Start at the top: Find out how the economy as a | | | | home building company, consider the price of lumber. Is |
| whole is doing. Is it good? Is it rough? Is the current | | | | it going up or down? If it goes up, will that put a |
| situation going to last for a while? Don't look just at the | | | | squeeze on profits? |
| economy of the country your target stock's company | | | | * Visit |
| is in... don't forget to look at the countries where the | | | | Company analysis: Next, turn your attention to the |
| company does a majority of its business. A strong | | | | company itself. Who is the management team and |
| economy in the US, for example, won't necessarily | | | | what is their experience in the company and the |
| save a company who exports a majority of its | | | | industry? What is the financial history of the company |
| products to Japan... if their economy tanks. Consider | | | | itself? Check to see if they serve only one industry or |
| government decisions like fiscal and monetary policy. | | | | several because the diversity of several clients among |
| * Visit and the sites of the individual banks to get a | | | | different industries will help to weather economic |
| handle on the economy. | | | | downturns. How is the company perceived among the |
| Drill down: Now that you've got your finger on the | | | | buying public? |
| pulse of the economy, drill down to just the investment | | | | * Visit and browse for the company and visit the |
| world, which can drive the economy. Is the Dow Jones | | | | company's website. |
| rocky right now? Is the S&P 500 trending upwards? Is | | | | Fundamental analysis seems like a lot of work at first... |
| the NYSE dipping? Looking at exchanges and indexes | | | | and it is... but it won't always be that way. Spend a |
| will help you get a handle on the investment world. If | | | | few hours getting to know the information then just a |
| you're looking at buying bonds, remember that they are | | | | few minutes a day monitoring it. |