What is a basic analysis?
Basic analysis is the type of stock selection discipline. If you conduct a thorough survey of the Company's financial statements before you decide to buy shares in the company for investment purposes, you are said to adhere to the approach of fundamental investment analysis. Another very common approach is technical analysis , which is almost the opposite type of approach.
The approach of basic analysis is trying to find out whether the company is financially healthy and will continue to earn money. The approach of technical analysis to investment almost completely deals with how the stock price has been done over time and attempts to anticipate what will be on the basis of this in the future. Sometimes both approaches are combined, with the approach of basic analysis used to select shares and access the technical analysis used to invest in interest shares.
In performing an intestal inventory analysis, one is trying to find out whether the stock is worth investing. In this approach we look at how wellThe company works financially. What are the income of the company? Are growing? How does the price ratio versus profit per share, compare the ratio of P/E, compare with other similar companies?
This approach is trying to answer some basic or basic questions about the company's financial health and the industry in which the company operates. How big is the company? How long has it been in business? What is the company's management? What is the outlook for this industry in which society is?
Basic analysis is usually considered to be a more conservative access to the selection of stocks than technical analysis. It's definitely more accurate science. The income from the price is easily calculated; It is simply a priceakaždá share in shares divided by profit per share. The company's accounting value can easily be determined from the company's financial statement and earnings are easily calculated from financial records.
On the other hand, mathematics for most technicalIt is much more complicated and often requires much more judgment by the investor. In the approach of technical analysis, the investor attempts to predict the behavior of the crowd, while the basic analysis simply tries to find out whether the company has earned money and for what rate it will probably continue to make money. The stock price in the short -term horizon is not so important in the basic analysis, because the theory is that if the company earns money and continues to make money, the stock price will eventually increase. The approach of technical analysis is much more involved in short -term prices.
Investment in stocks is much more likely to be successful if a systematic approach is used. The basic approach of analysis is the easiest to understand and learn, and as such is perhaps the best place to start for a beginning investor. However, both approaches have their strengths and knowledge of both will benefit any investor and will improve the return on investment.