Are you confused about how to learn Fundamental Analysis? Don’t worry! We got you covered. In simple words, Fundamental Analysis is a tool used to analyze financial securities if one should invest in them or not.
Before we jump at the first opportunity to learn fundamental analysis, we must understand the basics of this analysis and answer a popular question of what is fundamental analysis.
What is Fundamental Analysis?
Fundamental Analysis is a crucial aspect of understanding the investment strategies related to the stock market. It is the method to calculate the intrinsic value of financial security.
Intrinsic value gets measured by going through the economic and financial factors of the corresponding security. This value is affected by any alterations in the macro or micro-level economic factors such as the state of the economy, industry conditions, and management of the company.
The intrinsic value is reached to compare it with the financial instrument’s current price and segregate it as undervalued or overvalued. The fundamental analysis is in stark contrast to the technical analysis as it forecasts the direction of prices.
To reach the fair value of a stock, the analysts follow a well-planned path. They focus on the country’s overall economic state, first, then talk about industrial performance and strength. After these two have been analyzed in detail, they go through the company-specific information.
The data used by fundamental analysts to assess any financial security is available in the public domain.
The essential aspects evaluated during a fundamental analysis are revenues, earnings, information about the issuer, future growth, profit margins, return on equity, and other important company data available.
These aspects are mentioned in the company’s financial statements and are used to undervalue or overvalue the company. Further, the fundamental analysis is carried in two parts – Quantitative and Qualitative.
The Quantitative aspect of Fundamental Analysis talks about the numbers of the company in the financial statements and how positive or negative they are. The qualitative part is about the standard and quality of security.
Things that come under each of these aspects are as follows:
- Quantitative – Revenue, Assets, Profits, etc.
- Qualitative – Patents, Brand-recognition, Key executives of the company, and proprietary technology.
Thus, neither of them is superior or inherently better.
Now that we have a basic understanding of fundamental analysis, let’s move ahead to discuss how to learn fundamental analysis.
How to Learn Fundamental Analysis?
In the digital era, there are numerous ways to learn fundamental analysis. These ways are categorized into two categories – Online and Offline. The most famous methods to learn fundamental analysis are listed below:
- Mobile Applications
Let’s discuss them one by one in detail.
- Mobile Applications
There are a plethora of mobile applications available for learning various aspects of the stock market. Mobile Applications are gaining fast popularity in the learning industry.
These are time-saving and provide the facility to study anywhere and anytime. Moreover, the formats of learning have also been updated. Before, the best tool for education was via textual content.
Nowadays, learners want the content to be engaging, attractive, and must be available in multiple formats. These formats can be live video courses, text, audio, or pre-recorded videos.
The learner chooses the most suitable format for them and starts learning. So, you have many options to learn fundamental analysis via mobile applications.
The free content on YouTube is accessible to the masses and can be consumed as per their necessity. The authenticity of the content has to be accessed by the viewer himself.
A few content creators have mind-blowing content delivery in terms of quality and authenticity. Others might disappoint you in one or the other aspect.
So, before you invest your time, energy, and money with the content of a YouTuber, make sure that his credentials are worth it all, and they should meet your expectations to learn fundamental analysis.
Many people love learning while reading, and blogs are an emerging tool of learning. These are a perfect tool for this category of learners as the experts in the field pen down their experiences and ideas regarding the stock market.
Similarly, they write on this topic to help traders and investors learn fundamental analysis. These blogs are detailed and provide you unparalleled insight into this simple topic.
Books are known as a man’s best friend, and they indeed are. There are tons of fundamental analysis books available in the market. Let’s list a few fundamental analysis books that are considered the best.
- Security Analysis | Benjamin Graham and David L. Dodd
The Father of Value Investing authors this book, an investment style heavily dependent on fundamental analysis. It was published for the first time back in 1934.
It is considered to be one of the finest books in the history of financial analysis. The book attempts to provide investors with a distinctive approach to assessing the business of trading in financial securities.
Further, the book is full of examples that help understand the concepts of fundamental analysis in the easiest possible way. The book is a guide that trains the investor to make huge profits from securities that seem unfavorable.
The credibility of the book can be judged from the fact that this book is used as a textbook at Columbia University, where Mr. Graham taught once.
- Mastering Fundamental Analysis | Michael C. Thomsett
The author of this book has written more than fifty books, including Mastering Technical Analysis, Getting Started in Options.
Before he started as an author, he was a professional accountant and used to run his public accounting and tax consultation business.
The book is loaded with tips and tricks that help investors make better investment decisions as they allow learning to occur via worksheets, forms, graphs, charts, sidebars, etc.
Every concept is explained with definitions in simple words and step by step examples. These aspects help to understand and learn fundamental analysis in detail.
Further, a fantastic plan can be put together to build a strong and diversified portfolio.
- The Theory of Investment Value | John Burr Williams
This book was initially compiled as a Ph. D. dissertation by the author while he was still in Harvard. The author attempted to amalgamate the theoretical concepts along with the thought-provoking and enlightening commentary.
This style of presenting the information and concepts of fundamental analysis is exceptionally successful in easing the learning process for beginners in the trading industry.
- The Intelligent Investor | Benjamin Graham
This classic book known as the Bible of Value Investing is evidence of Mr. Graham’s timeless understanding of the market conditions. The book was initially published in 1949.
His philosophy, now known as value investing, shields the investors from errors of investing in the stock market and teaches them to adopt long-term strategies.
The practical application of his ideas and philosophy in recent times has proved his capabilities and wisdom time and again.
- Fundamental Analysis for Dummies | Matt Krantz
This book is authored by the Money Section’s writer and reporter of USA Today and USAToday.com. In the money section of these two, he covers the investment segment and the financial markets.
Further, ‘Ask Matt’ is a daily column in USAToday.com written by him, where he answers investment questions put forth by its readers.
He has authored Investing Online for Dummies, too, and appeared on FOX Business and Nightly Business Report.
These things add to the credibility of the book and encourage the reader to go through the book. The book is easy to understand, savvy, and a practical guide to learn fundamental analysis.
Having discussed all these formats to learn fundamental analysis, you must always remember some crucial points to take care of before investing your money, time, and energy with any of these.
A brief list is as follows:
- The Medium of Content (video, audio, text, etc.)
- Points Covered
- Is it in Line with your Requirements?
- Content Quality
- Language of the Course
- Duration of the Course
- Accessibility to the Course Material
- Language of the Course
Based on these factors, let’s talk about the best way to learn fundamental analysis.
Best Way to Learn Fundamental Analysis
Many people tend to prefer modes of learning to be portable and easily accessible while free time is reducing rapidly.
Due to these requirements, mobile applications have become the best way to learn fundamental analysis as there is an increasing demand for this mode of learning.
This demand is not limited to the stock market education field. Mobile Application is common for all streams of education.
Mobile Applications have gained popularity because of the various distinctive features offered by them. One such application with a range of features is Stock Pathshala.
Let’s list the features of Stock Pathshala:
- Helps you learn about the Stock Market in an easy way.
- These stock market courses are developed in the simplest language.
- The application can be accessed in Hindi and English.
- Courses are available in multiple formats – Audio, Video, and Text.
- Covers multiple aspects of the stock market, from basics to derivatives trading and from fundamental analysis to indicators and oscillators.
- The courses are multilingual. Currently, they are available in English, Hindi, Tamil, Telugu, and Gujarati. Many more languages to be added soon.
- Every chapter is followed by a quiz.
- Extends reviews on all kinds of stockbrokers, PMS companies, IPOs, and much more.
- ‘Shorts’ feature that explains basic stock market concepts in less than a minute.
- Courses are provided free of cost and under the premium membership umbrella.
- Many amazing offers for opening a Demat account, brokerage discount, and a lot more!
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