We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- Fundamental Analysis is used to make long term investments.
- Investment in a company with sound fundamentals creates wealth.
- Using Fundamental Analysis, one can separate an investment-grade company from a junk company.
- All investment-grade companies exhibit a few common traits. Likewise, all junk companies exhibit common characteristics.
- Fundamental Analysis helps the analysts identify these traits.
- Both Technical Analysis and Fundamental Analysis should coexist as a part of your market strategy.
- To become a fundamental analyst, one does not require any particular skill. Common sense, basic mathematics, and a bit of business sense are all that is needed.
- A core-satellite approach to capital allocation is a prudent market strategy.
- The tools required for FA are generally fundamental; most of these tools are available for free.