Technical Vs. Fundamental Analysis: Choosing Effective Strategies In Colombia

Technical Vs. Fundamental Analysis: Choosing Effective Strategies In Colombia – Fundamental analysis (FA) measures the intrinsic value of a security by examining relevant economic and financial factors. Intrinsic value is the value of an investment based on the financial condition of the issuing company and current market and economic conditions.

Fundamental analysts study anything from macroeconomic conditions, such as economic conditions and business conditions, that can affect the value of a security.

Technical Vs. Fundamental Analysis: Choosing Effective Strategies In Colombia

The end goal is to determine a number that an investor can compare to the security’s current price to see if the security is undervalued or overvalued by other investors.

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Fundamental analysis is usually done from a macro to micro perspective to identify securities that are not priced correctly by the market.

Fundamental analysis uses publicly available financial data to assess the value of an investment. The data is recorded in financial statements such as quarterly and annual reports and filings such as the 10-Q (quarterly) or 10-K (annual). An 8-K is also informative because public companies must file it whenever a reportable event occurs, such as an acquisition or a change in top management.

Public—and most private—companies list their websites on investor relations’ annual reports, highlighting financial decisions and results achieved throughout the year.

For example, You can perform a fundamental analysis of a bond’s value by looking at interest rates and the state of the economy as a whole. You will then evaluate the bond market and use financial data from similar bond issuers. Finally, You will analyze financial data from the issuing company, including external factors such as possible changes in its credit rating. 8-K; 10-Q; What they’re doing through the 10-K and the issuer’s annual reports; They can explore their goals or other issues.

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Fundamental analysis looks at a company’s earnings, revenues, future growth; return on equity; Profitability and other data are used to determine a company’s underlying value and prospects for future growth.

A key assumption behind fundamental analysis is that the current price of a stock does not fully reflect the company’s value compared to publicly available financial data. The second assumption is that the value reflected by the company’s fundamental information is likely to be closer to the stock’s true value.

Intrinsic value means something different in stock valuation than in options trading. Option pricing can be calculated for a stock in a number of ways, using a standard calculation for intrinsic value.

For example, Say a company’s stock is trading at $20, and after extensive research on the company. An analyst determines that it is worth $24. Another analyst does the same research but decides it’s worth $26.

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Many investors will consider the average of these estimates and assume that the stock’s intrinsic value may be near $25. These estimates are considered highly relevant because occasional investors are willing to buy stocks at prices that trade significantly below these intrinsic values.

This leads to the third key assumption of fundamental analysis: that in the long run; The stock market will reflect the fundamentals. No one knows how long the problem will last. Maybe days or years.

This is fundamental analysis. By focusing on a particular industry, an investor can estimate a company’s intrinsic value and find opportunities to buy at a discount or sell at a premium. When the market adjusts to fundamentals, the investment will pay off.

Although fundamental analysis is often used for stocks, Useful for evaluating any security, from bonds to derivatives. If you consider fundamentals from the broad economy to company details, you are performing fundamental analysis.

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This method of analysis is in stark contrast to technical analysis, which attempts to predict price direction by analyzing historical market data such as price and volume. Technical analysis uses price trends and price action to create indicators. Some indicators develop names similar to their shapes, such as the head and shoulders pattern. Others use trends to indicate how traders view investments and what will happen. Support and resistance lines are used. Some examples are an equilateral triangle or a wedge.

Fundamental analysis relies on financial information presented by the company whose stock is being analyzed. Ratios and metrics are created using data that indicate how a company is performing compared to similar companies.

The problem with interpreting the word fundamentals is that it can cover anything related to a company’s economic well-being. These include figures like revenue and profits, but can include anything from a company’s market share to the quality of its management.

Various basic factors can be divided into two categories: quantitative and qualitative. The financial meaning of these terms does not differ much from the well-known definitions.

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In this case, Quantitative fundamentals are hard numbers. They are measurable characteristics of a business. Therefore, the biggest source of statistical information is financial statements. income profit Assets and other things can be accurately measured.

Quality fundamentals are less tangible. These include the quality of the company’s key executives; brand name recognition; May include copyrights and proprietary technology.

There are four basic factors that analysts always consider regarding a company. All are talent over quantity. They include:

What exactly does the company do? This is not as simple as it seems. If a company’s business model is based on selling fast food chicken. Does it make money that way? Or will they only charge royalties and franchise fees?

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A company’s long-term success is primarily driven by its ability to maintain a competitive advantage and sustain it. Microsoft’s dominance of Coca-Cola’s brand name and personal computer operating system is a competitive advantage that extends throughout the business to keep competitors safe and enjoy growth and profits. When a company gains a competitive advantage, it can reward its shareholders well for decades.

Some believe that management is the most important criterion for investing in a company. It makes sense: Even the best business model is doomed if the company’s leaders fail to execute the plan properly. Although it is difficult to meet retail investors and truly evaluate managers. You can look on the corporate website and check out the profiles of the top brass and board members. How well did you do in previous jobs? Has their stock floated a lot recently?

Corporate governance is management, Describes the policies established within an organization that describe the relationships and responsibilities between directors and stakeholders. These policies are set out in the company charter; its terms; and as defined in corporate laws and regulations. ethics Justice transparency, Want to do business with an efficient company? Pay special attention to whether management respects shareholder rights and shareholder interests. transparency in their communications with shareholders; Make sure it is clear and understandable. If you don’t understand, it’s probably because they don’t want you.

It is important to consider the company’s industry: its customer base; market share among companies; overall industry growth; competition Regulatory and operational considerations are also important. Studying how the business operates gives an investor a better understanding of the company’s financial health.

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Financial statements are the medium through which a company discloses information about its financial performance. Followers of fundamental analysis use quantitative information from financial statements to make investment decisions. The three most important financial statements are income statements; Balance sheets and cash flow statements.

A balance sheet shows a company’s assets over a period of time. Represents a record of liabilities and equity. Three parts—property; Accountability and stockholders’ equity—it’s called a balance sheet because it must be balanced using the formula:

Assets represent the resources that the business owns or controls at a given time. It includes cash, inventory, This includes things like machinery and buildings. The other side of the equation represents the total financial value used by the company to acquire those assets.

Financing comes from debt or equity. Liabilities represent debts or obligations that must be paid. On the contrary, Equity is current liabilities; အမြတ်ဝေစုများနှင့် အခွန်များအားလုံးကို ပေးဆောင်ပြီးနောက် ကျန်ရှိသောအမြတ်ဖြစ်သည့် ထိန်းသိမ်းထားသော ၀င်ငွေများအပါအဝင် လုပ်ငန်းအတွက် ပိုင်ရှင်များမှ ပံ့ပိုးပေးခဲ့သည့် စုစုပေါင်းတန်ဖိုးကို ကိုယ်စားပြုသည်။

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လက်ကျန်ရှင်းတမ်းသည် လုပ်ငန်းတစ်ခုအား စစ်ဆေးရာတွင် လျှပ်တစ်ပြက်ချဉ်းကပ်နည်းကို အသုံးပြုနေသော်လည်း ဝင်ငွေရှင်းတမ်းတွင် ကုမ္ပဏီတစ်ခု၏ စွမ်းဆောင်ရည်ကို သတ်မှတ်ထားသော အချိန်ဘောင်တစ်ခုအတွင်း တိုင်းတာသည်။ နည်းစနစ်ပိုင်းအရ သင်သည် တစ်လ သို့မဟုတ် တစ်ရက်အတွက် လက်ကျန်ရှင်းတမ်းတစ်ခု ရှိနိုင်သော်လည်း အများပိုင်ကုမ္ပဏီများ၏ အစီရင်ခံစာကို သုံးလတစ်ကြိမ်နှင့် နှစ်စဉ်သာ မြင်တွေ့ရမည်ဖြစ်သည်။

ငွေသားစီးဆင်းမှုစာရင်းရှင်းတမ်းသည် လုပ်ငန်းတစ်ခု၏ အချိန်အတိုင်းအတာတစ်ခုအတွင်း ငွေကြေးဝင်ရောက်မှုနှင့် ထွက်ငွေများကို ကိုယ်စားပြုသည်။ Typically, ငွေသားစီးဆင်းမှုဆိုင်ရာ ထုတ်ပြန်ချက်တစ်ခုသည် အောက်ပါ ငွေသားနှင့်ပတ်သက်သည့် လုပ်ဆောင်ချက်များကို အာရုံစိုက်သည်-

လုပ်ငန်းတစ်ခု၏ ငွေသားအခြေအနေကို ကိုင်တွယ်ရန် စိန်ခေါ်နေသောကြောင့် ငွေသားစီးဆင်းမှုရှင်းတမ်းသည် အရေးကြီးပါသည်။ ရန်လိုသောစာရင်းကိုင်များသည် ဝင်ငွေများကို လှည့်စားရန် လုပ်ဆောင်နိုင်သည့် အများအပြားရှိသော်လည်း ဘဏ်တွင် ငွေသားအတုလုပ်ရန် ခက်ခဲသည်။ ထို့ကြောင့် အချို့သော ရင်းနှီးမြှုပ်နှံသူများသည် ကုမ္ပဏီတစ်ခု၏ စွမ်းဆောင်ရည်ကို ပိုမိုရှေးရိုးဆန်သော အတိုင်းအတာတစ်ခုအဖြစ် ငွေသားစီးဆင်းမှုထုတ်ပြန်ချက်ကို အသုံးပြုကြသည်။

အခြေခံကျသော ခွဲခြမ်းစိတ်ဖြာချက်သည် ကောက်ချက်ချရန်အတွက် ကော်ပိုရိတ်ဘဏ္ဍာရေးရှင်းတမ်းများဆိုင်ရာ အချက်အလက်များမှ ထုတ်ယူထားသော ဘဏ္ဍာရေးအချိုးများကို အသုံးပြုခြင်းအပေါ် မူတည်ပါသည်။

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