Equitymaster Agora Research Private Limited.
When an investor wishes to invest in a business for the long term say 3 — 5 years it becomes extremely essential to understand the business from various perspectives.
It is critical for an investor to separate the daily short term noise in the stock prices and concentrate on the underlying business performance.
Over the long term, the stock prices of a fundamentally strong company tend to appreciate, thereby creating wealth for its investors. We have many such examples in the Indian market. Higher the CAGR faster is the wealth creation process.
Therefore, you can imagine the magnitude, and the speed at which wealth is created if one would invest in fundamentally strong companies.
Do remember these are just 3 examples amongst the many that you may find in Indian markets. At this point you may be of the opinion that I am biased as I am selectively posting charts that look impressive. You may wonder how the long term charts of companies such as Suzlon Energy, Reliance Power, and Sterling Biotech may look?
Well here are the long term charts of these companies: These are just 3 examples of the wealth destructors amongst the many you may find in the Indian Markets. The trick has always been to separate the investment grade companies which create wealth from the companies that destroy wealth.
All investment grade companies have a few common attributes that sets them apart. Likewise all wealth destructors have a few common traits which is clearly visible to an astute investor. Fundamental Analysis is the technique that gives you the conviction to invest for a long term by helping you identify these attributes of wealth creating companies.
Of course you can be. It is a common misconception that only chartered accountants and professionals from a commerce background can be good fundamental analysts. This is not true at all. A fundamental analyst just adds 2 and 2 to ensure it sums up to 4.
To become a fundamental analyst you will need few basic skills: Understanding the basic financial statements Understand businesses with respect to the industry in which it operates Basic arithmetic operations such as addition, subtraction, division, and multiplication The objective of this module on Fundamental Analysis is to ensure that you gain the first two skill sets.
Technical Analysis TA helps you garner quick short term returns. It helps you time the market for a better entry and exit. However TA is not an effective approach to create wealth.Basic Fundamental Analysis of Banking When I made an ebook about methods of fundamental analysis, I forgot to tell you that there are some companies that have a structure of financial statement that is somewhat different from the usual.
ByStephen D. Simpson, CFA As banks have very different operating structures than regular industrial companies, it stands to reason that investors have a different set of fundamental factors to. Free stocks price quote for TNDM.
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