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Fundamental Analysis describes the condition whereby an
investor will analyze the economic and political environment in the hopes of
determining the future value of a particular investment product.
For example, a stock investor may start his fundamental
analysis by making a judgment as to the macro economic and political
fundamentals of the world, continent (or region) and country. (Hover here
for some questions an investor may need to answer).
From that point, the investor may then look at the different
industries and make a fundamental judgment as to the merits and drawbacks of
each. (Hover here
for some questions that may need to be answered).
The next step may involve looking at the companies in the
specific industry's space. (Hover here
for some details that an investor will need to evaluate).
All of this analysis comes under the heading of fundamental
analysis. At the end, the investor will generally make a judgment as to
the value of that stock and the expected price movement. A
"Buy" or "Sell" decision is then made that should
be supported what was discovered (for more, hover
here).
The term "drilling down" can be applied to this
type of analysis. For equities the process can be quite extensive.
Hover over any hyperlink to get the answers to the questions or find out additional information.
