Article

Stock Valuation
October 05 , 2012

Stock analysis is an evaluation of a particular trading instrument or the market in an attempt to predict future actions of the stock/market or to provide a general insight into the market. 

Techniques Used in Analyzing Stocks:

Stock analysis is complex and there are several techniques used by investors and financial experts:

Fundamental Analysis

Fundamental analysis is a widely used method of valuating a stock, and this method can be performed by a beginning investors. Stock valuation is done by comparing and analyzing economic, financial, and other factors in order to determine whether to buy, hold, or sell the stock. Economic factors will include the overall economy and the company's industry. For example, a retail outlet may have a poor valuation during a downturn in the economy. Other factors include the company's debt, financial condition, and even the company's management. This form of analysis can be performed on any stock, and can be applied to bonds.

Financial Analysis

Financial analysis is the process of evaluating a company is done to determine if the security is suitable for investment. Financial analysts with research income statements, debt, cash flows, and balance sheets to see if the company is stable and profitable enough to be invested in. Furthermore, a company's financial past is studied to predict future profitability. A common factor to look at is "return on assets." This shows how a company uses its assets to increase profits.

Technical Analysis

In this type of analysis, investors study price action on the stock market by the use of quantitative techniques and charts. The purpose of this type of analysis is to forecast overall price trends. A company's financial statements are less important in this type of analysis. Investors using technical analysis often use the advance-decline line, a tool that determines the difference between the number of stocks dropping in price and the number of stocks rising in price. Investors can create a net advance by subtracting total number of dropping prices from total number of advancing prices. Over time, the total creates the advance-decline line. This line often parallels the movements of the Dow Jones index, but financial experts have noted that when there is a discrepancy between the Dow Jones and the advance-decline line, that is a good indication of a changing direction in the market.

Index Method

In this type of analysis, investors value their portfolios by trying to create diverse investment strategies. The investment portfolio is weighted by market capitalization. In this type of analysis, investors try to find ways to minimize taxes, maximize the general trend of the stock market, and makes diverse investments. Analysis aims to find the most diverse portfolio strategy possible.

Fintotal Knowledge the best place to learn more on personal finance.

The language is simplified and written specially for non finance background individuals.


Explore more in a easy manner.

Table of Contents

Table of Contents

  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed
  • No Article Listed

Get the all financial products under one roof only at

you will NEVER GO WRONG with us!

Unbiased . Best Deals . Appropriate Products . No Mis-selling