Introduction to Fundamental Analysis

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The fundamental approach is based on an in-depth and all-around study of the underlying forces of the economy, conducted to provide data that can be used to forecast future prices and market developments.

Fundamental analysis is best known as a tool for investors trying to get a very detailed assessment of what a company is worth.

If you buy a warranty from a company and want to know if the company will be able to honor it, that calls for fundamental analysis.

If you just want to know “how well” a company is doing, you might also want to use fundamental analysis.

Fundamental analysis forces you to focus on investing in businesses, not stocks. You’re not buying a lottery ticket, but a piece of ownership in a company.