Using Fundamental and Technical Analysis
Long term investors rely on “Fundamental Analysis.” Using this invaluable tool you can ‘look under the hood’ - see a company’s management structure, their competitors, their position in the industry, revenues, income and potential growth rate. Of course, the goal is to try to determine if it is a good value. There are other metrics too. Earnings per share, price-to-earnings ratio, price-to-earnings growth, and dividend yield. Understanding how to read these will make it easier for you to compare two companies, each with its own share price, number of shares outstanding, or just different corporate structures, side by side.
You really can’t pick stocks without Fundamental Analysis.
Shorter term traders also rely heavily on “Technical Analysis.”
It’s not as complicated as it looks. It’s a way to measure supply and demand. It shows patterns. The assumption is future patterns and movement will often be similar to previous ones. If you understand the benefits and limitations of technical analysis, it can enable you to be a better trader or investor over the long-term.