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Fundamental Analysis the Easy Way - Part 4 |
by John Jagerson
Fundamental analysis may not need to be complex but searching for stocks that look best can be difficult without a way to automate the process. One of the great opportunities of online investing is the breadth of stock searches available for free. They are very robust, easy to use and often integrated with your online broker.
The video for this section is a demonstration of just one of these tools. The stock screener I will be using is very representative of tools available for free and pay around the internet. Practice on your own using one of these tools and add stocks to a paper portfolio. It may surprise you to see what you can find on your own.
This series of articles on simplified fundamental analysis builds on the concepts discussed in the Understanding Financial Statements article series.
In the video, I will discuss two case studies. You will notice that since this video was first published in July of 2008 those two stocks have performed on a relative basis as expected. Although the market has been an adversarial one since that time the value of proper fundamental analysis still comes through.
To see the first article in this series on fundamental analysis, click here.
To see the second article in this series on fundamental analysis, click here.
To see the third article in this series on fundamental analysis, click here.
Author's Note Redux: You will notice that several times within the video and text of this section I qualify statements with the phrase "diversified portfolio." This is not by accident. Almost all analysis breaks down when you only apply it one trade at a time or one stock at a time. This is because there is an unavoidable randomness within stock price changes, which is also known as unsystemic risk. Therefore, fundamental and technical analysis really only adds value when used on a group of stocks where the benefits of diversification can reduce exposure to unsystemic risk. This is a big subject and one we have already spend a lot of time on.
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