Are You Investing or Speculating?

Fundamental Analysis of a Company by Mintpaisa

Fundamental Analysis is a process using which an investor takes his investment decisions. It defines the company strengths, weakness, forces affecting the company.

Fundamental analysis helps the investor to decide the intrinsic value of a company share. Investors consider qualitative and quantitative factors which are the main part of the fundamental analysis.

Here Qualitative factors include business model, the performance of management, market conditions. The Quantitative factors include the history of the company, Profit/Loss statements, Cash flow statements, and some important ratios.

If you are not doing analysis on the above-mentioned factors then there is a high chance to say that you are not investing but speculating.

Investing through thorough fundamental analysis protect your capital and give future returns but speculating can blow your capital.

Fundamental analysis includes

Depending on the situations investor perform the Top-Down approach or Bottom-Up approach. Here the top-down approach means the investor starts his analysis initially with the economics (both macro and micro) and then proceeds to the bottom i.e., industry and company. In the case of the bottom-up approach, it happens in the opposite way.


To read the difference between investing and trading read this article Investor vs Trader – Who are you?

Note: Upcoming articles are continuation the current one. This series of articles explains about complete fundamental analysis in a step by step manner.

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