Fundamental Analysis

This is a discussion on Fundamental Analysis within the Economic & Fundamental Analysis forums, part of the Methods category; The difficulty with fundantal analysis seems to me to be quantifying all the news and current events. If one could ...

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Old Jul 13, 2006, 11:56am   #1
 
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Fundamental Analysis

The difficulty with fundantal analysis seems to me to be quantifying all the news and current events.
If one could construct an index of say +100 to -100 based on the above it would make it much easier to understand the whole or bigger picture. Perhaps there is already a website somewhere doing just this ? If anyone knows of such a site perhaps they would like to post the address here ?
We all form our opinions from the world news particually. IE the changes in the price of commodities, specifically OIL at present, which really affects markets.
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Old Jul 13, 2006, 12:08pm   #2
 
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Does fundamental analysis take world news into account? That would not have been my understanding, but since I don't use it my understanding may be way off base. As to sites, I don't know of one that does what you have outlined, though there is one that ranks stocks by earnings results and expectations (I think) So the approach would produce a fundamental ranking of sorts.
http://www.zacks.com/
Don't know how much of it is free, or if it's any good.
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Old Jul 13, 2006, 12:16pm   #3
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I agree this is a problem, but is it one you have to solve in order to trade successfully? Maybe you can let the market do the analysis and you follow the trend.

I know a lot of fundamental investors who avidly follow the news, government / Fed announcements, company reports etc. but ironically few of them buy or sell just on these items. They see trading on news (such as M&A, bid rumours etc.) as just that - trading - which they tend to regard as a random and speculative method of investment.

Though they claim to be FA investors, the majority wait for the price to move in their preferred direction and then make a move. I have said before that in my opinion tis makes them technical analysts, though on the most basic leve - recent price action alone. Its certainly a rule of TA to trade what you see, not what you think.
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Old Jul 13, 2006, 2:40pm   #4
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so, does price determine the fundamentals & news, or the fundamentals & news determine the price?
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Old Jul 13, 2006, 4:35pm   #5
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Quote:
Originally Posted by charliechan
so, does price determine the fundamentals & news, or the fundamentals & news determine the price?
The former.
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Old Jul 13, 2006, 4:40pm   #6
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i reckon so too.
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Old Jul 13, 2006, 6:16pm   #7
 
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Quote:
Originally Posted by charliechan
so, does price determine the fundamentals & news, or the fundamentals & news determine the price?
Surely it is mainly the latter. Sorry to disagree but if say transport costs suddenly rise it will affect the Dow etc. That is if it was not expected and already in the price. This is what confuses many. What should have say caused a price rise ( e.g. a fall in interest rates ) can actually have the opposite affect because the markets expected a bigger move.
To make a more accurate model of the markets there is also the perceived element of sentiment. Italy probably has it at the moment. The UK had it in 1966 !
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