Fundamental Analysis

[destiny]

hi,
can someone tell me the best book on Fundamental Analysis please. one which describes also how news affects share price movement, volume, how share placing affects a share etc. thanks

 

[jsd]

Have a look at security analysis Graham and Dodd, i think you'll need a few other books for news event trading

 

[Glenn]

I think that the Beano or Dandy would be the most reliable for fundamentals.
i.e. they don't have any.
Fundamentals is all smoke and mirrors and best avoided imo.
"When the tide goes out in the harbour, the good ships go down along with the bad".
"Never mistake a Bull market for skill"
etc.
Glenn

 

[destiny]

hi
is it worth getting the Fundamental Analysis CD on this site or is it better to get security analysis Graham and Dodd?

 

[destiny]

hi glen,
i didnt get the Beano or Dandy part, are these books, if so where do i find them?

 

[BBB]

Glenn - you're not wrong.

Destiny - if the Beano or Dandy dont do you, and you want something with more weight, try the Sunday Sport.

Otherwise, The Zulu Principle is supposed to be quite good, but I've never read it to be fair.

 

[Glenn]

hi glen,
i didnt get the Beano or Dandy part, are these books, if so where do i find them?

Hi Destiny.
I was being sarcastic. The Beano and Dandy are childrens comics.
Shame you haven't heard of them
What I'm saying is don't waste your time looking at fundamentals. They have little or no effect on share prices, and what effect they do have is indeterminate.
Where you need to be looking is at the share prices themselves. They can tell you (using technical analysis) more about where a price is going than fundamentals ever will.

Think about it. If you own a house, chances are it's the same house as it was 10 years ago. Nothing has changed in it's fundamentals. So why has the price gone up ? Because there ha been demand for all houses, not just yours.
Focus on the demand/supply and forget the fundamentals.

Glenn

 

[destiny]

i totally agree, but using fundemental analysis i want to see which shares are undervalued, the market can fill the gap when there is some good news. it is true that it has little or no effect on share movement, however is does give the trader confidence, as an example, i bought CORUS at 15p, i still held even though it went to 4p, they had assets exceeding more than 2 billion. the heard do get it wrong occasianally if you see what i mean? there are so many examples i can give, even the .com bubble was because everyone forgot about the fundementals. using fundementals you can pick out undervalued shares, or even the over valued, when demand starts rising or falling you buy it/sell it. using technical and fundemental analysis together can open huge profit opportunities. so are there any decent fundemental analysis books out there. finding technical analysis books is no problem whatsoeva

 

[jsd]

Graham and dodds book can be heavy going, its definitive and technical representation of fundamental analysis, not pleasurable to work through but technical. aimed at grads. and upwards.
jd

 

[madasafish]

The Financial Times and the Telegraph both publish useful guides: read them free by borrowing at your local library. If they do not have them they will have something similar or they may be able to get them from another library.

IT IS WRONG to say fundamentals are of no use. For Longer term thinking.. months.. fundamentals eventually mean something...


For example after such a terrible bear market there are still lots of grossly undervalued small caps which will probably increase in value 5-20 times in the next 5 years.. Now if you want to monitor all 3,000 UK shares go ahead. But if I can narrow the list to 250 ish using fundamentals

For a start look at Turnover/Market Capitalisation ..(if this means nothing to you you need a simple course in funnymentals)...

 

[Scripophilist]

Short term the market is a voting machine long term it is a weighing machine. That is why fundamentals count. Fundamentalist can understand why speculators and technical analysts exist but the counter is generally not true. I have worked quite happily with fundamentals for 15 years and it has served me very well. But fundamentals applies to all aspects of the company not just the numbers.

 

[Glenn]

Seems to me that Destiny's question related to short term situations, rather than months years etc.
Madasafish (Mike ?) have you stopped calling them Funnymentals ?

Glenn

 

[TheBramble]

i totally agree, but using fundemental analysis i want to see which shares are undervalued, the market can fill the gap when there is some good news.

Guess what, if joe public (you and I for our purposes) know a share is undervalued - we're unlikely to be (a) the only ones to know or (b) the first to know.

It doesn't really happen that often and unless you're 'inside' you're not likely to get any of the action.

There is a city saying: "Buy the Rumour; Sell the News".

Which basically means those 'in the know' are buying on the expectation of soemthing they know is to come. When the news breaks, they're already in for the ride that the novices now jump on board and fuel.

 

[madasafish]

Well on funnymentals Tadpole TAD is worth about 0.5p. I bought at 10p before XMAS now 20p

 

[destiny]

thats quite true bramble, but it doesnt stop us from buying the shares aswell as a long term investment, if they are already undervalued and hit rock bottom then surely it limits the risk, we wouldnt know if its rock bottom but looking at the generall trading day to day and puttin a stop loss would make it worth the gamble in my opinion, as long as you dont invest heavily.

madasafish, i also bought TAD at 4p and sold it at just over 8p, some things just dont make sence, its now over 20p, by the way how did you value it at around 0.5p?

 

[TheBramble]

thats quite true bramble, but it doesnt stop us from buying the shares aswell as a long term investment, if they are already undervalued

Absolutely, if you're into long-term growth and all the factors look good, why not.

But the term 'undervalued' is a relative one. What looks undervalued today can look like a peak in a couple of day's/week's time...

 

[destiny]

another example of what doesnt make sence, i bought PNC tel in june at 1.5p on the same day it was suspended. over 6 months no news whatsoever, they had no business by the way. they announced just a few days ago that they have assets worth 1.1 mln and liabilities total 4.4 mln stg. they said they are looking for a business and trading would commence most likely in MAY. just a few days after the announcement they re-open the share on AIM still with no business, up 7p !!! now how the hell is that possible with no news, still with no business where liablilities offsetting assets by 3.1 mln.

 

[TheBramble]

It's as possible as it ever was.

Most of the dotcoms up to the late '90s were doing very nicely on exactly that same basis - until the bottom fell out!