Question

The different approaches that a first time investor may use to investigate in a stock market for the first time is investing /speculating, company value, fundamental analysis and volume. Which one do you think is the best and why?

Answer 1

The fundamental analysis is the best approach for investigation about a stock :

This approach helps in determining the intrinsic value of a stock. This approach utilises the earnings growth, return on equity , revenue, profit margins to determine the intrinsic value and on the basis of which they reach a conclusion weather the stock is undervalued or overvalued. Investor like to invest in undervalued stocks as the profit potential is high in undervalued stocks as opposed to overvalued stocks. This approach does a complet analysis of the economic , financial and management conditions.