Fundamental Analysis

Understanding Fundamental Analysis

Fundamental analysis evaluates the intrinsic value of an asset by examining related economic and financial factors.

Economic Indicators

• Interest Rates: Central bank policies influence borrowing costs and currency values.

• Inflation Rates: High inflation can erode purchasing power and affect asset prices.

• Employment Data: Employment levels can signal economic strength or weakness.

• Gross Domestic Product (GDP): Measures a country's overall economic output.

Company Financials (for Stocks)

• Earnings Per Share (EPS): Company's profit divided by the number of outstanding shares.

• Price-to-Earnings Ratio (P/E): Current share price relative to its per-share earnings.

• Dividend Yield: Dividend per share divided by the share price, indicating the return on investment from dividends.

• Financial Statements: Analyze income statements, balance sheets, and cash flow statements for a comprehensive view.

News and Events

• Economic Calendars: Track scheduled releases of economic data that can impact markets.

• Geopolitical Events: Political instability, elections, and international relations can influence market volatility.

• Corporate Announcements: Earnings reports, mergers, and management changes affect stock prices.