Share Market

There are two types of investors. One set those who do not understand what stock market is or think it just too risky and therefore remain satisfied by buying mutual fund or certificates of deposits. The second group understand what stock is and also to analyze them before investing on them. There are basically three ways in which stock analysis is done:

1. Fundamental analysis

2. Technical analysis and

3. Quantitative analysis

In Fundamental analysis, the investors study the stock as a business. This is because they are buying a part of a business of that company. Therefore they try to find out the value of that business and try to find out what worth that stock is. This is done by assessing the financial per value share of the business.

The few things that an analyst has to look into this type of analysis are value, growth, income, GARP (Growth at reasonable price) and quality.

In Technical analysis the investors look only at the all the financial details available in the market which are disclosed by the company and then try to figure out whether it is a good buy or not. To do this the use different tools such as point and figure charts, logarithmic chart, Japanese candlestick and so on. The technical analyst also tries to study the psychology of the investors at a particular time.

Quantitative analysis as the name suggest is purely based on numbers. It does not believe in things like business, management expertise, competition, market potential etc. This is because analysts following this method think that these parameters are subjective and are inferred in varied manner by the investors. Their main concern is the company size. Investors might adopt screen base investing. In this method they apply some filters on the numbers, like company momentum which takes into account companies that are doing well for a few quarters or CANSLIM in which C and A stand for current and annual earning, N new product, S and L for small and large volumes, I for institutional ownership and M for market momentum. All these factors are used to decide the buy and sell of a company.

A blending of all the above methods would work best for investors. To invest knowledge about the company and its business value is necessary. Use charts and graphs to buy and sell stocks.