๐ Understanding Fundamental Analysis (FA) ๐
What is Fundamental Analysis?
๐ FA is a method that looks at a company's financial health to determine its intrinsic value. It's like being a detective for a company's finances! ๐ต๏ธโโ๏ธ
Key Components:
๐ Financial statements๐ Earnings reports๐ Economic environment๐ฐ Revenue๐ Debt levels๐ Growth
Example:
Imagine you want to invest in "Techie Toys Inc." You check their financial statements, earnings reports, and the overall economic environment. If they show strong growth and healthy revenue, it might be a good long-term investment! ๐
Pros:
๐ง Holistic view of health and growth๐ Identify undervalued companies๐ฏ Correct picks lead to significant returns๐ Less stressful & not time-consuming
Cons:
๐ซ Not suitable for short-term trading๐งฉ Complex, many factors and variables๐ง Requires economic understanding