Fundamental analysis is involves using related economical and financial factors to determine the value of a security. Both macro and microeconomic factors are considered when performing fundamental analysis from the overall economic health of an industry or country to specific details pertaining to one company such as specific Management decisions made by the company to its revenue and profit. Fundamental analysis can be used on a range of securities including indices and individual stocks, forex, and commodities.
Fundamental analysis is extremely useful for investors to decide if a security is over or undervalued. Both qualitative and quantitative methods of fundamental analysis are important for investors to consider and provide a holistic view of a security’s economic health. If done correctly an investor can uses fundamental analysis to identify opportunities to buy securities at a discount.