Fundamental Analysis

- Study of business and economic factors to determine the current and potential value of a
stock
1. Qualitative
2. Quantitative: ratios, financial statements
3. Macroeconomics: global economy, local economy
4. Microeconomics: performance of companies

- Study its business model, products, management, financial status

- Check: value (cheap) or growth (potential)

Metrics

Value Growth

Price to earnings (kada piso, ilang earnings) Earnings

Ratio Sales/Revenue

Book value Product innovation

Net asset value Industry position

Dividends

- Look at economic factors to see whether the current environment is viable for investment
and to align our expectations
- Why does FA work? Economy > business > value and growth

Technical Analysis
- Study of historical price and volume data to identify trends and have a gauge of future
price direction
- Look at the behavior of the buyers and sellers to identify trends and patterns
- Use technical indicators to come up with buying and selling signals
- General rule: if stock is above 50d average, uptrend
- Why does TA work? Human behavior > supply & demand > repeatable patterns

Basic TA Assumptions
1. Market already discounts all relevant information (micro+macro) in the PRICE
2. Prices moves in Trends
3. History repeats itself

Case studies
- Consolidation patterns: breakout price continues its trend after every consolidation
pattern (flag like pattern)