Individual Stocks

Selecting Individual Stocks

What are the two most important methods to analyze stocks?

The two most basic methods employed by many in order to discern in which stock to invest are fundamental analysis and technical analysis. With fundamental analysis, an investor tries to determine the real value of the company, to ultimately determine the “true” price of the stock, and to use many different data points, including data covering economic conditions and reported financial data. Based upon this analysis, an investor may determine the best time to buy or sell the stock, when its share price strikes the appropriate level, based upon this research. With technical analysis, securities are often analyzed strictly based upon market trading activity, using such indicators as the volume of trades, changes in prices of securities over time, and analysis of charts and graphs to help illuminate opportunities. In technical analysis, no attention is paid to the inherent value of an individual stock, nor necessarily to its financial performance last quarter or last year. Technical-based traders attend only to market trends, in order to identify optimal buying and selling opportunities, often on a second-by-second basis.


This is a web preview of the "The Handy Investing Answer Book" app. Many features only work on your mobile device. If you like what you see, we hope you will consider buying. Get the App