Fundamental Analysis

Fundamental analysis is an stock market investment strategy that uses a company's underlying financial condition as a guide for its future earnings prospects. Fundamental analysis assumes that a company's stock market price is a function of these future earnings forecasts, and so predictions for stock performance can be modeled.

Some of the greatest investors of all time subscribe to this model. Warren Buffet is perhaps the greatest example. His mentor was Benjamin Graham, who wrote some of these value investing bibles.

These investors believe that information can be gleaned from price to earnings ratios, debt ratios, and many other financial metrics. Like Technical Analysis, value investing involves heavy mathematics. Analysts model past earnings against a larger set of microeconomic variables to predict future stock market prices.

The proliferation of online trading applications and easy to use data modeling software has brought value investing to the masses. Arm yourself with knowledge and you might be able to invest online like the masters.