facebookHello, I just started Investing recently and I'm quite confused with the company financial statement. So, how we supposed to do a fundamental analysis? and choose the company we wanted to invest? - Seedly

Anonymous

05 Nov 2020

Stocks

Hello, I just started Investing recently and I'm quite confused with the company financial statement. So, how we supposed to do a fundamental analysis? and choose the company we wanted to invest?

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Hi there

From what u are saying, it may be best to not dabble in individual companies until u are able to do an analysis of company confidently, passive investing into etfs would be better

That said, fundamental analysis includes various things from Macro conditions of economy to financials and the business analysis of the company

On the financial analysis, basic things are to see the company do increasing revenues year over year / quarter over quarter cos shows company is growing, stable or growing margins showing scale or able to price competitively, growing profits (if applicable) or at least positive and growing cash flows that shows company is not on path to bankruptcy

On business, u need to understand business model, how they earn their $, what is their market position (incumbent, startup etc), their competitive advantages (moats as Buffett puts it) and quality of management (visionary leaders? Or executives who only want fat bonuses?)

Disclaimer: different things apply to different companies and I may have missed out some metrics to use, read up on investors like Buffett, lynch to better understand how they analyze companies

On choosing companies to start or invest, can start with companies u know cos u might have knowledge on them to aid analysis, or start with finding companies or industry etfs that align with and follow trends happening today (e.g. sustainable energy and climate change, increasing automation, rise of AIs etc)

Hope this helps

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