Fundamental Analysis
2 min readDec 11, 2020
- Fundamental analysis is generally the practice of evaluating the value of an asset and analysing the factors that could influence its price in the future. The factors are what really matters because that’s what actually defines this methodology so lets have a look at some of the factors.
- Certain events like a counties increase in the unemployment rates or a country’s economy and monetary policy statements affect the level of demand for its currency.
- If a country’s current or future economic outlook is good, their currency should strengthen and that’s where this concept would be derived from.
- The better shape a country’s economy is, the more foreign businesses and investors will invest in that country.
- Company reports Are taken into consideration by investors who have interest in purchasing an amount of stock in a business. Because the value of the investor’s shares will only increase if the underlying value of the shares increase, one must be confident in the company’s potential growth and this is certainly something that a companies report can paint a clear picture on.
- Media Influences! Whether or not you read the newspaper, watch the news on television, follow news of social media or listen to news on the radio im sure at some point in time you have been exposed to news that was representative of true coverage and/or news reports that were blatantly manipulative of the facts. The news can influence trading and investing decisions to a significant degree.
- When using the media as a source of data and information one needs to be sure of the source’s reliability.
- Environmental Influences are the major influences to the supply and demand of (but not limited to) agricultural commodities. If a country experiences drought there are countless ways that would affect production. We would mainly see the rise in prices of fruit, vegetables and grains from a country that is generally rich in production of these
- commodities if it had to go through a drought which also inevitably affects trading decisions and market conditions for the commodity.
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