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To Buy or Not to Buy Stock? Fundamental Analysis in 7 Steps
It isn’t easy to beat the market — if you wanted to try, this may be the best way
How should you decide whether or not to buy a stock? Well, you can join a stock investing community and simply buy what others are suggesting as the next hot stock. Maybe it will become a meme stock and go to the moon, and you’ll be so rich that you’ll never have to work again! There’s another way, known as fundamental analysis, that involves a lot more time and effort, and doesn’t promise that you’ll get rich quick or beat the market. But you can give it a try, by starting with hypothetical stock purchases that you can track, say, over several months, to see if it might work for you. I’ll describe a 7-step process and checklist to follow, that includes a downloadable spreadsheet here. (Remember, as always, I’m not providing investment advice!) At the end of your analysis, you may decide not to invest in that particular stock, and that’s perfectly fine — you may have avoided losses.
Intrinsic value
The goal of any stock investment should be to invest in stocks when you feel the market value or price is below the intrinsic value or price. The market price is simply what the stock is trading for today. Intrinsic value is something that can never be observed — it’s what you think the…
