What is basic analysis?
Many definitions can be given to the question of what is fundamental analysis, but I think they all have in common “general economics, the sector in which the company is located and the company’s data – ratios based on the value of the stock is trying to determine the analysis.”it would be. How to analyze the stock market? we examine it in 3 headings: technical-basic-barter. This article is about basic analysis training.
Every company is an organism. Although there are other companies in the same sector that are similar to them in many ways, the company is unique because of its very different characteristics such as assets and liabilities, organizational structure, management style, relationships, connections and origin. In order to know the value of a company for all these reasons, we call fundamental analysis a detailed analysis that takes into account the characteristics of the company first. What is the purpose of basic analysis? this is the most self-answer: to find the value of shares, to assess the value of shares.
Most of you have met the basic analysis-technical analysis comparison…
Technical analysis is a method of valuation based on the examination of the trading volume and price charts of a share. It is used to guide us through what levels and when a stake can be taken.
Basic analysis helps to determine which stocks to choose.
Therefore, these two types of analysis are not alternatives but complementary.
In my opinion you should use both.
Basic analysis training
If you have not received a bachelor’s degree or Master’s degree in the process, basic analysis will be difficult at first. But it is not difficult to understand and learn. It’s the internet age. If you follow the analysts and channels that produce complex content, you will have 50 percent done on basic analysis training. The remaining 50 per cent will remain in your interest-curiosity-skill situation.
Anyway, without distributing the subject how the basic analysis is done, what is looked at it let’s examine.
How Is Basic Analysis Done?
What people understand from basic analysis is generally company analysis. This is a big misconception and/but company analysis alone is not enough for basic analysis. In the context of the basic analysis training guide, I organized the basic analysis how-to question in 3 steps. Attention, please.
General economic analysis in basic analysis
A fundamental analyst must master the general economic conjuncture as a first step. In other words, the analysis of the basic data of the general economy or macroeconomics is the root of this work.
GDP (gross domestic product), employment, unemployment rate, inflation, interest rates, budget deficit are important data. This data shows the future cash flows of companies and from here
the movement contains important elements that determine stock values.
Tax and monetary policies are also counted in this class. Supply and demand are very decisive factors in the point.
Sector analysis in basic analysis
The second step is sector analysis.
You will encounter such situations that even if the economy shrinks, some sectors will grow; even if the economy grows, some sectors will tend to shrink. We call it” sales sentiment.”
For example, food, pharmaceuticals … (although the economy experienced a contraction in the corona infected days in which this article was prepared, for example, sectors such as pharmaceuticals and food continued to increase their growth.)
It is essential to make Sector Analysis while making basic analysis analysis for these and similar reasons. Without knowing the internal and external dynamics of the sector, you are missing the basic analysis…
Company analysis with basic analysis
Company analysis is our third step.
Finally, if we have completed the overall economy and sector analysis, we can move on to the company analysis, which is the final phase of the basic analysis.
Company analysis is an analysis in which we can look at many details, from the management of the company (boss sentimentality), financial situation, material assets, material assets (such as patents, brand value), indebtedness, and even foreign interest in the company.
In this section, How is the valuation of a company done, how is the value of the company worth the share price, is the share price cheap or expensive? answers to such questions are sought.
Company valuation methods with basic analysis
Valuation methods are the most confused part of financial mathematics. I’d like to mention that part a little bit.
Company valuation methods can be rounded up around approach 3. These approaches are cost, market and revenue approaches.
The company’s assets are highlighted in the cost approach. Methods such as book value, liquidation value are used. If the company sold all its assets and paid all its debts, what would be left? the company valuation is done by searching for the answer to the question.
According to the revenue approach, the value of the company is equal to the sum of the present values of cash inflows it is expected to provide in the future. Here,” discounted cash flows “and” discounted dividends ” using methods such as future income estimates and company valuation are used.
Market approach the market what we call the multiplier (company parameters) price/earnings ratio (f/k Ratio), market value/book value ratio (PD/DD Ratio), EBITDA (EBITDA) by looking at factors such as return on equity, the entity in question (such as stocks in investors ‘ valuation of the company is valued by measuring the value of assets.
How is the value of a stock calculated?
Now let’s share a few of these company valuation methods. You can also find many company valuation mathematical accounts on the internet. I’ll try to transfer the most useful ones here. Dec decks some methods on my twitter account and I add them here.
In our first method, the company’s equity, the annual net profit figure, the current market value are the data we will use. Using these, we will reach market multipliers and interpret whether the stock is cheap or expensive or has premium potential or not.