Your intense research and deep analytical knowledge lead you to the best investment benefit and limits the chances of losing money in the share market. So, everyone should research thoroughly before any kind of investment. It will not only make you familiar with the process of investment like how to invest, where to invest, what are the associated processes and procedures but enhance the knowledge about the risk associated with the share market and help to identify the best suitable & safe path also.
Your research may be different according to your investment needs and expectations but broadly we can define Stock market research into two categories. The first one is Fundamental Research and the second is technical research.
Both kinds of research serve different purposes of gaining benefit from the share market with their different approach, process, and implementation strategy.
Fundamental Research is the most used investment strategy by investors. It is an ideal way to analyze the forecast and estimate the benefit for long-term investments. It focuses on the value of stock and other determinants and factors that can affect the valuation of share and help us to analyze the future.
In this process, the stock price does not matter much but economic aspects, the company’s health, and trends play an important role to predict the future of the company. Apart from economic trends, fundamental research associates other factors that can directly or indirectly affect the company in the long run also. Some of the key components of Fundamental research are :
Financial Statistics :
Balance sheets, quarterly results, revenue reports, revenue model, assets, liabilities, etc. reflect the current health of any company that must be analyzed before investment. These factors are the key to a company's performance in the long run. Every document needs to be examined very minutely to get a clear picture of a company that gives us a clear mandate whether it is good or bad to invest in a particular stock.
Industry trends determine the direction and path of the industry. It contains all details related to the future scope and predictions of a specific industry and factors that can affect the ongoing trends and growth. So, knowing patterns and hidden meanings of industry trends is very important before any kind of investment.
Knowing competition and possible competitors gives us the ability to evaluate the performance of a company. It helps us to know the strengths and weaknesses of a company and showcase the growth prospective & possibilities among different players of the same industry.
The recent development and economic events also need to be addressed before investing money. The economic trends of a company can deeply impact the growth and future of any industry. Economic policies, fiscal policy, and monetary decisions can increase or decrease the possibilities of any company.
Return on Equity (RoE) and Return on Assets(RoA) are the two most important credentials required for Fundamental Research. The source of information and data are mainly financial documents or statements of the company that holds history as well as future aspects related to the company also.