<Look at a stock like Home Depot. Up and up and up. Can this continue? How does one know when changes in competition, the housing market, the job market, etc. will change the buying habits of their customers? By the time it shows in a quarterly report, it's too late for the investor.>
Research tells you if XYZ conditions will change the buying habits of customers, just like it should tell the management of the company when they perform it. Studying the environ of a company is part of fundamental analysis. That is how and why professioanl investors have confidence in the companies that they buy, ex. MSFT, DELL, INTC, etc.
I think that technical analysis is akin to voodoo. You find many more people writing books about it than actually making money over the long term with it. If you have performed your research and executed your due diligence properly, you should not be concerned with trading in and out of stocks, only with buying and holding.
For anyone who is truly interested in learning fundamental analysis the correct way, you can begin by downloading the income reconciliation software from rcmfinancial.com . It is a very professional (many professionals do not analyze at this level) software item that breaks down a company's income and reconstructs it from the ground up, stripping it of most accounting shenanigans along the way. Excel 97 is required for use (those without Excel 97 will have to follow along using written formulas only). It requires authorization after 2 days of use, but if we have not gotten far enough in using it to analyze an example I will extend the trial period for an extra day or two (assuming there is significant interest).
I will go along with whoever downloads it and posts to this thread, analyzing the income statement and footnote items of the Micrososft Corporation (as an illustrative example only). |
