I am a strong believer of Fundamental Analysis (FA).
FA is the foundation of investing. There is this saying: If the base strong and good, the structure can withstand any thunderstorm. FA helps us to determine the overall health of the company through the following 3 area of focus:
- The business’s financial numbers: i.e how is the financial health of is its income statements (profitability), its balance sheet (Financial position), its Cashflow, its future earnings etc
- The business’s management: How capable is the management team? Are they really performing at the best interest of the shareholders?
- The business model: Is the business sustainable over time? Does it have a strong moat to retain its market share? Is the business scalable over time?
Above are some of the important questions that I would ask myself before putting even $1 into the company.