Elements of stock market analysis

AuthorSuciu, T.
PositionDept. of Finances, Accounting and Economics, Transilvania University of Brasov
Pages153-160
Bulletin of the Transilvania University of Braşov • Vol. 6 (55) No. 2 - 2013
Series V: Economic Sciences
ELEMENTS OF
STOCK MARKET ANALYSIS
Titus SUCIU
1
Abstract: The paper repr esents a star ting point in the presentation of the two
types of stock/market a nalysis: the fundamental ana lysis and the technical
ana lysis. The fundamental a nalysis consist in the assessment of the financia l
and economic status of the company together with the context a nd
macroeconomic environment where it activates. The technica l analysis dea ls
with the demand and supply of secur ities and the evolution of their trend on
the market, using a r ange of graphics and charts to illustrate the market
tendencies for the quick identification of the best moments to buy or sell.
Key words: fundamental an alysis, technical ana lysis, volume analysis,
investor.
1. Introduction
Everyone cannot beat the
market…simply because everyone is the
market. But that does not preclude the
possibility that some investors, utilizing
more sophisticated approaches than the
public at large, can earn above average
returns on their investments. The first step
in building a successful investment strategy
is to learn as much as possible about where
in general are headed.
Game theorists call the stock market a
positive sum game because in the long run
the market rises and in aggregate, all
invertors make money. An old Wall Street
adage goes, don’t tell me what to buy, tell
me when to buy it. In fact, what and when
are two sides of the same coin- both
essential to a successful investment
strategy.
2. Fundamental analysis
Fundamental analysis presumes security
prices are based on the intrinsic value of the
1 Dept. of Finances, Accounting and Economics, Transilvania University of Braov.
underlying company. The fundamentalist
believes that with time, stocks will move up
to minimize the disparity between their
present value and their perceived intrinsic
value. Thus, fundamental analysis
presumes the future prospects of a security
are best analyzed through a proper
assessment of the intrinsic value of the
underlying company.
In pursuit of value, the fundamentalist
collects, analyzes, and models company
information, including earnings, assets,
liabilities, sales, revenue, and other
information required to evaluate the
company. Assumptions of the
fundamentalist include a belief that markets
are not completely efficient and that all
necessary information is available to the
public, but the company may not always be
efficiently priced. Overall, fundamentalists
are concerned with what the price should be
according to their valuation models.
A turning point in the popularity of
technical analysis occurred in the mid-

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