Matt Krantz - Fundamental Analysis For Dummies

Fundamental Analysis For Dummies, 2nd Edition

Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com

Copyright 2016 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions .

Trademarks: Wiley, For Dummies, the Dummies Man logo, Dummies.com, Making Everything Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc., and may not be used without written permission. All other trademarks are the property of their respective owners. John Wiley & Sons, Inc., is not associated with any product or vendor mentioned in this book.

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY : WHILE THE PUBLISHER AND AUTHOR HAVE USED THEIR BEST EFFORTS IN PREPARING THIS BOOK, THEY MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS BOOK AND SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES REPRESENTATIVES OR WRITTEN SALES MATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR YOUR SITUATION. YOU SHOULD CONSULT WITH A PROFESSIONAL WHERE APPROPRIATE. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM.

For general information on our other products and services, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax 317-572-4002. For technical support, please visit www.wiley.com/techsupport .

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com . For more information about Wiley products, visit www.wiley.com .

Library of Congress Control Number: 2016934821

ISBN 978-1-119-26359-3 (pbk); ISBN 978-1-119-26360-9 (ePub); ISBN 978-1-119-26361-6 (ePDF)

1. Table of Contents

If someone gave you a dollar for every newfangled stock-picking method invented every year, well, you probably wouldnt need a book on investing. Youd already be rich.

Investors are constantly barraged with new ways to pick stocks and buy stocks. Theres no shortage of pundits, professional investors, and traders who all claim to know the best ways to invest. The trouble is, most of their advice is conflicting and often confusing.

Maybe its this constant swirl of investment babble that tempted you to pick up this book. If so, you made a wise decision. This book will help you get back to the basics of investing, understand business, and measure how much that business is really worth. Rather than chasing hot stocks that whip around, Fundamental Analysis for Dummies will show you how to study the value of a business. Youll then use that information to make intelligent decisions about how to invest.

While faddish stock-picking systems come and go, fundamental analysis has been around for decades. The ability to pore over a companys most basic data and get a good idea of how a company is doing, how skilled the management team is, and whether or not a company has the resources to stay in business is a valuable skill to have.

Fundamental analysis is best known as a tool for investors trying to get a very detailed assessment of what a company is worth. But you might be surprised to learn you dont have to be an investor to use fundamental analysis. If you buy a warranty from a company and want to know if the company will be able to honor it, that calls for fundamental analysis. If you just want to know how well a company is doing, you might also want to use fundamental analysis. Journalists, too, can use fundamental analysis to find stories that will interest readers. Fundamental analysis also helps you figure out whether what you read about companies makes sense.

The aim of this book is to show you what fundamental analysis is and help you use it as a way to better understand business and investment.

Fundamental Analysis For Dummies is one of the most approachable texts to tackle this somewhat complex topic. Rather than bog you down with the nitty-gritty details that academics pull their hair over, Ive attempted to lay out all the main topics and techniques youll need to apply fundamental analysis to a variety of business tasks.

While fundamental analysis is useful for anyone with genuine interest in learning more about business, I appreciate the fact you are likely hoping to make some money from fundamental analysis. For that reason, the book is largely targeted toward investors who are either hoping to use fundamental analysis to manage their portfolios or to enhance their current system of selecting stocks.

As the author, I can share the tricks, tips, and secrets Ive learned from a career writing about online investing for readers just like you. In the course of writing for USA Today, including a daily online column about investing called Ask Matt at www.usatoday.com , Ive answered thousands of reader questions that may include the same ones you have.

Fundamental Analysis For Dummies gives you all the tools you need to access fundamental data, process it, and make decisions. The book, however, stops short of showing you how to actually buy or sell stocks by choosing a broker and entering orders. If youre interested in the actual process of buying or selling stocks, that topic is covered exhaustively in my other book, Investing Online For Dummies, 9th Edition (Wiley, 2016).

When youre flipping through this book, you might notice several icons that catch your attention. Thats done on purpose. I use several distinct icons to alert you to sections of the book that stand out. Those icons are as follows:

These icons highlight info that you should etch on the top of your brain and never forget, even when youre getting caught up in the excitement of fundamental analysis.

Read these sections to quickly pick up insider secrets that can boost your success with fundamental analysis.