Financial analysis
A financial analysis is a systematic presentation of information on the financial situation of individuals, companies or markets in general, which is often created by financial analysts. In a broader sense, the analysis of private financial planning is referred to as financial analysis.
Financial analysis in the strict sense
The financial analysis is divided into three areas:
- Fundamental analysis focuses on the business data of a company and with its economic environment. They tried to charge it a "fair " or "intrinsic value " of the company and of its shares and expects that the shares by virtue of (not perfect, but still existing ) approach market efficiency sooner or later this fair value.
- The chart analysis is concerned with the price development of securities, stock indexes, etc. and attempts to draw conclusions from patterns in past price history conclusions about its further development.
- The sentiment analysis focuses on the moods of investors and tried it to derive the development of securities prices.
A financial analysis seldom provides accurate results. Often a combination of two or even all three forms of analysis is used to arrive at a reliable result.
There are professional, suitably trained financial analysts who create rich business studies and in the course of which usually calculate a price target and enter a trade recommendation such as "Buy ", " accumulate" or " sell" recommendation. But even financial journalists (eg in market letters ) and individual investors can perform financial analyzes.
Success of the measures can serve a performance measurement that compares the predicted with the actual future price development.
Results of the financial analysis
The result of the analysis is a recommendation for action. The analyst assigns one examined the securities or the examined market into categories. Common are the recommendations:
- Buy ( engl. Buy)
- Hold ( Hold engl. )
- Sell ( engl. Sell)
While buying and selling are self-explanatory, the "Hold" recommendation in need of interpretation. This usually means "hold" that the expected rate changes allow taking into account the transaction costs no clear recommendation. Does the investor the paper already, a swap is not worth it in a "buy " Judged paper. If he has not, he shall prefer to purchase a "buy " Judged paper.
Some analysts differentiate stronger and raise highly recommended ( risky ) stocks with the attribute "strong" out. Further differentiation can mean the word " accumulate" or "Cancel ":
- Clear purchase (English Strong Buy )
- Buy ( engl. Buy)
- Accumulating ( engl. accumulate )
- Hold ( Hold engl. )
- Reduce (English Reduce )
- Sell ( engl. Sell)
- Clear sale (English Strong Sell )
If the recommendation is not marked otherwise, so it is an absolute (ie, independent of market performance ) recommendation. Partial set analysts, market development, however, as given ahead and review papers relative to the market. The judgments would be:
- Outperformer → better than the market
- According to market performer → the market
- Underperformer → worse than the market
Such an assessment is to specify an index as a benchmark ahead.
Furthermore, a recommendation on the weight of each plant can be related to the portfolio. Thus, the analyst recommends securities in accordance with their own risk-taking to
- Overweight (german overweight ) when the papers have good value adding opportunities
- Underweight (English underweight ) when the papers have poor value adding opportunities
Usually the recommendation of analysts is differentiated by investment horizon and risk tolerance. For example, an analyst may recommend:
- Short-term: Hold
- Long-term: Sell
He therefore expects a long -term price reduction, but not used immediately.