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investment analysisTRANSCRIPT
INVESTMENT ANALYSIS
INVESTMENT ANALYSIS
Definition : defined as the process of evaluating
an investment for profitability and risk, ultimately has the purpose of measuring how the given investment is a good fit for a portfolio.
INVESTMENT ANALYSIS METHOD
Investment Analysis Method
Fundamental Analysis
Technical Analysis
FUNDAMENTAL ANALYSIS
1. FUNDAMENTAL ANALYSIS
Definition The study of the stock value using basic data
such as earnings, sales and others. This basic state any securities have intrinsic
value. In equilibrium stock prices reflect the intrinsic value of the stock.
An investor who has a good fundamental knowledge can make a profit from the difference between the market price and intrinsic value to move quickly before the market price aligned with the correct information.
Fundamental
Analysisa)
Market / Economi
c Analysis
b) Industry Analysis
c) Compan
y Analysis
A) MARKET/ ECONOMIC ANALYSIS
This analysis will examine the general economic, with emphasis on variables that affect the economy of a country in a given period.
These variables can affect the aggregate economy and a significant impact on vested industry and company. Thus any developments that are likely to occur can affect the movement of share prices on the stock exchange.
B) INDUSTRY ANALYSIS
This analysis is known as sector analysis because it examines the industrial sector in a certain period.
In an analysis of industry needs to know the life cycle of industry analysis. The analysis must identify the period in which the company is located.
There are 4 stages in the industry life cycle.
i. Pioneer stage (innovation)
At this stage of rapid growth in demand occur, especially among the nature inovatif.
With the sales levels continue to increase with high growth rates. At this time there are also interesting opportunities outside the company to compete. Weak companies will be excluded at the outset. However, analysis are still having problems to identify companies that are able to survive in the industry.
ii. The development stage
At this stage is a high level of sales growth rate this time moderate.
The industry improve product quality and try to reduce prices. More stable market conditions and strong seta can attract more investors into the industry.
iii. Level Stability / Maturity Stage
This stage show is still high level of sales but a lower growth rate. All products and less innovative over standard among manufacturers. At this time there are many competitors in the market and cost are stable or nearly the same.
iv. Stage Fall
At this stage most of the companies suffered a decline in sales levels that cause the company's revenue also fell and may result in losses. Most companies out of the market. However, companies are still in the market are companies with loyal customers.
C) COMPANY ANALYSIS
Detailed analysis of the company made with the internal and external aspects.
To study the structure of the internal aspects of the organization of a particular company board of directors, key areas of business, subsidiaries, associated companies and business records.
Final objective of the analysis is to find the intrinsic value of the company. This intrinsic value is compared with the value of the stock market as a basis for making investment decisions.
Intrinsic value of the information derived from the financial statements of the company that provides financial data of the company.
Balance Sheet shows the position of the assets and liabilities of the company.
Statement of income to evaluate the performance of management and to estimate the future profitability of the company.
TECHNICAL ANALYSIS
2. TECHNICAL ANALYSISDefinition Technical analysis is a method of
evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume.
Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.
DOW THEORY
Dow Theory was created by Charles H. Dow in 1921.
It concluded that the stock price in the market as a whole does not move at random but influenced by three cycles and price movements, namely: -
1. Primary Movement
Cyclical price movements for a few
years, that early - first year and at least
three years. It involves long periods of
time.
Usually the development of the rise is
longer than the development of the
decline.
Upward movement show the market
'bull' and downward movement show the
market 'bear‘.
ii. Secondary Movement
Cyclic secondary movement for several months,
that as early - first six weeks and at the latest of
six months.
It acts as a force to improve the deviation occurs
in the primary cycle.
It appears because of the correction in the
primary cycle of falling prices due to current
market prices lifted or when the market plunged.
iii.Small Movement/ Daily
Daily movement is occurring randomly.
It is cyclic for a few hours to a few days.
Cycle effect is not as felt by investors as
relatively short duration and of no
importance to the technical members in
making predictions.
TECHNICAL INDICATIONi. The Advance Decline Line
Fluctuation line is the net difference between the number of
stocks experiencing price increases with the number of shares
of the price decline by subtracting the number of shares up to
the number of shares to come down in price.
These calculations are made using cumulative data. The
results obtained are plotted in order to form the line on a daily
or weekly basis.
These lines are compared with the average line to indicate
whether the stock market indicator movement is also
experienced by the market.
ii. Moving Average
Moving Average is calculated by determining the
number of such average closing price for 200
days, 30 weeks and so on.
The new calculation is made by adding one day
and the first to drop one day to the next. This
calculation is made over and over and the figures
are plotted to form the moving average line.
Moving average price compared to the market to
decide whether buying or selling.
iii. The New High Price Low
These market indicators could reflect either
bullish or bearish market.
Market is considered bullish if there is a number
of shares of a new show the highest price
significantly over 52 weeks.
Instead the market is weak if there are only a
few stocks only the highest price of a new show.
iv. Transaction volume
These market indicators also reflect bullish or bearish market.
High transaction volume as a whole shows the market is
bullish. This condition is stronger if followed by an increase in
price.
v. Mutual Fund Liquidity
Market conditions have a direct relationship with this liquidity
ratio. The higher the liquidity ratio of the market is bullish.
High liquidity ratio shows potential purchasing power and its
stock price will rise.
On the other hand if the liquidity ratio is low potential
purchasing power also lower and its market will be fall.
vi. Others Technical Indication
Contrary Opinion
Short Interest Ratio
CHARTS1. Bar Charts
Prepared by plotting a bar chart of daily share prices over time. Every day stock price movements drawn vertically, the upper part shows the highest price, the bottom shows the lowest price, while a horizontal line marked showing the closing price. The underside of the bar chart shows the daily sales volume. Technical members to use a bar chart to see patterns and charts are used to forecast future price movements.
2. Point and Figure Charts
The chart is prepared by plotting stock prices suffered a significant price change. Transaction volume is not shown in the chart. Horizontal line shows the time but according to calendar time is not important. The symbol 'X' and 'O' is used in the above chart. 'X' indicates an upward price movement. Signs 'O' show downward price movement. All the 'X' or 'O' represents the value of Rs 1, Rs 2, Rs 5 and so on depending on the value of the stock price changes. The 'X' and 'O' only recorded when a certain amount of price movement.
3. Relative Strength Index
Relative strength index is the ratio of stock prices to a market or industry index or ratio compared to the average share price of the stock price. This ratio is plotted over time. This line shows the strength of the stock relative to the foundation selected as industry, market and so on.
EFFICIENT MARKET
HYPOTHESIS
CONCEPT OF EFFICIENT MARKET HYPOTHESIS
Definition Efficient market hypothesis is the market in
which security prices fully described all known information quickly and accurately.
It is key to the determination of share prices in the market.
CONDITIONS THAT CREATE EFFICIENT
MARKETS
There are many investors who are rational and seek to maximize profits and is actively involved in the market.
Information can be easily obtained without any restrictions or conditions that make it difficult for a person to get information.
Information can be obtained at random where the announcement was made independently. This means that all announcements made by the company should be done when necessary, without any connection with the announcement made by other companies.
Investors respond quickly and fully to new information in the market and cause the stock price quickly adjusted in line with the new information.
THE TYPES OF INFORMATION
Past informationThis is information that is relevant to the valuation of shares by analyzing past market price data.
Public informationThis is information about a company, the industry and the world economy can be obtained through a public announcement.
Internal informationThis information is only held by a few individuals who have a position in a company.
FORM OF THE EFFICIENT MARKET
Weak FormIt states on the share prices already reflect all kinmi time stock quotes ago.
The Semi-Strong FormIt states that stock prices reflect all information that has been around or known. information include stock prices, accounting reports, economic data, company earnings announcements and other information relevant to investors in the valuation of a company.
Strong FormIt states that stock prices reflect all information either has been announced or yet to be announced. This means that the information has yet to be announced can also be absorbed by the market as reflected by the market price of shares
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