Poem on Fundamental Analysis


Active Member

I am providing the link above since what follows is a sequel to the peom on technical analysis(above link) unlike the real world where the situation is vice-versa.

If people think that on Technicals, I have got over sentimental
Let me add that they are ornamental without the analysis deemed fundamental

For each and and every stock, to know how to judge and treat
You cannot but not know the profit and loss account and balance sheet

One can easily get bowled over
By the last three-five years turnover

Turnover need not necessarily indicate profitability
Which more than anything else improves the stock market performance probability

Profitability has to be supported by inclination to declare sufficient dividend
Whether one is talking of a stock or discussing a mutual fund

Dhirubhai Ambani knew that with continous dividend, capital appreciation would be the result
Which enabled him to single handedly change India's equity cult
In his life time,Reliance was stock market's perennial darling
Irrespective of market rising or falling

One has to look into growth of turnover, profit and assets
To make a holistic judgment after looking at all facets

One would be considered an ignorant fellow, his investment performance could be mellow
If in todays world he is not aware of funds and cash flow

Anyone who knows anything about the stock market would not dare
To venture into a stock without knowing Earnings per share

Unless you are well versed with your Price to earnings ratio
Your investments could turn into a flop show

One should be specially be vary of replacement and free reserves
Inability to distinguish between the two can prove very testing for your nerves

To achieve a proper relative judgment, one has to probe the chemistry
Of the stock vis--vis peers and the concerned industry

Pursuing Trading and using Technicals, one has to be daring and bold
On the contarary, In Fundamentals patience is required for buy and hold.

Whatever assessing stocks or indices through Technical or Fundamental analysis
Thery are just tools; overindulgence can result in " Analysis causing Paralysis"

If you dont like the poetry, there shall not be an encore
Remember that Technicals reflect opinion, fundamentals shall always remain the core.
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Hi all,

It is the market sentiment rather than just fundamental that remains as core . ;)


Active Member
Mr Ashwini Gujral also has written in his book on derivatives that stock rise not because of their intrinsic worth but because of people's expectations on them or because "perception of reality is more important than reaility" . In that context you are right. In my view, Sentiment has a major role in the short run but fundamentals do have more weightage in the long run.
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