ch 12 Flashcards
Fundamental analysis
attempts to use publicly available information to evaluate securities in an attempt to measure the security’s intrinsic value.
Five Factos for fundamental analysis
Overall economic conditions, the firms management, the firms financial performance, the firms financial position, valuation
Publicly traded firms hold a what every quarter
earnings press release
Transparency
the ability to have access to a firms financial information
What are the key areas of the 10-k
The firms financial statements, management discussion and analysis (MD&A), risk factos, changes in and disagreements with accountants on accounting and financial disclosure
Whats often overlooked in the 10-k
Footnotes and Auditors opinion
Annual Report
is an annual publication provided to shareholders that describes the year’s operations and financial performance
What do you assess when assessing the overall economic conditions
the macro-economy, the business cycle, and industry analysis
Macro indicators
GDP, interest rates, unemployment rate, inflation
Cyclical Sectors
tend to be extreamly sensitive to business cycle changes EX: automobiles
Defensive sectors
much less sensative to changes in the business cycle compaird to cyclical. EX: medication
Secotr Rotation
describes the re-allocation of assets based on the stage of the business cycle. In essence, when times are good, analysts allocate more heavily to cyclical sectors, and when times are hard, analysts allocate more heavily to defensive sectors.
Value Investor
an investor who uses fundamental analysis to find securities priced below their intrinsic value
Earnings Press release
Quartly news updates on a firm’s financial results
Conference Call
a telephonic event in which a firm’s management discusses the quarter’s performance and answer questions from analysts
