Investments Flashcards
Top-Down Method
Fundametal analysis
- An investor looks at trends in the general economy selects industries, and then selects companies that should benefit from those trends.
Bottom- Up Method
The client searches for individual stock with outstanding performace before considering the impact of economic trends. Assumes the individual company will do well, even if the industry is not performing well.
Ration Analysis
Studies relationship between financial variables. Ratios of one firm are often compared with the same ratio of similar firm’f financial statistics are unreliable. Likewise, a particular ratio for a firm may be evaulated over a period of time to determine if any special trends exist (establish norms for the firm)
Fundamental Analysis
1) Top-Down, 2) Bottom-Up 3) Ratio
Economics is research of such factors as interst rates, gross domestic product, inflation, unemployment, and inventories as tools in order to predict the direction of the economy.
Technical Analysis
Uses charts or computer programs to identify and project price trends. Most analysis examines the short or intermediate term. Unlike fundamental analysis, technical analysis is not concerned with the financial position of a company.
Technical Approaches
Dow Theory, Barron’s confidence index, Odd lot theory, Investment advisor opinions, Advance/decline, moving/decline line, Moving average (200-day), Mutual fund cash position.
