Want to Learn Fundamental Analysis

#1
Hi All,

I am new at this site, and want to be a Fundamental Analyst of stock but I don't know where to start and how to start.

I am very confused about books Like:

a) Which book should I read?

b) What should I learn to to become a Fundamental Analyst?

Can you guys help me in this regard.

I shall be very thankful to all if you guys can show me the path.

Thanks

Ehtsm
 

Alchemist

Administrator
Staff member
#2
What's your educational background?

Do you have basic knowledge of financial statements?

I mean do you understand terms like "income statement", "depreciation", "receivables" etc?
 
#3
What's your educational background?

Do you have basic knowledge of financial statements?

I mean do you understand terms like "income statement", "depreciation", "receivables" etc?

Yes Alchemist,

I Know, I am a graduate with B.Com (Bachelor of Commerce) in which accounting and statistics were also my subject.

Thanks for an early reply.
 

Alchemist

Administrator
Staff member
#4
In that case, you can consider purchasing some of the books on this list:

http://www.e-investing.in/markets-indices/3646-list-books-i-have.html

My suggestions:

Damodaran On Valuation by Aswath Damodaran
Financial Statement Analysis & Security Valuation by Penman
Analysis of Financial Statements by Leopold Bernstein & John Wild

Also, you can consider one of these two books on general investing:

Buffettology Mary Buffet
One Up On Wall Street Peter Lynch
 
#5
The Intelligent Investor - Benjamin Graham

In my opinion, the above book should be read by each and every person before investing even 1 rupee in the market. You may or may not follow the method given in the book - but it's still a must read in my opinion.

If you want to go deeper into Analysis,

Security Analysis by Graham (actually by 4 of his students) - this book is too complicated for me - since I have no background in commerce or economics - however, hoping to learn enough to read this book.
 
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#6
In that case, you can consider purchasing some of the books on this list:

http://www.e-investing.in/markets-indices/3646-list-books-i-have.html

My suggestions:

Damodaran On Valuation by Aswath Damodaran
Financial Statement Analysis & Security Valuation by Penman
Analysis of Financial Statements by Leopold Bernstein & John Wild

Also, you can consider one of these two books on general investing:

Buffettology Mary Buffet
One Up On Wall Street Peter Lynch
Thanks a lot Alchemist for providing me the valuable list of fundamental books given below:

1) Damodaran On Valuation Aswath Damodaran
2) Financial Statement Analysis & Security Valuation Stephen Penman
3) Fundamental Analysis For Investors Raghu Palat
4) Schwager on Futures: Fundamental Analysis Jack Schwager
5) Security Analysis Benjamin Graham
6) The Interpretation of Financial Statements Benjamin Graham & Spencer Meredith
7) Analysis of Financial Statements Leopold Bernstein & John Wild
8) Financial Shenanigans Howard Schilit
9) Creative Cash Flow Reporting: Uncovering Sustainable Financial Performance Charles W Mulford & Eugene E Comiskey
10) The Financial Numbers Game: Detecting Creative Accounting Practices Charles W Mulford & Eugene E Comiskey
11) Quality of Earnings Thornton L O Glove & Robert Sobel
12) Buffettology Mary Buffet
13) One Up On Wall Street Peter Lynch

But I would like to know two more things.

a) Should I buy and read the all given above books?
b) Or Is there any specific book in this list that fulfill the required to become the Fundamental Analyst.

Because as you know that there are a lot of books on amazon.com on such subject and every author claims that the written his/her book is best on this subject but the professional fundamental analyst can only advise you that which author's book is best.

I need your recommendation.

Thanks once again for early reply
 
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#7
The Intelligent Investor - Benjamin Graham
In my opinion, the above book should be read by each and every person before investing even 1 rupee in the market. You may or may not follow the method given in the book - but it's still a must read in my opinion.

If you want to go deeper into Analysis,
Security Analysis by Graham (actually by 4 of his students) - this book is too complicated for me - since I have no background in commerce or economics - however, hoping to learn enough to read this book.
Thanks vinvest!

I shall must read the your recommended books and if you have any others valuable information on this subject please share.

Thanks once again.
 

Alchemist

Administrator
Staff member
#8
a) Should I buy and read the all given above books?
b) Or Is there any specific book in this list that fulfill the required to become the Fundamental Analyst.

Because as you know that there are a lot of books on amazon.com on such subject and every author claims that the written his/her book is best on this subject but the professional fundamental analyst can only advise you that which author's book is best.
You need not buy all the books together. Buy one at a time, as and when you have time and money to commit.

Read slowly and understand. Don't read these books like novels. Read them like you read your school textbooks, few pages at a time, but with full understanding.

Indian editions are available for most the books that I have mentioned. Look at sites like Flipkart, Infibeam, Indiaplaza etc.

You can read the reviews on Amazon.com. The reviews will tell what others feel about these books.

If you want to buy just one book, I suggest you go for Penman's "Financial Statement Analysis & Security Valuation".

Books like Buffettology (Mary Buffet), One Up On Wall Street (Peter Lynch) and The Intelligent Investor (Benjamin Graham) look at stock market investing from "common sense" point of view. These books don't cover fundamental analysis in depth, but if you get a chance, you must read them.

For a fundamental analyst, "common sense" is as important as his ability to interpret financial statements, maybe more important.

There is lot of valuable information about fundamental analysis available on the internet, but it's not well organized and is scattered. Therefore I feel, it is better to start with a good book. Once you know what all you should be knowing about, you can search the internet for individual topics.
 
#9
Learning to read financial statements is the easier part. The harder part is to develop good knowledge about the various industries and sectors. Also some economics, esp. the macro part. Without this it is not possible to make good investment decisions. Because investing is not about understanding the past, but predicting the future :)

Alchemist, what resources do you use for the same?
 
#10
If you want to buy just one book, I suggest you go for Penman's "Financial Statement Analysis & Security Valuation".

Books like Buffettology (Mary Buffet), One Up On Wall Street (Peter Lynch) and The Intelligent Investor (Benjamin Graham) look at stock market investing from "common sense" point of view. These books don't cover fundamental analysis in depth, but if you get a chance, you must read them.
Thanks once again Alchemist!

I will go now with Penman's "Financial Statement Analysis & Security Valuation" according to your recommendation after that I will read another books provided list by you.

But, would you please advise me that is there any "Authentic Tutorials" on given below subjects OR written by you OR any specific book in which everything is thought by example!

a) How to Determine if Stock Price Is Overvalued or Undervalued?
b) How to Value the Actual Price of Stocks?
c) What Is The Intrinsic Value Of A Stock?
d) Or, When to buy and sell a stock? etc.

If yes, please share, it will more help such me peoples who are interested in learning such subject.

Thanks for reply.
 
#11
Learning to read financial statements is the easier part. The harder part is to develop good knowledge about the various industries and sectors. Also some economics, esp. the macro part. Without this it is not possible to make good investment decisions. Because investing is not about understanding the past, but predicting the future :)

Alchemist, what resources do you use for the same?
Yes $$Money$$!

I agree with you, this is the important part where one should more focus if they want to be a Fundamental Analyst.
 

Alchemist

Administrator
Staff member
#14
any specific book in which every thing is thought by example!

a) How to Determine if Stock Price Is Overvalued or Undervalued?
b) How to Value the Actual Price of Stocks?
c) What Is The Intrinsic Value Of A Stock?
d) Or, When to buy and sell a stock? etc.
As far as I know there is no such book available.

If ever a book is written that explains everything about stock markets, it would be at least 10000 pages long.

Penman's book has lot of examples, but it focuses more on analysis of financial statements and less on buy/sell decision making.

It would be better if you read Penman's book with another book on general stock investing (Graham's or Mary Buffet's or Lynch's or any other).

Also as $$Money$$ has rightly pointed out, stock market investing is about predicting the future.

The future is uncertain and dependent on many variables.

Besides theoretical knowledge, predicting the future needs good judgement, which comes only from practical experience.
 
#15
#16
As far as I know there is no such book available.

If ever a book is written that explains everything about stock markets, it would be at least 10000 pages long.

Penman's book has lot of examples, but it focuses more on analysis of financial statements and less on buy/sell decision making.

It would be better if you read Penman's book with another book on general stock investing (Graham's or Mary Buffet's or Lynch's or any other).
Thanks Alchemist for helping me.
 
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