So after days of fundamental analysis on hunderds of stocks, I've narrowed it down to three that seem really good. Their margins are good, ratios are good, EPS and P/E are good, etc. What is the next step towards leveraging this information towards profits? When many of the fundamental metrics line up in the right direction, should this be a signal to open the position and start to take in profits? or is there a final metric that should considered to further solidify / finalize the decision to open the position?

Note, I am performing the analysis based on quarterly data and looking at holding the position for the next 2-6 months max.

Thank you

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    2-6 months (to me) is more of a trading range than an investment so I can't give too much advice on it. You can invest in a under-priced security and it might take more than 2-6 months to get to the true price (if you are correct in your under-priced analysis). Make sure you also look at the industry and similar companies (competition) before you make your decision as well. – Ross Jan 5 '16 at 15:35
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    Ever consider looking more at technical analysis if you only plan on holding for a couple of quarters? – JB King Jan 5 '16 at 15:53
  • Thanks for the replies. I have had a good amount of practice with technical analysis / candlestick analysis and have not had great results with it, as the outcome seems pretty random. – AnchovyLegend Jan 5 '16 at 17:05
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    What are the companies? :) – NuWin Jan 5 '16 at 17:08
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    @NuWin, why is that relevant? – user9722 Jan 5 '16 at 22:44

If the fundamentals have been great for a long time chances are the stock is already fairly priced on what people value the equity at. However if you feel the company is doing well in growth and you speculate that it will continue to grow then there is nothing more you can do than buy it.

What I would recommend doing is familiarizing yourself with technical analysis using Candlestick charts, These can provide great outlook on what the market is thinking.

Also refrain from setting timelines without a plan. A plan means cutting losses quickly and making sure risk:reward is 1:3 . For example if the stock is valued at 100.000 your plan could be to cut losses if it reaches 95 but sell and accept gains if it reaches 115.00. A timeline is only useful when you have a plan with it.

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  • Thanks for the reply. I am familiar with candlestick analysis and have had a good amount of practice with it, although I found that often times, clear signals, don't preform as expected. Decided to consider fundamental analysis. – AnchovyLegend Jan 5 '16 at 17:06
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    @AnchovyLegend, where you using TA with a plan as Luke suggests, did you implement risk and money management and did you back-test your strategies? Most people who say they tried TA and say it didn't work is because they were using it ad-hoc with no written plan. – user9722 Jan 5 '16 at 22:43

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