Financial Statement Analysis and Fundamental Analysis
* Leading companies in their industries are not immune
from ending up in bankruptcy.
* One of Enron’s goals was to become the biggest company
in the world.
* Enron became the largest bankruptcy on record.
* Laws and regulations such as the Sarbanes-Oxley Act will
not insulate investors from poor investments.
Why bother with financial statement analysis and number crunching
to determine in which stocks to invest? It is easy for investors to
follow the published buy, sell, and hold ratings of analysts with
regard to which investments to make.
The process isn’t quite that simple, though. The lesson you
can learn from the bankruptcies of Enron, WorldCom, and others
(in addition to the stock research abuses by analysts) is that investors
must look out for themselves. State and federal regulators fined
many investment banks and brokerage firms for their analysts’
conflicts of interest between their investment banks and their stock
research recommendations. Enron and WorldCom showed that
investing in the leading companies in their industries also was not
Consequently, politicians and regulators created laws and
regulations in the hopes of making investors feel safe. But even if
auditors are more thorough in their examinations of financial statements,
greedy executives still will be hired, and boards of directors
still will “rubber stamp” the wishes and deeds of management
teams. Laws and regulations still will not insulate investors from
poor investments and the misdeeds of strategists, analysts, and
executives, so investors must scrutinize financial statements, including
those of the largest companies. Finding a company with a strong
financial position based on analysis of its financial statements goes a
longer way than listening to the recommendations of those who
have their own motives for generating their investment opinions.
* Financial statement analysis
* Competitive analysis
* Assessing the financial strengths and weaknesses of a
Categories in Trading Mistakes
Lack of Trading Plan
Planning plays a key role in the success or failure of any endeavor
Using too much Leverage
Determining the proper capital requirements for trading is a difficult task
Failure to control Risk
Refusing to employ effective risk control measures can ensure your long-term failure
Lack of Discipline
A lack of discipline can destroy even the most talented and best prepared trader
Useful Advices to Beginning Trader
You can control your success or failure
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