Fundamental Analysis

What is fundamental analysis?

Fundamental analysis is the sudy of basic, underlying factors that will affect the supply and demand, and thus the price, of a financial instrument such as a stock, commodity, or currency. (Source: CFTC)

Fundamental analysis maintains that markets may misprice a security in the short run but that the "correct" price will eventually be reached. Profits can be made by trading the mispriced security and then waiting for the market to recognize its "mistake" and reprice the security. Even if the investor believes he cannot beat the market index, he may still pick stock for the challenge, for the fun of trying, and for the ego rush when he does beat the market. (Source: Wikipedia)