Getting Started: Fundamental Analysis

When it comes time to make investment decisions, it's a good idea to be guided by more than just your gut instincts. If used effectively, fundamental analysis is one of the most useful ways to determine whether a company is a good investment choice. Even if you don't have a finance background, don't let that stop you from becoming your own personal stock portfolio analyst.

Two Schools

When it comes to stock analysis, there are two main schools: Fundamental analysis and technical analysis . Fundamental analysis is all about using concrete information about a company's business to try to find the real value of a stock, while technical analysis eschews all of that in favor of looking at the way pure market factors will affect a stock's movement ("Chart of the Day").

They call it fundamental analysis for a reason: It can be fundamental to your ability to make money in the stock market. When you take a look at a company's fundamentals, you're judging its corporate health. After all, who wants to invest in an unhealthy company? This is a mantra that the likes of über-investor Warren Buffett uses, so why shouldn't you (Stockpickr: Warren Buffett's Portfolio)? ...