Is there any merit to fundamental analysis of the markets?

Is there any merit to fundamental analysis of the markets?

Fundamental analysis has been around for a long time, and will probably always remain relevant. Fundamental Analysis is the oldest and most well-established market theory.

Fundamental analysis is to take all the real-world information about a company into account when evaluating securities and to acknowledge that the shares are what they are: partial ownership in a company. It follows that someone should know about the company and its earnings potential.

The guru of this theory, Benjamin Graham (1894-1976), an American economist and professional investor, published a book called “Security Analysis,” which even today remains the “bible” of fundamental investing. The underlying belief of the followers of this theory is that future earnings of a company determine today’s stock price.

Of course, the difficulty is to evaluate these earnings far into the future. Technical analysis, the estranged sibling of fundamental analysis, instead focuses on price movements, momentum, and trading bands to turn security analysis into a physics problem of sorts.

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