, The Green Pennies Stock Report: Fundamental Analysis And How To Make It Work For You (Part 2)

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Wednesday, August 16, 2017

Fundamental Analysis And How To Make It Work For You (Part 2)

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Richard L. Musgrave
8/16/2017

The Importance of News
Another part of fundamental analysis is looking through both the companies news releases as well as watching regional, national, or global news sources. For example, say that there is a new law that’s just passed that will affect the company negatively. As investors, we don’t take the negative news lightly at all. In fact, negative news will likely cause a rush towards the exit door with tons of selling. If you were on your game and caught the poor news being released, you have a much better chance of saving your money. On the contrary, if you missed the news, you might be stuck inside of a sinking stock. You might not be able to find anyone to buy your shares so you can exit the stock. This could cycle to badly that you might lose most of your money. Keeping track of the news is a worthwhile and easy precaution that’ll help you protect your money in the long run.

How to use Fundamental Analysis Effectively

Now that you’ve learned how to conduct fundamental analysis on a company, it’s time that you find out how to integrate it into your trading strategy. When many people first start, they tend to ignore the financial statements released by these companies. I find the act of ignoring critical financial information to be a grave mistake.

For example, I had a friend that look purely at how the lines were trending and totally ignored fundamental analysis. He bought in with his buy-in capital and the next thing he knew, it dropped. There were two reasons to this. First off, the company was taking a huge loss and was getting crippled under all of its debt. Its response to this was to dilute their shares into the market. Needless to say, my friend provided an exit for these scrambling investors to bail the stock. The second reason (and the more compelling/sad reason) was that my friend was only looking at the daily stock charts and ignoring the monthly or three-month stock charts. If he had used these other time scales, he would’ve seen that the stock was in a sharp decline. With a lot of luck, I was able to help him pull out his money without a loss.


Seriously, fundamental analysis is completely full of very important information. By not looking into it, you put yourself at a huge disadvantage. Some people think of the stock market as gambling, and it only is if you don’t try to understand it. I’m trying to teach you how to use the available data in such a way to win more often than not.

Richard L. Musgrave
8/16/2017
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