A look into Investment Analysis

 Concept:

Investment analysis(IA) is a spectrum of learning which details with many phases of investment and its processes. It details with analyzing past investment decisions, the future plans for investment and also choose the type of investment vehicle that will suit the investor needs to the full extent. This website reviews the complete study about investment analysis from a beginner’s perspective.

 

The purpose of IA:

This helps to break down and simplify the entire process of investing for the betterment of the investor’s learning and understanding of the same. This acts as the key to a healthy portfolio management system.it helps in making an analysis of the past performance of investments and their impact on the investors.

The process:

With the help of certain standardized factors, the past investment decisions are analyzed by the prospective future investors and they look into details like the types of securities, their industrial background, their profit-making capabilities, etc and the utmost essence will be the risks these securities had to come across. And also it will focus on the risk management process in detail.

The key factors in this process of IA include the factors such as the entry price, expected time horizon, and the reason for making that investment at any particular time. These factors are very necessary to understand the ideology of making investment decisions wisely. Therefore, these must be closely monitored to find the best suitability to each investor.

Types of Investment Analysis:

The two broad classifications of IA is a bottom up and top down investment analysis methods. The bottom-up method focuses on analyzing the stocks individually for finding their values, their competence, pricing policies and other unique qualities of the company and the investment. This approach works without a focus on the market cycles that affect the stock or the economic factors that are related to these investments. This is simply more of a microeconomic focus on the investment policies of investment.

The top-down analysis is the one which focuses on the economic, market and industrial factors that affect the investment decisions at large. This is pretty much necessary before stepping to make a huge investment in any sector or security. Here the investor evaluates the financials of an industry in which he wishes to invest and find all the related technical terms and concepts and past performances so that he can confide with this confidently.

Hence the investment analysis and the factors surrounding this concept are very important from an investor’s point of view.