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Posted December 25, 2008
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Great for learning about company fundamentals, but not blindly buying on them.
Having conducted my own study into the effectiveness of fundamental analysis vs. technical analysis (see "Stock Fundamentals On Trial: Do Dividend Yield, P/E and PEG Really Work?") I am somewhat sceptical of books that blindly advocate picking stocks based on (apparently) sound fundamentals.<BR/><BR/>This book isn't one of them. It is, of course, a well-written easy-to-read guide to understanding company balance sheets and financial ratios; but it does also acknowledge the possible use of company fundamentals to confirm a technical price trend (and vice versa). It contains an interesting chapter on applying moving averages to financial ratios and other company data, whereas most stock market books discuss moving averages only in the context of the share price itself.<BR/><BR/>If you want to understand company fundamentals... buy this book! Just keep in mind that analysts' forecast fundamentals can be wrong, sometimes spectacularly; and that while sound fundamentals might offer good reasons to buy in to a stock, adverse price action (a technical indicator) might be an equally valid reason for getting out.
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