Many people think that in portfolio management it is possible by closely observing the market situation to determine points in time that speak either for an entry into the stock market or an (at least temporary) exit. Investment strategies that focus on this are known as timing or market timing.
Likewise, many investors think that it is always possible to identify individual securities that are underpaid or overpaid. Assuming such differences between price and value offset over time, a portfolio manager should buy securities identified as underpaid and sell overpaid securities. The corresponding procedure is called selection or title selection. For the selection in particular economic sectors and stock corporations have to be rated.
Financial analysis (or analysis for short) is used to evaluate investment opportunities and describes all activities that serve to obtain and process information about financial markets, currency areas, economic sectors and individual companies and which aim to provide the portfolio manager with information on the market in a report -Timing and title selection to give .ss
The analysts specialize.
People who tend to judge entire economic or currency areas from an economic perspective with regard to the question of whether there are recommendable investments, examine the interest rates, the inflation rate, country risks, political risks, the economy, fiscal policy and monetary policy. This type of analysis is often referred to as research.
When assessing companies as an investment object, economic aspects are more dominant. The key words here are company profits, company growth, and data on new products and reports (equity stories) on the company's development prospects.
Indeed, in the past financial analysis was equated with the analysis of annual accounts. Financial analysis was understood to mean the evaluation of entrepreneurial activity, and this evaluative analysis was carried out by people who worked in the company (so-called internal analysis) as well as by people who do not belong to the company (external analysis).
While the internal analysts mostly had comprehensive, up-to-date and very detailed information at their disposal, the external analysts were dependent on balance sheets and other information that were periodically or occasionally made available to third parties by the company. This is why the earlier equation of financial analysis and annual financial statement analysis is to be understood. Here, key figures and their interpretation were the focus of the analysis. Analysts work with a wide variety of data sources and methods.
The distinction between fundamental analysis and technical analysis should be familiar.
While the one evaluates so-called fundamental data such as balance sheets and reports of the respective company, the latter focuses on the “technical” condition of the market. It becomes clear on the basis of the historical price development, further on average lines and statistics on the trading volume.
Es zeigt sich, daß die Methoden der Finanzanalyse nicht einzig für Aktien Gültigkeit besitzen sondern ebenso bei anderen Wertpapieren greifen. Hier sind Anleihen zu nennen oder Wertpapiere, die Rechte an Immobilien verbriefen. Selbst für Futures und Optionen bleiben die Bewertungsprinzipien der Finanzanalyse gültig. Infolgedessen werden die Begriffe Finanzanalyse und Securities analysis (Security Analysis) oft gleichgesetzt.