How to Conduct Fundamental Analysis
Fundamental analysis is a method of assessing and forecasting the value of financial assets based on studying a company's business, industry trends, and general economic factors. This approach allows investors to determine the real value of a stock or other asset, compare it with the current market price, and make informed investment decisions. In this article, we will look at the goals and methods of fundamental analysis, what elements make up its structure, what are the stages of its implementation, and when this analysis is most effective (and when it is not).
Goals
The main goal of fundamental analysis is to determine the fair (intrinsic) value of an asset and identify whether it is undervalued or overvalued by the market. Simply put, an investor uses this approach to understand whether the current price of a stock (or other security) is worth the money that is being asked for it on the market. If fundamental analysis shows that the fair price of a company is lower than the market price, then the asset is considered overvalued and its purchase is not profitable now. Conversely, if the estimated intrinsic value is higher than the current stock price, the asset is undervalued – it makes sense to buy such a share, expecting future price growth. Thus, fundamental analysis of securities helps to choose the most promising securities for investment and form a portfolio taking into account growth potential. In addition, the fundamental approach is used to assess the financial condition of a company and predict its long-term dynamics – for example, investors use it to understand which companies will successfully grow and generate profits in the future, and which will face problems.
Methods
A combination of quantitative and qualitative methods is used to conduct fundamental analysis. The quantitative part includes working with numbers: studying the company's financial statements, calculating performance indicators (profitability, liquidity, debt burden, etc.) and comparing them with competitors' indicators or industry averages. The qualitative part focuses on intangible aspects: the quality of management, the company's competitive advantages, its business model, brand and reputation in the market.
There are several classic approaches that investors use, combining both types of analysis:
Comparative analysis. This method involves comparing key indicators and prices of different companies. For example, an investor compares the coefficients (multipliers) of one company with similar indicators of other companies in the same sector. The scale of the business, market share, financial indicators (such as earnings per share, margin, price/earnings ratio P/E, etc.) and current stock prices are compared. This analysis helps to understand whether a particular stock looks cheap or expensive relative to its peers. If a company's indicators are inferior to competitors, but the shares are more expensive, the paper may be overvalued, and vice versa.
Induction. The inductive approach involves generalizing specific cases to derive general rules. The investor studies individual examples and makes general conclusions. For example, if several companies in the same sector demonstrate similar growth rates of revenue and profit, it can be assumed that a certain level of these indicators is typical for this sector. Or, having noticed seasonal fluctuations in a company's results (say, sales growth during the holiday months and a decline in the first quarter), the analyst expects that similar seasonality will repeat itself in the future. Induction helps to identify patterns that are then taken into account when assessing the prospects of an asset.
Deduction. The deductive method is the opposite of induction. It uses general patterns to analyze a specific case. For example, it is known that rising raw material prices reduce producers' profits, so having seen a significant increase in the price of oil, a fundamental analyst will predict a decrease in the company's oil refining margins. Another example: general market valuations (multipliers) for the banking sector differ from those for the technology sector. Using deduction, an investor conducts an analysis by extending fundamental data for the sector to an individual company - for example, comparing the indicators of a specific bank with the average for the banking industry, based on the general rule that banks have certain profit and capital ratios.
It is important to note that fundamental analysis is focused primarily on the medium and long term. While technical analysis examines price dynamics on charts and is often used for short-term trading, the fundamental approach relies on deep study of company and economic data, and its results manifest themselves over time. Both approaches are not mutually exclusive: many investors combine fundamental and technical approaches to take into account both the company's financial indicators and the current market behavior.
The structure of fundamental analysis
Fundamental analysis has a multi-level structure, covering both global and local factors. The classic fundamental approach usually considers three main levels of influence on the value of a stock or other asset:
Macroeconomic level. The general economic and political situation forms the background on which the market develops. The state of the economy (GDP growth rates, inflation, interest rates, exchange rates) directly affects the entire stock market. For example, a period of economic growth contributes to the growth of profits of many companies, which also pushes up the value of their shares, while a recession or crisis leads to a decrease in corporate indicators and pressure on asset prices. Thus, the analysis of global and country factors is an integral part of the fundamental analysis structure, allowing you to understand the conditions in which a business operates.
Industry level. Each company operates in a certain sector of the economy, and the state of this sector greatly affects the prospects of the business. Fundamental analysis takes into account the industry situation: the phase of the cycle (crisis, stagnation, growth), the level of competition, the dynamics of demand for the industry's products, prices for raw materials or components, the regulatory influence of the state, etc. For example, companies in promising, fast-growing sectors (such as IT or renewable energy) have a greater chance of value growth than businesses in depressed industries. By assessing the industry context, the analyst understands which factors will contribute to or hinder the development of the company in this area.
Corporate level (company level). This is the core of fundamental analysis, where the internal indicators and features of a specific company are studied. The analyst examines in detail the financial condition of the organization: revenue, net profit, marginality, assets and liabilities, equity capital, debt burden, financial ratios (for example, profitability, liquidity), and the dynamics of indicators over a number of years. The quality of management (management qualifications, HR policy), the company's development strategy, its competitive advantages in the market, market share, and business growth rates are also studied. An important part is the analysis of financial statements - balance sheet, profit and loss statement, cash flow statement - to obtain objective performance figures. In addition, qualitative aspects are taken into account: brand reputation, innovative potential, level of corporate governance, that is, everything that can affect the company's success in the long term. In practice, the levels are closely interconnected. Fundamental analysis is based on taking into account external (macro and industry) and internal (corporate) factors simultaneously. For example, even a very strong and efficient company can temporarily reduce its results if the entire industry is experiencing a decline. Or, on the contrary, a favorable macroeconomic situation can push up the indicators of even average-quality companies. Therefore, the structure of fundamental analysis assumes a comprehensive approach: assessing an asset from different sides in order to create a complete picture of its value.
Stages of Analysis
Having analyzed the structure, let's move on to how to conduct fundamental analysis step by step. The classic sequence of steps was proposed by the founders of the method (Benjamin Graham and David Dodd) and includes four main stages of analysis:
Macroeconomic analysis. At the first stage, the investor assesses the general state of the economy and the stock market. Key macroeconomic indicators are analyzed: GDP dynamics, inflation rate, central bank interest rates, unemployment rate, country's balance of payments, as well as general market sentiment (phase of the economic cycle, presence of crisis phenomena or, conversely, recovery). The political situation is also important: a stable government, predictable legislation, absence of geopolitical tension create favorable conditions for business, while political crises or sanctions can negatively affect the securities market. The goal of this stage is to identify the global trend. If the economy is growing and the stock market is on the rise, the investor expects a generally favorable background for most companies (even weak firms can grow along with the market). If there is a decline or recession, you should be careful: in such periods, even good companies can temporarily sag. Understanding the macro situation helps the investor choose the right general tactics - for example, increase the share of cash in the portfolio when expecting a crisis or invest more actively during the period of the beginning of economic growth.
Industry analysis. At the second stage, a specific industry is studied, to which the company under study (the issuer of the stock) belongs. The investor determines the state of the industry: assesses the supply and demand for its products, the growth rate of the sector, the level of competition between companies in the industry. Industries can be divided into several categories: crisis (in decline), stagnant or depressed, stable (mature), promising (developing) and fast-growing. For long-term investments, shares of companies from stable and growing industries are preferable. For example, energy or telecom can be stable sectors, and IT or biotechnology - growing. The investor finds out what category the industry belongs to and how industry trends can affect the company's business. External factors specific to the sector are also taken into account: raw material prices (important for metallurgy, oil and gas), government regulation (for banks, the alcohol industry, etc.), technological changes in the market, etc. The result of the industry analysis is an understanding of whether the environment is favorable for the company's activities or whether it faces serious external risks.
Company (issuer) analysis. The third stage is an in-depth study of the company itself that issued the shares. Here, the focus is on its financial results and performance indicators. The investor studies the accounting statements: looks at revenue and its growth from year to year, operating and net profit, earnings per share, the amount of dividends the company pays to shareholders, the capital structure (equity to debt ratio). The company's assets are important - what it has on its balance sheet (real estate, equipment, patents, cash, etc.), as well as liabilities - how much debt and other liabilities it bears. Key financial ratios are calculated: profit margin, return on equity (ROE), return on assets (ROA), current liquidity ratio, debt burden (debt to EBITDA or to equity) and others. These indicators are compared either with previous periods (whether they grow or fall over time) or with similar ones of competitors. In addition to figures, qualitative aspects are analyzed: company development strategy, management efficiency, the presence of a sustainable competitive advantage (for example, a unique technology or a strong brand), market share and the rate of its change, innovation, corporate governance. Based on the totality of these data, a conclusion is made about how efficient and sustainable the company is, whether it has the potential for business growth in the future. This stage essentially answers the question: "Is this company successful and promising?"
Securities analysis and valuation. The final stage is a direct assessment of the investment attractiveness of a share (or other instrument) of a given company. Here, the fair value of shares is determined based on all the information collected. An investor can use various approaches to valuation: the discounted cash flow (DCF) method, the dividend flow model, a comparative analysis of multiples (comparison of the company's value with market valuations of similar companies using such ratios as P/E, P/BV, EV/EBITDA, etc.). The goal is to calculate how much a share should cost based on the fundamental indicators of the company. The resulting calculated internal value is compared with the current price of the share on the stock exchange. If the internal valuation is significantly higher than the market, it is concluded that the share is undervalued and has room for growth - it can be bought. If the calculated value is below the quotation, it means that the market has overvalued this security - a decline is likely, and it is not worth investing (or it makes sense to sell the existing securities). It is also advisable at this stage to compare shares of different companies with each other: having assessed several options, the investor chooses the most promising assets for investment in terms of the ratio of fundamental value and market price. As a result of the third and fourth stages, a final decision is made - to buy, hold or sell specific shares based on their fundamental attractiveness.
Following the described stages allows you to systematically conduct fundamental analysis without missing important points. Some private investors can shorten the process - for example, skip macro- and industry analysis and immediately move on to studying the company. However, this approach carries risks: without understanding the global context, you can invest in the shares of a company that, against the backdrop of negative market conditions, will sag along with the entire market, even if the company itself is not bad. Therefore, a comprehensive passage of all stages is the key to a more reliable result.
Main sources of data
For successful fundamental analysis, it is important to know where to get information on all of the listed aspects. The main sources of data include:
Financial statements of the company. The official accounting reports of the issuer are the main source of quantitative information. Public companies regularly publish annual and quarterly reports: balance sheet, income statement, cash flow statement and explanatory notes. These documents contain all key performance indicators: from revenue and cost price to net profit, from the amount of assets to the amount of debt. Reporting allows investors to assess the current financial condition of the company and track its changes over time. You can find reports on the official website of the company itself (in the section for investors), on the websites of stock exchanges or securities market regulators. Many analytical portals also provide summary data on financial indicators.
-
Market data and quotes. To compare the value and current price of an asset, you need up-to-date data on stock quotes (or other instruments). They are taken from exchange sources - trading terminals, financial news feeds, official websites of exchanges. Price history is necessary to calculate profitability, growth indicators, correlation with fundamental data (for example, the dynamics of the price/earnings ratio over time). Here you can also get information about the company's market capitalization (the total value of all its shares), trading volume, price volatility. These data are often visualized in the form of graphs, but for a fundamental analyst, a graph is just a way to see the general trend, while the key is the price and volume figures.
Macroeconomic statistics. Information about the economy (national and global) is collected by government agencies and international organizations. Key macro indicators - GDP, price indices (inflation, CPI), central bank rates, unemployment rate, industrial production volume, trade balance, exchange rates, etc. - are published regularly (monthly, quarterly). The sources are websites of the ministries of economy and finance, central banks, statistical services (for example, Rosstat, the US Bureau of Economic Analysis, the Federal Reserve System, etc.), as well as economic calendars on financial portals. Investors follow these publications to adjust their estimates: for example, a sharp acceleration of inflation or an increase in the rate can worsen the forecast for a number of companies, as costs rise and loans become more expensive. Macro data is also needed to analyze other markets - for example, raw material prices that affect exporting industries, or exchange rates that are important for companies engaged in foreign trade.
Industry reviews and news. Understanding trends in a particular sector is facilitated by analytical reviews, market research, news from specialized publications. Many investment companies and banks issue reports on industries (for example, a forecast for the steel market, analysis of the banking sector, an overview of the IT services market, etc.). They contain statistics on the industry, average indicators of companies in this segment, expert forecasts. In addition, specialized media report on events that can affect the industry: changes in government regulation, the emergence of new technologies, transactions between companies, and other factors. An investor should monitor such information - for example, through financial news, company press releases, and specialized websites. Knowing what is happening in the sector makes it easier to assess the prospects of a particular company in this context.
Other sources. Various additional data also helps the fundamental analyst. For example, financial analysts at large brokers publish their company valuation models and investment recommendations - they should not be taken as the ultimate truth, but they can lead to useful ideas or highlight important risks. Transcripts of conference calls with management (if the company holds them for investors) provide an understanding of the plans and mood of the management. News agency reports on force majeure situations (from industrial accidents to lawsuits against the company) allow you to adjust the analysis in a timely manner. Ultimately, a fundamental approach means working with a large amount of diverse information, and a modern investor has a wide range of tools to obtain it - the main thing is to be able to filter the data and highlight truly significant factors.
Force majeure
Force majeure circumstances should be mentioned separately, which can affect the market and individual companies, but are almost impossible to predict. Force majeure are extraordinary, unforeseen events that can dramatically change the economic situation. Classic examples include natural disasters (earthquakes, floods, hurricanes), man-made disasters (major accidents, environmental cataclysms), military conflicts, terrorist attacks, global epidemics. Such events often take both investors and businesses by surprise. It is difficult for fundamental analysis to accurately take into account the consequences in force majeure conditions, since the models are based on normal conditions, and not on shock deviations.
For example, a sudden outbreak of military action in a region can collapse the value of assets associated with this market, regardless of the previous fundamental indicators of the company. Or a global pandemic (as happened in 2020) changed the main economic indicators around the world in a matter of weeks, making many previous forecasts meaningless. Force majeure can lead to a sharp drop in the profit of a successful company (due to a stop in production or a break in supply chains), while a weak company, on the contrary, receives an unexpected boost (for example, manufacturers of protective equipment and medicines in the wake of the pandemic). Fundamental analysis, of course, can include crisis scenarios and stress testing of the company for strength, but it is almost impossible to predict a specific sudden blow and its timing. Therefore, force majeure factors always remain an area of uncertainty. It is important for an investor to realize that even the most thorough analysis of indicators and factors does not provide a guarantee against the influence of external shocks. To reduce the risk of force majeure, diversification is usually recommended - distributing investments across different assets, countries and industries. Then an extreme local event will not destroy all capital. In addition, you should constantly monitor the news: when force majeure has already happened, you need to promptly revise fundamental estimates. In such situations, approaches to analysis in extreme periods are different - more attention is paid to short-term measures of the company's survival and general systemic risk than to the intricacies of long-term growth.
An example of using fundamental analysis
Let's consider a simplified example of how a novice investor can apply fundamental analysis in practice. Suppose an investor has his eye on the shares of a large retail company that is traded on the stock exchange. He decides to analyze whether it is worth buying these shares.
1. Macro and industry: First, the investor studies the general situation. The country's economy is growing at a steady rate of ~3% per year, inflation is low, consumer spending is increasing - this is a good sign for the retail sector (people are spending more). The stock market is generally on the rise after the recent interest rate cut. Industry analysis shows that the retail segment is doing well: sales in the industry are growing, more people are shopping online (and this company has a strong presence in e-commerce). There is competition, but the company is in the top 3 in market share, while some smaller competitors, on the contrary, are closing. Industry factors are favorable.
2. Company analysis: Next, the investor dives into the company's financial statements. Revenue over the past year has grown by 15%, net profit - by 20%. The profit margin is rising, which means the company is more effective in controlling expenses. The debt burden is moderate: debt is about 50% of equity, while there are significant tangible assets (real estate, warehouses) on the balance sheet. The company's financial indicators look stable: the current liquidity ratio is ~1.5 (assets are enough to cover short-term liabilities), return on equity (ROE) is about 18%, which is above the industry average. Investors also note that the company regularly pays dividends, albeit small, and increases them by ~5% annually. Qualitative aspects: the management has a good reputation, the CEO has many years of experience, the company is actively implementing IT solutions to increase sales. In general, the fundamental picture of the company is positive - it is profitable, growing, not overburdened with debt and adapting to new conditions (online trading).
3. Evaluation and decision: Based on the collected data, the investor tries to estimate the fair value of the stock. He calculates several multiples and compares with competitors. Let's say the stock price is currently $100, the earnings per share (EPS) for the year is $10. Then the P/E (price/earnings ratio) is 10. The main competitors' P/E is around 15-18, and the industry average is about 16. This is the first warning sign: with similar business growth rates, our company's shares are cheaper relative to the generated profit. The investor also evaluates the company's value using the discounted cash flow model: he forecasts cash flows for several years ahead (taking into account revenue growth of 10-15% per year) and brings them to the current value using a discount rate that takes into account the risk. Calculations show that the fair price of a share should be, say, about 120-130 USD (that is, 20-30% higher than the current one). Having weighed everything, the investor concludes that the shares are undervalued by the market. Perhaps the market has not yet responded to the improved performance or is concerned about some risks (for example, increased competition), but the company has good prospects. Therefore, based on the results of the fundamental analysis, the shares are considered attractive for purchase. The investor purchases a certain number of shares and includes them in his portfolio, expecting that over time the market will revise the assessment and the quotes will rise to a fundamentally justified level.
Of course, in reality the analysis will be more complex and detailed, taking into account many nuances. However, even this simplified example shows how the fundamental analysis approach helps to make a decision: having studied the financial indicators and factors, the investor was able to reasonably distinguish an undervalued security from others and invest in it with an eye on a long-term result.
Fundamental analysis of the Forex market
Fundamental principles of evaluation are applicable not only to stocks and companies, but also to the currency market. Fundamental analysis of the Forex market focuses on studying the economic and political state of the countries whose currencies are traded. Unlike the stock market, where companies are evaluated, on Forex the object of analysis is national economies and their currencies. Currency prices (exchange rates) depend on fundamental factors: macroeconomic indicators and events.
The main factors of fundamental analysis in the currency sphere are the macroeconomic indicators of states. A Forex trader monitors changes in central bank rates, inflation, GDP growth rates, unemployment, the state of the trade balance, industrial output and other indicators of economic activity. For example, if the US economy demonstrates strong growth and the Fed raises the key interest rate, a fundamental analyst expects the dollar to strengthen – a rate increase makes investments in dollar assets more attractive, increasing demand for the currency. On the contrary, a soft monetary policy (lowering rates, turning on the printing press) usually weakens the national currency.
Political events also play a major role in the currency market. Elections, changes in government, referendums, international agreements or conflicts – all of this can cause fluctuations in rates, as it affects investors' confidence in the country's economy. Force majeure events have a strong impact on currencies: during the global crisis of 2008 or at the beginning of the 2020 pandemic, there were sharp jumps in demand for “safe havens” (for example, the US dollar, Swiss franc, Japanese yen), despite the internal indicators of the economies. Fundamental analysis on Forex often relies on the economic calendar - the schedule of publications of important macro statistics and events. Traders know in advance when inflation data will be released, when the head of the central bank will speak, or when the rate meeting will be held, and prepare for increased volatility at these times. Some short-term strategies are even based on trading during news. However, long-term investors in the currency market (for example, large hedge funds) make decisions based on fundamental assessment: they analyze which currency is undervalued relative to another in terms of purchasing power parity, where the country's economy is heading in the coming years, and open long-term positions (the so-called positional traders). For example, if the Eurozone economy is stagnating and the US is growing, they might sell euros and buy dollars in anticipation that the EUR/USD rate will continue to decline.
It is important to note that technical analysis is widely used by currency speculators, but fundamental analysis provides an understanding of why the rate is moving in one direction or another. Often, major trends in Forex are determined by fundamental reasons - differences in interest rates, phases of the economic cycle, commodity prices (for commodity currencies). Therefore, even if a trader uses charts to choose an entry point, it is useful to consider the fundamental background. Ideally, a combination of methods reinforce each other: fundamental analysis suggests in which direction the currency pair is likely to move in general, and technical analysis helps to determine a specific moment for a trade. As a result, based on macroeconomic factors, investors and traders can predict long-term trends in Forex - for example, the strengthening of one currency against another over a period of months - although in the short term, the rate may deviate under the influence of market noise.
When analysis is ineffective
Despite all its advantages, the fundamental approach also has limited cases when it does not work well. First, in highly efficient markets (for example, the US stock market, according to some economists), all public information is reflected in quotes very quickly. Supporters of the efficient market hypothesis believe that the current price already includes the entire set of known information about the company, and it is almost impossible to beat the market based on publicly available data. If this is true, then searching for undervalued assets using fundamental analysis loses its meaning - after all, the obvious cheapness of a share means that there are some hidden reasons for this, just not obvious to the general public. Simply put, there are no "free lunches" in such a market: when an indicator seems too good, the market does not believe it for reasons known to those in the know. Second, fundamental analysis does not give an exact answer when the market will revalue an asset at fair value. Let's assume that the analyst correctly determined that the stock is significantly undervalued. But how long will it take before other investors notice and start buying up the paper, raising the price? This may happen in a month, in a year, or may not happen at all. In reality, it often happens that outsider companies remain cheap for years until some event (a change in management, a takeover, a technological breakthrough) occurs that makes the market reconsider its opinion. During this time, the investor's capital will be "frozen" in a slow-moving asset. Thus, fundamental analysis is ineffective for market timing - it tells you what to buy, but not always when. It is of little help to short traders: on a horizon of days or weeks, stock prices depend more on crowd emotions than on quarterly reports.
Thirdly, the factors underlying fundamental valuations themselves change over time. Even if the market corrects price imbalances, there is no guarantee that the company's fundamental indicators will remain the same by that time. Business is not static: new competitors appear, consumer preferences change, unforeseen expenses arise. For example, an investor bought undervalued shares and is waiting for them to grow to fair value, but over the course of a year the company has faced a deterioration in the market situation and its financial results have declined - it turns out that the fair price has also "floated" down, and there may be no growth in quotations at all, even if the initial calculation was correct. Finally, we cannot fail to mention psychological and speculative aspects. The market is driven by people, and sometimes asset prices deviate significantly from reasonable levels due to greed or fear. During a bubble, investors can buy up shares of trendy companies en masse without regard for fundamental valuations, and such shares will remain overvalued for a long time (an example is the dot-com boom of the late 1990s, when many Internet companies were incredibly expensive without making a profit). Conversely, in the midst of panic, excellent companies can be traded for pennies because everyone is fleeing the market. Fundamental analysis is often powerless in extreme market phases - it shows that assets are absurdly priced, but the crowd acts irrationally for some time. As a result, prices are formed not only “from calculations”, but also under the influence of emotions and expectations. Given these limitations, a competent investor combines fundamental analysis with other approaches and takes risks into account. Technical analysis can tell when the mass of participants begins to change their minds (based on signals on the charts). Risk management (diversification, setting stop losses) will protect against unforeseen circumstances. And most importantly, you need discipline and patience: the fundamental approach rarely gives immediate results, but in the long term, if applied wisely, it can bring profit, as evidenced by the success stories of famous adherents of the fundamental investing style.
Books on fundamental analysis
To gain a deeper understanding of the topic, it is useful to turn to classic literature on investments and fundamental analysis. Below are some well-known books that will be useful for a novice investor:
"The Intelligent Investor" (Benjamin Graham). This book, written by one of the progenitors of the fundamental approach, is considered a reference book on value investing. Graham explains in simple terms the principles of securities analysis, the concept of the "margin of safety", the psychology of investing and gives advice that has been relevant for many decades.
"Common Stocks, Uncommon Profits" (Philip Fisher). Fisher's classic work, in which the author describes his method for selecting company shares for long-term investments. Particular attention is paid to qualitative aspects: how to evaluate management, competitive advantages, business growth prospects. The book teaches you to look for companies with outstanding potential, even if their current performance is not striking.
"Beating Wall Street" (Peter Lynch). In this book, successful fund manager Peter Lynch shares his experience in choosing stocks. Lynch explains how a private investor can find profitable assets by carefully observing the life around him (for example, paying attention to the goods and services that he himself consumes). He describes what company indicators to look at and how to classify companies by type (slow-growing, cyclical, fast-growing, etc.) in order to apply the right analysis strategy to each.
"Investments" (William Sharpe et al.). A more academic book, which is a textbook on financial investments. It sets out the basics of both fundamental analysis and portfolio management. The reader will find an analysis of various types of financial instruments, methods for assessing the value of shares and bonds, as well as a description of the efficient market, risk management and other important concepts. Suitable for those who want to systematize knowledge and understand the theoretical foundations of asset valuation.
Each of these books is valuable in its own way. By studying the experience and recommendations of recognized experts, a novice investor consolidates his understanding of the principles of fundamental analysis and learns to apply them in practice. It is worth remembering that markets change, but the basic principles of assessing a company and finding undervalued shares remain largely unchanged - and classical literature helps to master them.
