Małgorzata Luniewska, Ph.D., Department of Economics and Management, University of Szczecin, ul. Mickiewicza 64, Szczecin, 71-101, Poland
fundamental Data Base
The fundamental analysis is a method of determining the profitability of stock investment on the basis of the company’s economic/financial condition, its stability on the market and perspectives for development. The analysis is useful with long-term investment, hence it is possible to see the convergence with the portfolio analysis. Carrying out the fundamental analysis in all given dimensions allows for the proper interpretation of results and cost analysis. Moreover, it provides information on the fundamental strength of the company.
Due to its structure and phases of execution, the analysis is reluctantly used by individual investors. However, the use of companies’ fundamental strength may be and is useful in the process of analyzing securities for the use of the portfolio analysis.
The factor linking and enabling the process of selecting entities are methods of multidimensional comparative analysis. From the point of view of the investment’s time horizon, during selection it becomes important to take under consideration the continuity, or stability in time, of the entity’s fundamental strength. In this scope, apart from constructing traditional fundamental databases it is helpful to use stable in time fundamental databases.
Their structure is a consequence of:
- the need for selecting shares of fundamentally stable companies for the equity portfolio – the best of the best,
- the development of the horizontal and vertical risk diversification theory and risk management – fundamentally stable portfolios,
- wider use and utility of the fundamental analysis in the process of investing single shares – especially by individual investors,
- market analyses from the point of view of the business entities’ development level – this concerns mainly the development level of the capital market - including the stock market.
Presented in this paper are the rules of constructing fundamental databases useful in the process of investing in shares on the capital market in a long-term timeline.
Keywords: fundamental analysis, portfolio analysis, vertical and horizontal diversification of risk.
JEL C10 (Econometrics, Statistics)