Fundamental analysis

Reports before ratios

Start with the accounts: revenue, margins, cash flow, debt, and the notes that explain how the numbers were made. A ratio such as price to earnings compresses that work and hides whether earnings are temporary. Compare companies in the same line of business, and still expect the comparison to be rough.

Value is not a magnet

A share can stay inexpensive for years if the business is getting worse, and it can stay expensive while the business grows into the price. Buying only because a multiple is lower than its own history is a habit, not an argument. Write the argument in sentences.

Position in a portfolio

A careful analysis of one company can still be a reckless portfolio if that company is the portfolio. Fundamental work chooses holdings. Risk work decides size. The two are not substitutes, and neither replaces the tax and custody questions on the country pages.