A study of the techniques of common stock analysis

Abstract

For an individual, investment in common stock should have the goal of maintaining or increasing the individual's purchasing power. This paper reports a study of the fundamental and technical approaches to common stock analysis. The fundamentalist uses inductive reasoning to determine the value of a stock after a study of relevant historical figures. The technician attempts to use the price of the stock as a basis for deductive reasoning concerning value. Technical indexes, indicators and charting are covered. Finally, psychological effects on market prices are reviewed with a discussion of the "Theory of Contrary Opinion" and "Odd-Lot Theory". It is concluded that each approach to analysis must be carefully evaluated for potential and an investor should remain acutely aware of all techniques and forces which exert an influence in the market.