INVESTMENT

ANALYSIS

INVESTMENT ANALYSIS
Definition :
defined as the process of evaluating
an investment for profitability and
risk, ultimately has the purpose of
measuring how the given investment
is a good fit for a portfolio.

INVESTMENT
ANALYSIS
METHOD

Investment
Analysis
Method

Fundament
al Analysis

Technical
Analysis

FUNDAMENTA
L ANALYSIS

1. FUNDAMENTAL ANALYSIS
Definition
The study of the stock value using basic data
such as earnings, sales and others.
This basic state any securities have intrinsic
value. In equilibrium stock prices reflect the
intrinsic value of the stock.
An investor who has a good fundamental
knowledge can make a profit from the
difference between the market price and
intrinsic value to move quickly before the
market price aligned with the correct
information.

a)
Market /
Economi
c
Analysis

Fundamen
tal
Analysis
c)
Compan
y
Analysis
b)
Industry
Analysis

A) MARKET/
ECONOMIC ANALYSIS

This analysis will examine the general

economic, with emphasis on variables that
affect the economy of a country in a given
period.

These variables can affect the aggregate

economy and a significant impact on vested
industry and company. Thus any
developments that are likely to occur can
affect the movement of share prices on the
stock exchange.

B) INDUSTRY ANALYSIS
This

analysis is known as sector

analysis because it examines the
industrial sector in a certain period.
In an analysis of industry needs to
know the life cycle of industry
analysis. The analysis must identify
the period in which the company is
located.

There are 4 stages in the industry life cycle.

i. Pioneer stage (innovation)

At this stage of rapid growth in demand occur, especially among
the nature inovatif.
With the sales levels continue to increase with high growth rates.
At this time there are also interesting opportunities outside the
company to compete. Weak companies will be excluded at the
outset. However, analysis are still having problems to identify
companies that are able to survive in the industry.

ii. The development stage

At this stage is a high level of sales growth rate this time
moderate.
The industry improve product quality and try to reduce prices.
More stable market conditions and strong seta can attract more
investors into the industry.

iii. Level Stability / Maturity Stage

This stage show is still high level of sales but a lower

growth rate. All products and less innovative over
standard among manufacturers. At this time there are
many competitors in the market and cost are stable or
nearly the same.

iv. Stage Fall

At this stage most of the companies suffered a decline

in sales levels that cause the company's revenue also
fell and may result in losses. Most companies out of
the market. However, companies are still in the
market are companies with loyal customers.

C) COMPANY ANALYSIS
Detailed analysis of the company made with
the internal and external aspects.
To study the structure of the internal aspects of
the organization of a particular company board
of directors, key areas of business,
subsidiaries, associated companies and
business records.
Final objective of the analysis is to find the
intrinsic value of the company. This intrinsic
value is compared with the value of the stock
market as a basis for making investment
decisions.

 Intrinsic

value of the information

derived from the financial statements
of the company that provides financial
data of the company.
Balance Sheet shows the position of
the assets and liabilities of the
company.
Statement of income to evaluate the
performance of management and to
estimate the future profitability of the
company.

TECHNICAL ANALYSIS

2. TECHNICAL ANALYSIS
Definition
Technical analysis is a method of
evaluating securities by analyzing the
statistics generated by market activity,
such as past prices and volume.
Technical analysts do not attempt to
measure a security's intrinsic value,
but instead use charts and other tools
to identify patterns that can suggest
future activity.

DOW THEORY
Dow

Theory was created by Charles H.

Dow in 1921.
It concluded that the stock price in the
market as a whole does not move at
random but influenced by three cycles
and price movements, namely: -

1.

Primary Movement

.Cyclical

price movements for a few

years, that early - first year and at least

three years. It involves long periods of
time.
.Usually

the development of the rise is

longer than the development of the

decline.
.Upward

movement show the market

ii.

Secondary Movement

.Cyclic

secondary movement for several months,

that as early - first six weeks and at the latest of

six months.
.It

acts as a force to improve the deviation occurs

in the primary cycle.

.It

appears because of the correction in the

primary cycle of falling prices due to current

market prices lifted or when the market plunged.

iii. Small
.Daily
.It

Movement/ Daily

movement is occurring randomly.

is cyclic for a few hours to a few days.

.Cycle

effect is not as felt by investors as

relatively short duration and of no

importance to the technical members in
making predictions.

TECHNICAL INDICATION
i.
.

The Advance Decline Line

Fluctuation line is the net difference between the number of
stocks experiencing price increases with the number of shares
of the price decline by subtracting the number of shares up to
the number of shares to come down in price.

These calculations are made using cumulative data. The

results obtained are plotted in order to form the line on a daily
or weekly basis.

These lines are compared with the average line to indicate

whether the stock market indicator movement is also
experienced by the market.

ii. Moving Average

Moving Average is calculated by determining the

number of such average closing price for 200
days, 30 weeks and so on.

The new calculation is made by adding one day

and the first to drop one day to the next. This
calculation is made over and over and the figures
are plotted to form the moving average line.

Moving average price compared to the market to

decide whether buying or selling.

iii. The New High Price Low

These

market indicators could reflect either

bullish or bearish market.

Market is considered bullish if there is a

number of shares of a new show the highest
price significantly over 52 weeks.

Instead

the market is weak if there are only a

few stocks only the highest price of a new show.

iv. Transaction volume

These market indicators also reflect bullish or bearish market.

High transaction volume as a whole shows the market is

bullish. This condition is stronger if followed by an increase in
price.

v. Mutual Fund Liquidity

Market conditions have a direct relationship with this liquidity

ratio. The higher the liquidity ratio of the market is bullish.

High liquidity ratio shows potential purchasing power and its

stock price will rise.

On the other hand if the liquidity ratio is low potential

purchasing power also lower and its market will be fall.

vi.

Others Technical Indication

.Contrary
.Short

Opinion

Interest Ratio

CHARTS
1.

Bar Charts

Prepared by plotting a bar chart of daily

share prices over time. Every day stock
price movements drawn vertically, the
upper part shows the highest price, the
bottom shows the lowest price, while a
horizontal line marked showing the
closing price. The underside of the bar
chart shows the daily sales volume.
Technical members to use a bar chart to
see patterns and charts are used to
forecast future price movements.

2. Point and Figure Charts

The chart is prepared by plotting stock prices

suffered a significant price change. Transaction
volume is not shown in the chart. Horizontal line
shows the time but according to calendar time is
not important. The symbol 'X' and 'O' is used in the
above chart. 'X' indicates an upward price
movement. Signs 'O' show downward price
movement. All the 'X' or 'O' represents the value of
Rs 1, Rs 2, Rs 5 and so on depending on the value of
the stock price changes. The 'X' and 'O' only
recorded when a certain amount of price
movement.

3. Relative Strength Index

 Relative

strength index is the ratio of stock

prices to a market or industry index or
ratio compared to the average share price
of the stock price. This ratio is plotted over
time. This line shows the strength of the
stock relative to the foundation selected as
industry, market and so on.

EFFICIENT
MARKET
HYPOTHESIS

CONCEPT OF EFFICIENT
MARKET HYPOTHESIS
Definition
Efficient market hypothesis is the market in
which security prices fully described all
known information quickly and accurately.
It is key to the determination of share
prices in the market.

CONDITIONS THAT
CREATE EFFICIENT
MARKETS
There

are many investors who are

rational and seek to maximize profits
and is actively involved in the market.

Information

can be easily obtained

without any restrictions or conditions
that make it difficult for a person to
get information.

 Information

can be obtained at random

where the announcement was made
independently. This means that all
announcements made by the company
should be done when necessary, without
any connection with the announcement
made by other companies.

Investors

respond quickly and fully to new

information in the market and cause the
stock price quickly adjusted in line with the
new information.

THE TYPES OF INFORMATION

Past information
This is information that is relevant to the valuation
of shares by analyzing past market price data.

Public information
This is information about a company, the industry
and the world economy can be obtained through a
public announcement.

Internal information
This information is only held by a few individuals
who have a position in a company.

FORM OF THE EFFICIENT MARKET

Weak Form
It states on the share prices already reflect all
kinmi time stock quotes ago.

The Semi-Strong Form

It states that stock prices reflect all information
that has been around or known. information
include stock prices, accounting reports, economic
data, company earnings announcements and
other information relevant to investors in the
valuation of a company.

Strong Form
It states that stock prices reflect all
information either has been announced or
yet to be announced. This means that the
information has yet to be announced can
also be absorbed by the market as reflected
by the market price of shares

THANK YOU