Lesson 1 of 21 · Start Here · 1 min read

What Is Fundamental Analysis?

beginner

A stock is a claim on a real business's future earnings — this track is about figuring out what that claim is actually worth.

Buying a share of stock means buying a small, real slice of ownership in an actual business — its products, its customers, its future profits. Fundamental analysis is the practice of studying that underlying business directly, rather than the stock's own price behavior, to form a view on what it's actually worth and whether the current price is a reasonable one to pay for it.

This is the opposite lens from the Technical Analysis track, which studies price action itself and deliberately sets the business aside. Neither lens is "more correct" — they're answering different questions (is this a good business, vs. what is the price doing) — and many investors use both.

A stock isn't a ticker symbol that moves. It's a piece of a real business that happens to have a price attached.

The core question, broken down

What does this business actually earn?

Revenue, profit, cash flow — covered starting next lesson

Is that a good business?

Growing, profitable, financially stable — the Business Health group

What should it cost?

Comparing the price to what it earns — the Valuation lessons

What is it actually costing?

The current market price, which may or may not reflect any of the above

Key takeaways

"Price" and "value" are different concepts throughout this entire track — price is what the market currently charges; value is what the business is judged to actually be worth.
Every lesson from here on is really answering one of the four questions above, in more specific detail.
Fundamental analysis is slower by nature than technical analysis — it's built around a business's underlying trajectory, not its stock's day-to-day price movements.

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