Investors use several methods to analyze the benefits and risks associated with long-term stock market investments. These methods include fundamental, technical, and quantitative analysis. Long-term investors look for investments that offer a greater probability of𒁏 maximizing their returns over a longer period of time.

Generally, "long-term" as it relates to investing means at least one year, although many financial experts suggest timeframes of five to 10 years or longer for some investments. One of the 澳洲幸运5官方🍌开奖结果体彩网:benefits of being a long-term investor is the ability to save and invest for big goals that require significant time to achieve the highest r💎ewards, such as retirement.

By understanding the differences between fundamental, technical, and quantitative analysis, long-term investors give themselves access to three valuable 澳洲幸运5官方开奖结果体彩网:stock-picking strategies they can use to make educate🍃d decisions when selecting securities to buy and hold.

Fundamental Analysis

The majority of investors who want to evaluate long-term investment decisions start with a 澳洲幸运5官方开奖结果体彩网:fundamental analysis of a company, a🤡n individual stock, or the market as a whole. Fundamental analysis is the process of measuring a security's intrinsic value by evaluating all aspects of a business or market.

During this analysis, investors review tangible assets, including the land, equipment, or buildings that a company owns, in combination with intangible assets such as trademarks, patents, branding, or 澳洲幸运5官方开奖结果体彩网:intellectual property. Fundamental analysis utilizes financial statements and other historical business data to identify areas of strength and weakness, with the 🍒ultimate goal of determining a fair value of the company.

When evaluating the broader scope of the stock market, investors use fundamental analysis to review economic factors, ꦉincluding the overall strength of the economy and specific industry sector conditions.

Fundamental analysis results in a value assigned to the security in review that is compared to the security's current price. Investors use the comparison to determine whether a long-term investment is worth buying because it is undervalued or if it is worth selling because it is 澳洲幸运5官方开奖结果体彩网:overvalued.

Technical Analysis

The process of evaluating securities through statistics is known as 澳洲幸运5官方开奖结果体彩网:technical analysis. Analysts and investors use data on market activity such as historical returns, stock prices, and 澳洲幸运5官方开奖结果体彩网:volume of trades to chart patterns in securities movement.

While fundamental analysis at🙈tempts to show the intrinsic value of a security or specific market, technical data is meant to provide insight into the future trading activity of securities or the market as🔯 a whole.

Technical analysis uses data from short periods of time to develop the patterns used to predict securities or market movement, while fundamental analysis relies on information that spans years. Because of the short duration of data collection in technical analysis, investors tend to use this method more in short-term trading. However, technical analysis can be a beneficial tool to evaluate long-term investments when combined with fundamental analysis.

Quantitative Analysis

Evaluation of the historical performance of a company or broad market is often done through quantitative analysis. Everyday investors perform quantitative analysis through simple financial ratio calculations such as 澳洲幸运5官方开奖结果体彩网:earnings per share (EPS) or more complex calculations such as the♍ discounted cash flow (DCF). Quantitative analysts for professional investment firms most typically utiliz🅷e complex computer models instead.

The results of quantitative analysis provide insight into the 澳洲幸运5官方开奖结果体彩网:valuation or historic performance of a specific security or market. But quantitative analysis is not often used as a standalone method for evaluating long-term investments. Instead, quantitative analysis is used in conjunction with fundamental and technical analysis to determine the potential advantages and risks of investment decisions.

The Bottom Line

Retail investors most often use fundamental analysis when determining the quality of long-term investments in a wide array of securities and markets, while they may turn to technical analysis in the review of short-term investment decisions such as the 澳洲幸运5官方开奖结果体彩网:active trading of stocks. Invest🔜ors use quantitative analysis to evaluate the financial stability of a company.

While some investors prefer the use of a single analysis method to evaluate long-term investments, a combination of fundamental, techni💛cal, and quantitative anal𝔍ysis is the most beneficial.