Fundamental analysis is not jus knowing the PE ratio, EPS, ROI etc...This are important but the most important are still the company cashflow, income statment, balance sheet.A examination of 3,5,7,10 years of these data is necessary to make a sound investment decision.
Next understand the business of the company, for example one need to know the nature of the business, how easy is it for new player to enter the business, is the business easy to monopolies, how big is the company in the industry, what is the forecast for this industry??
Frankly i am not a fundamental guy, i am a technical trader.I am train in these aspect of fundamental analysis before but really it is not my cup of tea.Fundamental investing is really about investing the value of the company,investing in the business, something that you really want to own.The world most successful investor Warren Buffet use these approach.
Getting to know the cashflow,income statment, balance sheet is not difficult, understanding the business, the way to do the business is the most difficult thing to achieve. That why Warren Buffet say that diversification is for people who do not know what they are doing.Yes is true. Unless we can be like him whom understand the business, know how the business should be run and able to have coffee with the CEO, we still need to diverse in the long term investment.Put it another way, if we know the things like Warren Buffet then we dont have to diverse, work or worry anymore.\
So for average joe, investing in the long run still need diversification.
