PDSnet Glossary

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Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

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Definition

A person who uses fundamental analysis, (rather than technical analysis) to select shares and time their transactions in the stock market. Fundamentalists are concerned with establishing the "real" value of a share as precisely as they can by forecasting its probable future flow of dividends and then discounting the result into a present value for the share today. Obviously, the result remains subjective because fundamentalists differ in their predictions of future earnings and also in the rate at which they discount their predicted dividend flow. In practice, only large institutional investors engage in this type of analysis. As a private investor it is useful to study the company's results and try to estimate what you think their next earnings and dividend are likely to be.

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