Mastering Fundamental - Analysis MICHAEL GC. THOMSETT Dearborn Financial Publishing, Inc?tue This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Editorial Director: Cynthia A. Zigmund Managing Editor: Jack Kiburz Interior Design: Lucy Jenkins Cover Design: S. Laird Jenkins Corporation © 1998 by Michael Thomsett Published by Dearborn Financial Publishing, Inc.® All rights reserved. The text of this publication, or any part thereof, may not be repro- duced in any manner whatsoever without written permission from the publisher. Printed in the United States of America 989900 1098765432 Library of Congress Cataloging-in-Publication Data Thomsett, Michael C. Mastering fundamental analysis : how to spot trends and pick winning stocks using fundamental analysis / Michael C. Thomsett. Dc Includes index. ISBN 0-7931-2873-0 1. Investment analysis 2. Stocks—United States. 3. Stock exchanges—United States. I. Title. HG4529.T49 1998, 98-8159 332.63'22'0973—de21 cP Dearborn books are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please call the Special Sales Manager at 800-621-9621, ext. 4384, or write to Dearborn Financial Publishing, Inc., 155 N. Wacker Drive, Chicago, IL. 60606-1719.CONTENTS + Preface—What This Book Will Do for You Introduction—The Big Secret ls... There Is No Big Secret 1. Defining the Fundamentals—What You Need 2. Timing of Financial Information—Yesterday’s News 3. The Reliability Problem—Accuracy of the Numbers 4. Financial Reporting—How They Do It 5. Picking Apart the Financials—Easier Than You Think 6. Ratios—What They Are, How They Work 7. Trends—Your Secret Weapon 8. Putting Market Services to Work 9, How to Really Read the Stock Listings 10. What Makes Stock Prices Change 11. Economic Indicators or Gauging the Economy 12. Different Drummer Investing or The March of the Contrarians 13. Fundamentals in Specialized Markets 14. Valuable Techniques for the Savvy Investor Glossary Index Vii ix 37 47 66 81 122 133 150 163 178 193 209 223 231