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Fundamental Analysis

Fundamental analysis is a method of market analysis primarily focusing on the external factors that affect the price of a security. Fundamental analysis presupposes that securities are always either over-priced or under-priced and are thus perpetually correcting themselves towards their true value. Fundamental analysts focus on the economic, geo-political, social and macroeconomic factors such as: output, income, unemployment, GDP, inflation/deflation. The purpose of fundamental analysis is to identify whether a certain security is over-priced or under-priced in order to take the appropriate position.