If someone gave you a dollar for every newfangled stock-picking method invented every year, well, you probably wouldn’t need a book on investing. You’d already be rich.

Investors are constantly barraged with new ways to pick stocks and buy stocks. There’s no shortage of pundits, professional investors, bloggers, and traders who all claim to know the best ways to invest. The trouble is, most of their advice is conflicting and often confusing.

Maybe it’s this constant swirl of investment babble that tempted you to pick up this book. If so, you made a wise decision. This book will help you get back to the basics of investing, understand business, and measure how much that business is really worth. Rather than chasing hot stocks that inevitably crash, Fundamental Analysis For Dummies will show you how to study the value of a business. You’ll then use that information to make intelligent decisions about how to invest.

While faddish stock-picking systems come and go, fundamental analysis has been around for decades. The ability to pore over a company’s most basic data and get a good idea of how a company is doing, how skilled the management team is, and whether or not a company has the resources to stay in business is a valuable skill to have.

History is full of examples where just knowing a little fundamental analysis would’ve saved you from a massive financial hit. The dot-com boom in 2000 followed by the bust in 2001 was easily sidestepped by investors who knew these young Internet stocks were grossly overvalued and many companies’ business models were flawed.

And even the bear market of 2022 wasn’t as painful for students of fundamental analysis. If you read companies’ financial statements, instead of following the stock tips of complete strangers on Reddit, you likely avoided some of the brunt of the market’s pain.

In other words, taking the time to learn about fundamental analysis will actually help you make, and keep, more money. Following the fundamentals of companies keeps you rooted in reality. And that’s very valuable when other investors lose their heads and go chasing after stocks they see featured in Internet memes or eye-catching posts on social media.

Fundamental analysis is best known as a tool for investors trying to get a very detailed assessment of what a company is worth. But you might be surprised to learn you don’t have to be an investor to use fundamental analysis. If you buy a warranty from a company and want to know if the company will be able to honor it, that calls for fundamental analysis. You should know how solid a company is prior to entering any kind of long-term contract with it.

If you just want to know “how well” a company is doing before you take a job offer, you might also want to use fundamental analysis. Just think of the young people hired by small, underfunded firms in 2022 who had their offers rescinded. Journalists, too, can use fundamental analysis to find stories that will interest readers. Fundamental analysis also helps you figure out whether what you read about companies makes sense. Knowing how companies are truly performing is an important part of being informed about the economy. If you’re at a cocktail party and the talk is about a popular company like Tesla, fundamental analysis will help you know what’s really the score with the company. It’s similar to how you might want to study the performance of teams before talking sports.

The aim of this book is to show you what fundamental analysis is and help you use it as a way to better understand business and investment.

About This Book

Fundamental Analysis For Dummies is one of the most approachable texts to tackle this somewhat complex topic. Rather than bog you down with the nitty-gritty details that academics pull their hair over, I’ve attempted to lay out all the main topics and techniques you’ll need to apply fundamental analysis to a variety of business tasks.

While fundamental analysis is useful for anyone with genuine interest in learning more about business, I appreciate the fact you are likely hoping to make some money from fundamental analysis. For that reason, the book is largely targeted toward investors who are either hoping to use fundamental analysis to manage their portfolios or to enhance their current system of selecting stocks.

As the author, I can share the tricks, tips, and secrets I’ve learned from a career writing about online investing for readers just like you.

Fundamental Analysis For Dummies gives you all the tools you need to access fundamental data, process it, and make decisions. The book, however, stops short of showing you how to actually buy or sell stocks by choosing a broker and entering orders. If you’re interested in the actual process of buying or selling stocks, that topic is covered exhaustively in my other book, Investing Online For Dummies, 10th Edition (Wiley).

Icons Used in This Book

When you’re flipping through this book, you might notice several icons that catch your attention. That’s done on purpose. I use several distinct icons to alert you to sections of the book that stand out. Those icons are as follows:

These icons highlight info that you should etch on the top of your brain and never forget, even when you’re getting caught up in the excitement of fundamental analysis.

Read these sections to quickly pick up insider secrets that can boost your success with fundamental analysis.

Some of the things covered in the book get a bit hairy and complicated. This icon flags such sections for two reasons. First, you may decide to avoid the headache and skip over them, because the info isn’t vital to your understanding of fundamental analysis. Second, the icon is a heads-up that the paragraph is a little complicated. Don’t be embarrassed if you need to read the section a second or third time. Hey, you didn’t want this book to be too easy, did you?

Avoid the land mines scattered throughout Wall Street that can decimate your good intentions at building wealth with these sections.

Beyond the Book

In addition to what you’re reading right now, this product also comes with a free access-anywhere Cheat Sheet that clues you in to stuff like knowing the key Securities and Exchange Commission (SEC) filings, goes over financial ratios to know and love, and offers a financial analyst’s mini-dictionary. To get this Cheat Sheet, simply go to www.dummies.com and type Financial Analysis For Dummies Cheat Sheet in the Search box.

Where to Go from Here

If you’re a new investor or just curious about fundamental analysis, you might consider starting from the beginning. That way, you’ll be ready for some of the more advanced topics I introduce later in the book. If you’ve already been using fundamental analysis or wondering if fundamental analysis might enhance a strategy you think is working for you, you might skip to Part 2. And if you’re dying to know about a specific topic, there’s nothing wrong with looking up those terms in the Index and flipping to the appropriate pages.