What methods do professional analysts adopt to analyse stocks?
Professional stock pickers adopt different processes to analyse stocks. Some adopt a method in which they begin at the general and then zoom in to the specific i.e. they would probably begin with an analysis of the economy. While analysing the present state of the economy they would look at interest rates, what economic outlook the finance ministry projects for the short term and other political events that might have a bearing on the economy. Having reached at a conclusion about the economy, the professional will choose industries that he expects will perform well under the given economic conditions. Next, he hones in on some of the companies in the industry, sees how the companies are performing and then evaluates their stocks. The end product of such an analysis is to convincingly answer one question for his investors: Is the price at which the stock is currently selling worth it? The other method works in the reverse way in which the professional analyst picks up a stock, looks at
