1.1.4.2 Two methods of fundamental analysis

The methods that traders often use when conducting fundamental analysis are:

• From macro to micro analysis
• From micro to macro analysis

Starting from a macro perspective, it will generally start with an analysis of the global economic situation, including global economic policies, monetary policy, population development, GDP, production efficiency, etc., as shown in the following figure.

With the deepening of the analysis, the focus of the analysis is gradually placed in a certain region or an industry, and finally gradually pushed to the specific enterprises that focus on research. Throughout the analysis, the analysis focused on the region or the specific enterprise's global competition. These analyses include comparisons of sales, prices, R&D, and more.

The analysis method from the microscopic point of view is to adopt the opposite analysis method as above.

Relative to the way of technical analysis, the fundamental analysis of the trader's requirements is:

• Use longer time
• Require a more comprehensive knowledge system

It is difficult for independent traders to complete fundamental analysis, and thus the use of fundamental analysis to conduct transactions requires more people to collaborate on the analysis. With the widespread use of computers and the Internet, many basic analytical tasks have begun to be processed using mathematical models, greatly reducing the labor costs of analysis.

[Thinking] When a trader refers to an analysis report, how to judge the reliability of the basic data and the rationality of the conclusion?

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