Problems With Fundamental Analysis
There are several problems with fundamental analysis:
- Investors must rely on information being supplied by a company. Of course we all know that all corporations are always honest and truthful right?
- Corporations may pressure banks and accountants to fudge the numbers a bit in exchange for accounts.
- A lot of fundamental analysis relies on what amounts to best guesses about the future performance of a company.
- Simply to hard for an everyday investor to really get the truth behind a company's numbers.
So this comes back to the simple fact; that you should never trust anyone but yourself when it comes to investing your money. Way to many people put their blind faith into companies such as Enron to find out they were lied to for many years. As an example, listen to any CEO talk on CNBC and you will see that no matter how bad their company is doing; somehow, they will always make it out to seem like they are on the right path.