Fundamental and technical

analysis
May 2, 2023
 Performance table

Név Neptun code Forum questions 40 % Video essay 10 % Short essay 20 % Table composition 10 % Pecha Kutcha 20 % Total
E1GRAR E1GRAR 40 10 20 10 80
LLMM20 LLMM20 34 10 20 10 74
V9E6V6 V9E6V6 30 10 20 10 70
KNP7WD KNP7WD 44 10 20 10 84
A9HV58 A9HV58 0 0 0 0
MP8V5U MP8V5U 0 0 0 0
BKAS5I BKAS5I 8 10 20 10 48
WTW6HF WTW6HF 0 0
IONP01 IONP01 4 10 17 10 41
PZAB0F PZAB0F 22 10 20 10 62
TQN9QS TQN9QS 14 10 19 10 53
LL072C LL072C 28 10 20 10 68
P7E7SK P7E7SK 22 18 10 50
How would you reposition your
financial portfolio to react on
climate change?

• One strategy to consider is investing in companies that are actively working

to reduce their carbon emissions and develop sustainable practices. This
can be done through investing in green bonds, sustainable funds, or
individual stocks of companies with strong environmental, social, and
governance (ESG) scores. By investing in these companies, you are
supporting their efforts to address climate change and reduce their impact
on the environment.

Another strategy is to divest from companies that are heavily dependent on

fossil fuels or engaged in environmentally harmful practices. This can
include divesting from traditional energy companies, such as those
involved in coal, oil, and gas, as well as companies in other sectors that are
contributing to climate change. This divestment can be done through
selling stocks or moving investments into alternative industries. (Marta)
How would you reposition your
financial portfolio to react on
climate change?
• The society's increase of awareness in climate change will not only shift consumer
behavior but also the business trend towards more sustainable and green
economy. Therefore, several strategy that I will implement are:
1. Add portfolio with stocks of company in renewable energy industry -> company
in renewable energy industry will gain more traction with the climate change
awareness hence it will get more profit which also a potential gain both in the
stock price and the dividend it shares to the investor.

2. Add portfolio with government bonds that will be used to support environment
and sustainable activities -> although it has no direct impact to the interest that I
will gain as an investor, I consider this as an investment for myself as well because
as one of the citizen in the country where government will spend the money to
support environment and sustainable activities then I will indirectly get the
benefit. For example if the government decide to do reforestation then the oxygen
and greenery will improve the well-being of people in the country.

3. Not add investment in the company that does not support green business -> I
will keep my portfolio of company even though its not supporting green business
in order to keep the balance with the portfolio that I have add in point 1 & 2.
However, I will not add investment in the company anymore. (Eka)
How would you reposition your
portfolio if at all, based on the fact that
artificial intelligence has been
widespread quickly by 2023?

• One strategy to consider is investing in companies that are at the forefront

of AI development and implementation. This can include companies that
are developing AI technologies or using AI to improve their products or
services. Some examples of industries that are heavily utilizing AI include
healthcare, finance, and retail. Investing in these industries can potentially
lead to higher returns as AI continues to revolutionize these sectors.

Another strategy is to diversify your portfolio to include both AI-related

investments and traditional investments. This can help to mitigate the risk
of investing solely in AI-related companies, which may be subject to rapid
changes in the industry and potential market volatility.

It's important to note that investing in AI-related companies may come

with higher risks, as the industry is rapidly evolving and there may be
significant uncertainty around the adoption and regulation of AI
technologies. (Marta)
How would you reposition your
portfolio if at all, based on the
fact that artificial intelligence has
been widespread quickly by 2023?
• The widespread of AI in the industry can be compared apple to apple with the
widespread of online and internet based industry in the early 90s and 00s. As a
moderate risk profile investor who currently lean to be a low risk investor, here
is the portfolio reposition that I will most likely to take:

1. Wait and see the development of AI company -> there are 2 possibilities for a
company at the forefront of innovation whether to fail completely (like most
startup industries) or to successfully being the pioneer. As an investor, I will wait
for another 3-5 years to invest in a company that has a solid foundation of AI
development and commercialization plan of it especially if the company is only
solely based the revenue from it. However, if the company is an established
technology company i.e. Tesla, Google, Meta, then I will most probably try to
invest slightly on it.

2. Start or add investment in companies that complement AI development -> In

order to develop AI, software and hardware are used to some extent. Therefore,
when the development of AI growing rapidly then the demand for these
software and hardware will also facing the same trend. As an investor, I will start
or add investment in companies like Intel, AMD or NVIDIA.
Fundamental
analyisis
• Fundamental analysis is a method of determining an
asset’s real or "fair market" value.
• Fundamental analysts search for assets currently
trading at prices higher or lower than their real value.
• If the fair market value is higher than the market
price, the asset is deemed undervalued, and a buy
recommendation is given.
• If the fair market value is lower than the market
price, the asset is deemed overvalued, and the
recommendation might be not to buy or to sell if the
stock is held.
• In contrast, technical analysts favor studying the
historical price trends of the asset to predict short-
term future trends.

https://www.investopedia.com/t
Stock’s fundamental
analysis – top down
approach

• The overall state of the economy

• GDP, inflation, Unemployment, PMI,
Consumer confidence
• The strength of the specific
industry
• Regulation, business cycle
• The financial performance of the
company issuing the stock
• Specialties, qualitative information,
Sources for
fundamental
analysis
• Financial statements
• quarterly and annual reports and filings
like the 10-Q (quarterly) or 10-K (annual).
• 8-K is also informative because public
companies must file it any time a
reportable event occurs, like an
acquisition or upper-level management
change.
• Companies’ innvestor relation sections of
their websites, highlighting financial
decisions made
• Not good enough :
• sell-sided analysis,
• free analysis
Qualitative Fundamentals

• The Business Model

• What exactly does the company do? This isn't as straightforward as it seems. If a company's business model
is based on selling fast-food chicken, is it making its money that way? Or is it just coasting on royalty and
franchise fees?
• Competitive Advantage
• A company's long-term success is primarily driven by its ability to maintain a competitive advantage—and
keep it. Powerful competitive advantages, such as Coca-Cola's brand name and Microsoft's domination of
the personal computer operating system, create a moat around a business allowing it to keep competitors at
bay and enjoy growth and profits. When a company can achieve a competitive advantage, its shareholders
can be well rewarded for decades.
• Management
• Some believe management is the most important criterion for investing in a company. It makes sense: Even
the best business model is doomed if the company's leaders fail to execute the plan properly. While it's hard
for retail investors to meet and truly evaluate managers, you can look at the corporate website and check
the resumes of the top brass and the board members. How well did they perform in previous jobs? Have
they been unloading a lot of their stock shares lately?
Qualitative Fundamentals
• Corporate Governance
• Corporate governance describes the policies in place within an organization denoting the
relationships and responsibilities between management, directors, and stakeholders. These
policies are defined and determined in the company charter, its bylaws, and corporate laws and
regulations. You want to do business with a company that is run ethically, fairly, transparently, and
efficiently. Particularly note whether management respects shareholder rights and shareholder
interests. Make sure their communications to shareholders are transparent, clear, and
understandable. If you don't get it, it's probably because they don't want you to.
• Industry
• It's also important to consider a company's industry: its customer base, market share among
firms, industry-wide growth, competition, regulation, and business cycles. Learning how the
industry works will give an investor a deeper understanding of a company's financial health.
Metrics - an example Coca Cola Co.
Coca-Cola Industry Sector
Y/Y Revenue Growth 13.48% 10.86% 16.18%
P/E Ratio 29.12 25.16 18.68
Price to Free Cash Flow 24 7.45 4.23
Debt to Equity (TTM) 1.57 0.14 0.11
Quick Ratio (TTM) 0.16 0.24 0.2
Return on Equity (TTM) 13.14% 30.21% 23.16%
Return on Assets (TTM) 11.5% 8.69% 7.91%
Return on Investment (TTM) 13.14% 19.76% 15.84%
Revenue per Employee (TTM) $111,578 $55,015 $66,896
Technical analysis
• Technical analysis is a trading discipline employed to
evaluate investments and identify trading opportunities in price
trends and patterns seen on charts.
• Technical analysts believe past trading activity and price changes of a
security can be valuable indicators of the security's future price
movements.
• Technical analysis may be contrasted with fundamental analysis,
which focuses on a company's financials rather than historical price
patterns or stock trends.

https://www.investopedia.com/terms/t/technicalanalysis.asp
Major assumptions of FA
• According to Charles Dow:
1.Markets are efficient with values representing factors that influence a
security's price, but
2.Even random market price movements appear to move in identifiable
patterns and trends that tend to repeat over time
3.The market discounts everything: everything from a company's
fundamentals to broad market factors to market psychology is already
priced into the stock.
Technical analysis
indicators
• Price trends
• Chart patterns
• Volume and momentum indicators
• Oscillators
• Moving averages
• Support and resistance levels
Daily chart of OTP Bank of Hungary
Erős falat tört át az OTP - Meddig emelkedhetünk?

https://www.portfolio.hu/bank/20230502/eros-falat-tort-at-az-otp-meddig-emelkedhetunk-612546
 A cup of tea?

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