In fundamental analysis, the basis for the estimated price (intrinsic value) is of fundamental factors such as financial statements, other important information from time to time to be declared a public company and macro economic developments, like any news in other fields such as politics, social , weather, etc.. Deemed necessary, all of them for at least the last two years. Of course the work involved is colossal, if you want to be reviewed in depth and exhaustive.
It is impossible for anyone to absorb all the information offered in total. Need to put the border in order of priority and the limited time and resources of each. Restrictions established by the analyst according to individual needs are different. In addition, access to the information available is not the same for all parties who were involved, in terms of time and number. Differences in the analyst space restrictions will affect the price formation process, so that will arise differing perceptions about the price level that is considered normal.
If the part is also the motivation reviewed various parties to jump into the stock market, the price movement will be influenced also by considerations that are not fundamental or rational. Parties that are considered fundamental approach is the long-term investors who occasionally need to implement portfolio adjustments, but always try to select stocks with the best performance. Group that is not always so, but still quite rational is the driver of the market (market maker) because its obligation to create demand in a particular stock. In the group "market maker" including "specialists" which are prohibited by exchange rules to create a request that is misleading, because the stock did not really tackle the fundamental requirements at all. The "specialist" assigned to keep trade alive and liquid for a particular stock based compensation of special treatment (privileges) from the stock exchange in the United States.
Motivational differences between the investor and the market movers can cause the best stocks are not getting the highest price. It could happen that the stock is not so good fundamentals, market actors pursued because of higher demand.
Executors stock with a low percentage of stock that have been developed, but it is higher in markets that have not been well developed, are the speculators who are not rational. The speculators made up of two groups that consumed the issues that make a profit on the exchange is easier and faster than jump into the normal business.
One group did have more money, so overall will not lose all the pain. Losses will make them a bitter lesson that hopefully can be a driving force for fatigue-tired going in to make an analysis before engaging in the stock, rather than relying on rumors or instinct alone.
The other group is those who actually do not have much money, but that is just not needed immediately. Because have no understanding of fund management, there are no reserves to deal with losses that come along with or faster than the need to use. The experience will make their way into the stock deterrent anymore.
From fundamental background material and stock market actors can draw the conclusion that the effort to set prices in advance, may not work well. Price been calculated to be not be expected to appear in the market. What can be expected is a guide to action buy and sell based on comparisons between the analysis and the reality faced by principal’s exchanges. Sell shares called "overvalued" (price is above that value has been calculated / estimated), instead buy shares of the "undervalued" (the price is below the value that has been calculated / estimated). A rational attitude so it will generate profits if the time period used is long enough. But whether a strategy of "buy-and-hold" for the stock "undervalued" can produce the maximum profit?
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