What are 'business fundamentals'?
From http://financial-dictionary.thefreedictionary.com/Business+Fundamentals The facts that affect a company's   underlying value. Examples of business   fundamentals include debt, cash flow,   supply of and demand for the company's   products, and so forth. For instance,   if a company does not have a   sufficient supply of products, it will   fail. Likewise, demand for the product   must remain at a certain level in   order for it to be successful. Strong   business fundamentals are considered   essential for long-term success and   stability. See also: Value Investing,   Fundamental Analysis. For a stock the basic fundamentals are the second column of numbers you see on the google finance summary page,  P/E ratio, div/yeild, EPS, shares, beta.   For the company itself it's generally the stuff on the 'financials' link  (e.g. things in the quarterly and annual report,  debt, liabilities, assets, earnings, profit etc.
Quant has been an interesting part of finance, but I always thought they missed something really important.   The standard methods of statistical analysis can’t explain what’s going on with economy and firms. Otherwise, quant hedge funds would have been making money all the time.   The conventional quants find patterns in data, test them then go live. These models work until some fundamental (or not so fundamental) shifts in the market. Then they find themselves back in the drawing board looking for their next model. This kind of analysis seems like a lot of grind for fairly  unpredictable returns.   There are more and more companies that don’t lend themselves well to fundamental analysis as we know it. Financial data and some poor flawed human analysts insights alone can no longer explain much.   This is a unique set of challenges that Data Science, more specifically AI could solve. The speed at which AI can learn and process information is just mind boggling. AI can learn the entire financial history of decision making in minutes. It can recognize patterns, make sophisticated analysis and constantly update its probability tables as the new information comes in. This is something no human can compete with.    Imagine a quantitative engine that adapts as the economy changes. It could draw heaps of unstructured data about a company, learn from it in real time, make course corrections and spit out its recommendations.   To the degree that human decision making is involved in the strategic decision making of companies, we will need the depth of context that can be provided by humans, but I see the field moving away from excel spreadsheets with fairly poor predicting capacity to AI models with strong predictive capacity. "GE have two problems as I (a GE alum) see it.  1.  Short-termism in middle management.  If you're a middle manager at GE, you're desperate to make ""E Band"" - the named Executive rank.  To get there, you can't be in your role for more than three years, but ideally two.  So you won't begin, support, endorse or participate in any project that won't see measurable financial results in &gt;24 months.  That's lunacy.  What this means is that to show ""impact"" at GE, middle management bash together some flimsy band-aid for a real problem.  They'll generally call it a ""template"" or a ""best practice"", even if it is neither.  They'll put it on the GE intranet as a ""workflow"", and tell everyone to use it.  Then they'll call that improvement project complete, and move on to their next job.  2.  Matrix environment.  Currently in vogue, I get it.  Here's how it's poison to GE.  There are middle managers in GE who report to three different people, and have no-one reporting to them (or very few people).  Therefore, to get anything done without resources of your own, you have to go around begging and borrowing other people - under the guise of ""matrix environment"".  That has two issues: firstly that it relies on the influencing skills of the middle-manager (don't get me wrong, influencing skills matter, but they're not the #1 skill required to move the needle), and secondly that it relies on the bandwidth and the ability-to-say no of the resource.  Busy people say no, and busy people tend to be the best.  Weak people can't say no, and they tend not to be.  All this gives GE fairly crappy solutions to fairly fundamental problems.  tl;dr: Incentives and Organization at GE lead to sub-optimal outcomes." This problem is unfixable. Maybe the future holds a world where everyone will understand basic computing, how to use technology in a functional way and probably how programing works at a fundamental level and even then you may still have insufferable morons with too much power running business. The Art of Short Selling by Kathryn Stanley providers for many case studies about what kind of opportunities to look for from a fundamental analysis perspective. Typically things you can look for are financing terms that are not very favorable (expensive interest payments) as well as other constrictions on cash flow, arbitrary decisions by management (poor management), and dilution that doesn't make sense (usually another product of poor management). From a quantitative analysis perspective, you can gain insight by looking at the credit default swap rate history, if the company is listed in that market. The things that affect a CDS spread are different than what immediately affects share prices. Some market participants trade DOOMs over Credit Default Swaps, when they are betting on a company's insolvency. But looking at large trades in the options market isn't indicative of anything on its own, but you can use that information to help confirm your opinion. You can certainly jump on a trend using bad headlines, but typically by the time it is headline news, the majority of the downward move in the share price has already happened, or the stock opened lower because the news came outside of market hours. You have to factor in the short interest of the company, if the short interest is high then it will be very easy to squeeze the shorts resulting in a rally of share prices, the opposite of what you want. A short squeeze doesn't change the fundamental or quantitative reasons you wanted to short. The technical analysis should only be used to help you decide your entry and exit price ranges amongst an otherwise random walk. The technical rules you created sound like something a very basic program or stock screener might be able to follow, but it doesn't tell you anything, you will have to do research in the company's public filings yourself. "The raw question is as follows:  ""You will be recommending a purposed portfolio to an investment committee (my class). The committee runs a foundation that has an asset base of $4,000,000. The foundations' dual mandates are to (a) preserve capital and (b) to fund $200,000 worth of scholarships. The foundation has a third objective, which is to grow its asset base over time.""   The rest of the assignment lays out the format and headings for the sections of the presentation.  Thanks, by the way - it's an 8 week accelerated course and I've been out sick for two weeks. I've been trying to teach myself this stuff, including the excel calculations for the past few weeks." I took two of their online classes, attended an on campus case discussion, and attended a discussion between two professors on the future of capitalism.  What's being taught and talked about at HBS in the past year that I've been a student has been focused on using business and the economy to serve humanity. At the end of the disscusion one professor suggested getting rid of income taxes and replacing it with a financial transaction tax. A sales tax on financial instruments not targeted at long term investments but at high frequency trading. "In studying the great ""successes"" in business, it's clear that those who do the best have unlimited creative and business ideas, not just one idea, but many ideas all day long everyday.  No matter what you decide for your current idea, document (write down) your process of each step that you took from idea to inception and track one or two key metrics alongside, so your list would look like this:  1. Socialize idea, goal revenue $0, total cost $0, time 26 hours 2. monitor money invested, costs, and hours of your time 3. Brainstorm: What's the quickest way to have one paying client 4. How will I track my customers? 5. How will I connect and communicate with my customers? 6. And on and on.  From having an idea to implementation to even making money or a profit is quite simple, straightforward, and any book, mentor or online free content can show you how.  What is ""hard"" is maintaining motivation, stamina, and creativity for when REAL challenges come up, because they will!   Competition swoops in, in a way you that you (and the sage commenters at Reddit) couldn't have predicted, you are audited by the IRS and then owe way more in taxes than you expected from four years ago, you are sued for a small claims or worse, or you simply get bored or inspiration strikes in your heart on another great idea.  Problems like this require REAL and thoughtful ""creativity and implementation"" on demand, all day, everyday. This is what starting a business is really about. Tracking your steps means that you can easily and quickly review what you've done and backtrack or try another idea instead of wallowing in mistakes, missteps, or hard problems. It's really much harder than it sounds, but once you can invent more ideas to solve a problem than there are problems, you can overcome most challenges.  The framework is that, you want to start a business because it serves your customers, brings them enough value and delight to pay you, and you have a way to make a living yourself and/or sell eventually or have some ""exit strategy.""  You want an exit strategy so that your business doesn't become a poor paying ""job"" that you're a slave to. Because it does, and if it does, a job is way easier and makes you more money.  Write down each step of your business building process, track your costs, revenue, and time, and have fun.  Then, you have enough energy to ""pivot"" or change your ideas because you've set up a repeatable, improvable, process to run your next idea through with modifications along the way. You keep retrying your process for your ideas until your lifestyle is paid for (your salary) or something even greater monetarily." I was wondering if someone could recommend a textbook  I'm taking a course right now in foundations of finance and we're dealing with subjects such as utility functions, risk aversion, prudence, temperance, Arrow-Debreau securities, portfolio theory, and more  I'm finding the textbook we're using (Intermediate Finance, Danthine &amp; Donaldson) a bit hard to understand