There is no formal manual for performing fundamental analysis. We urge you to use your imagination when using it! Here are three methods that can assist you in your asset research process to get you started.
Read the whitepaper or information memorandum
Most businesses, both new startups and well-established corporations, frequently have a whitepaper or information memo. The team’s background, their ambitions for the future of the business, and other details are all included in this document. Don’t merely scan one of these documents for facts when reading it. Examine the smaller particulars as well.
Does the text have a lot of grammar or spelling mistakes? Does it have a shoddy design or an unsavory vibe in general? If so, investing in that business is probably not something you want to do. You can go on to the core of the content if all the minor details are correct.
You can find the answers to the crucial project questions by reading a whitepaper or information memo. For instance, what issue does this team hope to resolve and how will they go about doing so? What are the project’s plans? What is the collective history of the team? Do you know any investors? If so, how much of a stake do they have in the business and how much power do they wield? In the end, the responses to all of these queries will have an impact on your investment. Therefore, you must learn before investing any money.
Research the target market and competitors
An essential component of fundamental analysis is comprehending a project’s place in a specific market. Any worthwhile effort need to aim to address a global issue with a specific market in mind. Are there a lot of gambling addicts who want to become wealthy rapidly in the target market? If so, that investment is not shrewd.
Let’s assume instead that the target market consists of men and women between the ages of 30 and 55 who are concerned about the environment and want to promote renewable energy. That target market appears to be far more enduring, robust, and stable. That initiative is a better investment for your money than the one that promotes get-rich-quick schemes.
You must research a certain asset’s rivals after having a firm grasp of the target market and its function. Which project is better than the other in terms of benefits? Examine the various communities, teams, and route maps of the rival businesses to determine which one you believe has the most chance of succeeding.
The business model
What is the business’s mission? The white paper or information memorandum should make this very apparent, but it’s also possible that the company doesn’t have either. Therefore, it is up to you to ascertain the business plan of the corporation.
It’s not always simple to do this. Consider McDonald’s as an example. You might believe that their strategy is to sell hamburgers all over the world. While that is true, their main source of income is real estate. Therefore, think carefully before establishing a business model.