Fundamental analysis uses key ratios to determine the financial health of a business.
In my article on Price to Earnings Ratio or P/E , I noted that this number gave you an idea of what value the market place on a company’s earnings.
The problem facing the incoming Obama Administration is that the danger of the economy slipping further is greater than huge deficits and high interest rates down the road.
If the deficit spending can put people to work, investors may benefit in the near term as business gears up for promised public works projects.
Will this fix the economy? Unfortunately, no one knows for sure.
Based on those numbers alone, you could conclude that the market was flat and not much was going on.
However, if you looked at the advance/decline numbers, you would see that on both the New York Stock Exchange and the Nasdaq that about 59 percent of the stocks closed up for the day.
From a whole market perspective, it wasn’t a bad day.
This article discusses what is behind these numbers and why you should care.
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