Pros & Cons of the stock analysis technique which is taught in business school, used by teams of mutual funds professionals and made Warren Buffet one of the richest man in the world!
PROS:
1. Filters out great companies available at a good price.
2. Investing in a fundamentally strong company with patience has a much higher probability of reward than holding a fundamentally poor company.
3. Allows “BUY THE DIP”.
4. Provides an exit strategy when the stock price becomes irrational.
CONS:
1. Works only for investments. Absolutely should not be used for Stock trading.
2. Requires a lot of hardwork and patience.
3. Stock prices change much earlier than fundamental changes in the company (due to smart players, insider trading, etc.)
4. Stock prices do not move based on fundamentals of the company. They move based on demand & supply.
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