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Finance a la shmoop what's the difference between a chartist and a

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fundamental analyst? okay here's Bob the trader no relation to Bob the Builder [Bob the builder appears]

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that is literally his name Bob the trader his parents were bearish on

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social security ever really being there for him so you know Bob the trader was

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their social security sort of how things work in China today they bet the ranch [Ranch appears]

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on Bob and Bob makes bank by trading stocks for silverman slacks Partners on

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Wall Street he makes ten million bucks a year by

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looking at charts and trading patterns like ascending triangles and double [Trading patterns appear on sheets of paper]

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bottoms we cannot lie and triple top like that obB is a chartist and really

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kind of an astrologist too and well just kind of weird but he's rich so people [Bob carrying stacks of money]

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call him eccentric well Bob the trader is basically the opposite of a

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fundamental analyst how so well Bob the trader knows and cares almost nothing

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about the companies behind the stocks he trades, he doesn't know what they do for

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a living or what their earnings are or what they manufacture or what their

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profit margins are or what their gross rates are or who runs them or even how

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you spell their corporate name.... well Bob just knows that this week the

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stock appears to be starting a major break out and he wants to bet big by [Break out appears on grading patterns]

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being long the stock either by owning it or by owning call options with a strike

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price right up around here okay so that's Bob the trader all right now meet

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Izzy the investor and yep you guessed it that's her real name would have been [Isabel as a baby with her parents]

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Isabel but well same deal on the parents and the social security bearishness

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thing..Izzy the investor is her parents social security she too makes ten

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million dollars a year on Wall Street only she makes like three trades a year

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Bob the trader makes that many in an hour

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Izzy the investor is a fundamental analyst or a fundamental investor so she

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makes big bets on a concentrated handful of stocks which then represent the

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investment portfolio she manages and is evaluated again it's like relative to

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some index like the S&P500 five hundred so what does a fundamental

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analyst care about other than having fund she looks at everything that

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comprises real and tangible or meaningful value in a company like all [Man discussing fundamental analysts]

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the stuff we described earlier mainly well, the cash it produces or will

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produce in the future like if she's paying a hundred bucks share for a stock

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what financial returns or value do you get for that stock? ten bucks in real

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cash earnings a six percent dividend how our profit margins are they trending up

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or down? what about revenue growth our revenues

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in fact growing and what about management do they get the biz or are

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they just in the rolls for a you know investment bank or golf well how does

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the company manage its cash does it buy back stock how well does their product

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mesh with the future like are they making operating systems for robots or

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paper and pulp so yeah that's what a fundamental analyst does they pick [Stock transfers to Izzy]

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stocks using the fundamentals that make up the value of the stock and they really

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don't care a whole lot about the charts and yes the key thing is that they get

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down to the fundamentals of what makes a company tick especially if that company [Izzy sitting in office and clock ticks]

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makes clocks for a living

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