<P> The intrinsic value of the shares is determined based upon these three analyses . It is this value that is considered the true value of the share . If the intrinsic value is higher than the market price, buying the share is recommended . If it is equal to market price, it is recommended to hold the share; and if it is less than the market price, then one should sell the shares . </P> <P> Investors may also use fundamental analysis within different portfolio management styles . </P> <Ul> <Li> Buy and hold investors believe that latching on to good businesses allows the investor's asset to grow with the business . Fundamental analysis lets them find "good" companies, so they lower their risk and the probability of wipe - out . </Li> <Li> Value investors restrict their attention to under - valued companies, believing that "it's hard to fall out of a ditch". The values they follow come from fundamental analysis . </Li> <Li> Managers may use fundamental analysis to correctly value "good" and "bad" companies . "Bad" companies' stock prices will eventually fluctuate, which can create opportunities for profit . </Li> <Li> Managers may also consider the economic cycle in determining whether conditions are "right" to buy fundamentally suitable companies . </Li> <Li> Contrarian investors hold that "in the short run, the market is a voting machine, not a weighing machine". Fundamental analysis allows a broker to make his or her own decision on value, while ignoring the opinions of the market . </Li> <Li> Managers may use fundamental analysis to determine future growth rates for buying high priced growth stocks . </Li> <Li> Managers may include fundamental factors along with technical factors in computer models (quantitative analysis). </Li> </Ul> <Li> Buy and hold investors believe that latching on to good businesses allows the investor's asset to grow with the business . Fundamental analysis lets them find "good" companies, so they lower their risk and the probability of wipe - out . </Li>

2. there are two basic types of stock common stock and