Finance Data
Finance data is a broad term that encompasses market data, firm data, and historical data.
MARKET DATA
Market data is data that is related to the trading of securities. Securities are negotiable instruments that represent financial value. Securities are broken down into the following categories:
- Debt Securities
Includes bonds, debentures, bank notes, and other debt. - Equity Securities
Includes stocks and derivative contracts (futures and options).
Market data traditionally refers to stock prices, but it can also refer to broader sector or market prices.
FIRM DATA
Firm data is information about a publicly held company. Firm data includes financial reports (balance sheet, income statement, and statement of cash flow), annual reports, and firm press releases. Firm data is used to put together an overall picture concerning the economic health of a firm. It is used by investors to make investing decisions.
One of the most well-known corporate bankruptcies in history was that of Enron in 2001. The collapse of Enron was due in part to the discovery of irregular accounting practices. Many of these practices were detailed in the firm data, in this case, the financial and annual reports. Numerous financial analysts have stated that had investors and market experts paid more attention to Enron’s firm data, the collapse could have been avoided.
HISTORICAL DATA
Historical data is used by financial analysts to review the past economic performance of a firm. To a degree historical data encompasses firm data, as past financial reports are a part of historical data. Historical data also includes the past stock prices of a firm.
Technical analysis (commonly referred to as charting) is financial analysis based on past performance. Technical analysis uses past stock price and past trade volume to predict future stock price. Historical data is a key component to technical analysis.
Technical analysis is in near direct opposition to fundamental analysis. Technical analysis ignores the present condition and economic climate in which a firm operates. Fundamental analysis involves analyzing the current financial reports for a firm, firm management, firm competitive advantages, the competitors of a firm, and the current economic market in which the firm operates. Fundamental analysis, to a large degree, ignores past performance.