Importance of Economic Analysis in security analysis?

Security analysis is essential for for making intelligent investments in equities of companies. In the case of examining a potential investment in the stock of a particular company research is done on a company's profits and projected profits. Other reasons are as follows:

* assess the competition in a particular industry;

* assess the skills and business records of a company's executives;

* determine whether the company makes profits on a cyclical basis;

* examine the public reports of top management people who are buying or selling the stock of their own company;

* examine the price to earnings ratio; and

* examine the company's dividend history and policies.