Qualitative Analysis

See: Fundamental Analysis.

When quant analysis is your only guide to investing, you're likely missing the total picture from 37,000 feet. Quantitative metrics (and all the other goop that goes into that mix) is somehow processed by an algorithm set up by an investor guru, and then the black box tells the portfolio manager what to do or not do...or just automatically invests the dough.

Quant analysis is all about the numbers, but as applied in two arenas. That is, one set of quant metrics looks at trading patterns and volumes and shapes of charts, almost like a Rorschach Test, where you see a flying elephant with a large, um...trunk. So that's the trading pattern quant zone. The other zone is a quant approach to the fundamentals of the company. Like, how fast is revenue growing relative to the industry or the market in general? How are margins doing? Free cash? Debt paydown? Something else?

It all comes together at the end with a buy, sell, or hold, and, well...that's what makes a market.