Posts Tagged as ‘stock’

August 24, 2008

How to Screen Stocks in 10 minutes

Does the firm pass a minimum quality hurdle?…
Avoid mini caps and firms that trade on bulletin boards (or pink sheets); avoid firms that don’t file regular financials with the SEC; avoid initial public offerings (IPO).
Has the company ever made an operating profits?…
Avoid promising (or young start-up) firms. For example: novel treatment abt some rare-disease, exciting [...]

August 24, 2008

Intrinsic Value

The value of a stock is equal to the present value of its future cash flows. Value is determined by the amount, timing, and riskiness of a firm’s future cash flows
Present value calculation is necessary because future value of money is worth less than current ones because:

Money we receive today can be invested to generate [...]

August 21, 2008

The Basic of Stock Valuation

Over time, the stock market’s returns come from two key components: investment return and speculative return. As Vanguard founder John Bogle has pointed out, the investment return is the appreciation of a stock because of its dividend yield and subsequent earnings growth, whereas the speculative return comes from the impact of changes in the price-to-earnings [...]

August 19, 2008

Analyzing a Company – The Basic

This can be break down into five areas
I. Growth.
Sales growth is more important than earning growth. Sales growth is more difficult to fake. In general, sales growth stems from one of the four areas:

Selling more goods or services
Raising prices
Selling NEW goods or services
Buying another company. This is low quality growth.

II. Profitability.
Comparing cash flow from [...]

August 17, 2008

Financial Reporting: An Overview

Taken from The Five Rules For Successful stock investing by Pat Dorsley.
There are three financial statement that you need to take note:

The balance sheet is like a company’s credit report because it tells you how much the company owns (assets) relative to what it owes (liabilities) at a specific point in time. It tells you [...]

August 17, 2008

Stock – General tips

Taken from The Five Rules For Successful Stock Investing, by Pat Dorsley
When not to sell a stock:

The Stock has dropped
The Stock has skyrocketed

When to sell a stock:

Did you make a mistake?
Have fundamentals deteriorated?
Has stock risen too far above its intrinsic value?
Is There Something better you can do with the money?
Do you have too much money [...]