| Latest Forum Topics / Others |
 Post Reply
|
|
Interesting Read
|
|
|
ten4one
Master |
08-Aug-2006 09:51
|
|
x 0
x 0 Alert Admin |
Good for you Singaporegal. Contunue doing what you know best and as long as it works it is the best strategy or method for you. I don't adopt a single strategy and I could change 'technics' depending on the situations and trading environments prevailing. Cheers!!!!! |
| Useful To Me Not Useful To Me | |
|
singaporegal
Supreme |
07-Aug-2006 09:05
Yells: "Female TA nut" |
|
x 1
x 0 Alert Admin |
hi ten4one, agree with you totally that research takes a lot of effort. Before I switched to TA, I used to spend hours poring over newspapers or analyst reports etc. just to make a decision whether or not to buy or sell. But with TA, I come to a decision in like 5 mins. Its quick and short term, but given my busy work schedule, I think its suitable for me. |
| Useful To Me Not Useful To Me | |
|
|
|
|
ten4one
Master |
06-Aug-2006 17:17
|
|
x 0
x 0 Alert Admin |
Thanks billywows for your insight. I agree that it is the Market practices that they 'published' the in-house analysed reports only after they've served their 'valued' clients and bought into the Markets. Though I don't like this ideal, I could live with it. To me it is Ok to lose money when you participate in the Market. Most important of all, at the end of the day it is not whether you're right or wrong about the Market, but how much you make when you're right and how much you lose when you're wrong. Maximizing the opportunity takes courage especially the leverage is huge. Cheers!! |
| Useful To Me Not Useful To Me | |
|
billywows
Elite |
06-Aug-2006 15:03
|
|
x 2
x 0 Alert Admin |
Hi ten4one ... maybe I should simply say I do my own homework by keeping myself updated with the latest market info everyday to feel the market pulse. It is often too late and risky to rely on financial analysts' reports as they are mostly 'deliberately delayed'. As what most of you have suspected, banks and institutes would buy into a particular stock first and later issued upgrade or positive reports for it. They then bail out when retail investors load in. This is why we should never chase a bull. Why chase it when you can buy early and let other other people do the chasing for you? Self-confidence is important in stock market. To achieve it, we have to do our own homework to understand the market better. Then we position ourselves early to beat the market (banks & institutes too). Timing is crucial in stock trading if we want to buy low and sell high. And sometime, luck plays a play too! Remember, we are responsible for our own money. Warren Buffett's first rule of investing is "Never lose money." To this, he often adds rule No. 2: "Never forget rule No. 1." He takes those rules to heart in his investment strategy. He trys to focus his investment dollars on sustainable, undervalued businesses that he can easily understand. (*Taken from 1st article below) |
| Useful To Me Not Useful To Me | |
|
ten4one
Master |
05-Aug-2006 08:50
|
|
x 0
x 0 Alert Admin |
Hi billyvows, Do u really do your own research ? The reason I ask is I found it very difficult to do a thorough research - just to find the 'real' value of a Company will take me days (and yet have to reconfirm with fellow buddy investors). As an Individual, I don't have the luxury of having 'workers' to gather info and data etc....... ! I envy those who could come up with a report easily. Regards. |
| Useful To Me Not Useful To Me | |
|
|
|
|
billywows
Elite |
04-Aug-2006 22:33
|
|
x 0
x 0 Alert Admin |
Thanks, zigworld .... I am good with research, but lousy in charting. So I leave the TA, FA & etc to our experts in this forums. Luckily, my researches have made some good money for me so far. Hehe! |
| Useful To Me Not Useful To Me | |
|
Zigworld
Member |
04-Aug-2006 11:59
|
|
x 0
x 0 Alert Admin |
Nice read. My lesson learnt from the article: There are good & bad companies but there isn't good and bad share price. |
| Useful To Me Not Useful To Me | |
|
billywows
Elite |
04-Aug-2006 07:38
|
|
x 3
x 0 Alert Admin |
Here another interesting read for you guys again .... ------------------------------------------ How to Buy Low and Sell High By We all invest for the same reason: to make money. And in order to make money investing, we need to know two key things: when to buy and when to sell. If you can buy something for $1 and turn around and sell it for $2, then you've made money. If, on the other hand, you buy for a buck and can't find someone willing to take it off your hands for more than $0.50, you've lost money. Clearly, to make money at investing, the goal is to buy low and sell high. More than half a century ago, Benjamin Graham, the pioneer of value investing, came up with a simple way to do just that -- a concept known as the "margin of safety." By deploying this technique, investors greatly decrease the chance that they'll lose their hats and increase the likelihood that they'll trounce other investors. Following in Graham's footsteps, Bill Miller, who runs Legg Mason Value Trust (LMVTX), has beaten the market for 15 consecutive years -- something that is practically unheard of in the mutual fund industry. And Miller's long-run performance pales in comparison to that of Warren Buffett, a former pupil of Graham's and current head of Berkshire Hathaway. What's more, Graham's margin of safety is something we put to good use here at the Motley Fool Inside Value newsletter service. Know a company's true worth The key to success is a clear understanding of a company's true worth. With that knowledge in hand, buying low and selling high becomes a simple matter of waiting, buying a stock only when it falls below the company's true worth by a tempting margin. Once you own it, you need to keep tracking the company's value. When the stock rises to an uncomfortably high premium to its true worth, sell it. The central lesson: All buying and selling decisions should be guided by comparing a company's stock price to its true worth, not by some vague notion of what the hot stock of the moment is. My friend and colleague Philip Durell follows that philosophy as chief analyst at Inside Value. His selections as a whole are beating the market's return since the newsletter's inception in 2004. His record is added proof that using a margin of safety truly does work. Philip has beaten the market by not giving into the temptation to buy "the next big thing." As sexy as the marketing pitch may be, the next big thing often falls flat on its face. After all, look what happened to Baidu.com (Nasdaq: BIDU) since its highly publicized IPO. The company's stock has fallen since going public, despite being initially proclaimed as China's answer to Google. Closer to home, consider the all-American struggle of networking pioneer JDSU (Nasdaq: JDSU). At the forefront of the dot-com boom, this business' fiber-optic services were going to launch a revolution of high-speed communications. While high-speed networking has certainly changed the world, the story and the stock got too far ahead of the market for the products. As a result, investors who bought in near the peak of the hype are still down more than 90%. These are painful lessons, indeed, about investing in the next big thing. Instead, Philip has relied on companies with proven strong businesses and competitive moats, such as rent-to-own giant Rent-A-Center (Nasdaq: RCII). Though it's larger and more profitable than its primary rivals, Rent-Way (NYSE: RWY) and Aaron Rents (NYSE: RNT), Rent-A-Center nonetheless stumbled recently. Its newer, more customer-friendly stores have cannibalized sales at its older units. That cannibalization has depressed same-store sales, taking the company's share price down with it. That stumble provided just the opportunity Philip needed to suggest that subscribers buy low. As would be expected, Rent-A-Center is not sitting still through this crisis. Its recent plan to close its underperforming outlets will go a long way toward improving operating efficiency. Already, since being selected for Inside Value this past October, the company's shares have rocketed some 52.96% -- far exceeding the market's gain of 8.57%. Buying low with the margin of safety Every company has what Graham calls an "intrinsic value," a measure of what a company is really worth. Finding that value is part art and part analysis. One of the most powerful tools in a value investor's toolkit is a discounted cash flow calculator, into which you put your estimate of how much cash the company will generate in the ensuing years. The calculator then tells you how much the company is worth today. Inside Value has just such a calculator available to subscribers. If you're already a subscriber, click here to access it. If not, click here to take a free 30-day trial to the newsletter and play with the calculator to your heart's content. Once you've figured out what the company is worth, you can use that information to determine whether or not it has enough of Graham's margin of safety to be worth buying. Imagine buying the forerunner to oil giant ExxonMobil (NYSE: XOM) at the start of 1995. At a split-adjusted $15.19 per stub, you would have been buying shares in a business priced as though the multidecade low oil prices would be a permanent fixture in the world economy. Yet throughout its history, oil has been a cyclical commodity, prone to occasional price spikes. Eleven years later, on the back of oil's recent climb, the company traded hands at $66.47, up a staggering 338% from that start date. Selling high with the margin of safety Logically, if a company trading below its intrinsic value is worth buying, then a company trading at or above its intrinsic value just might be a candidate for selling. After more than doubling for subscribers between October 2004 and November 2005, Philip recommended just such a sell for former Inside Value selection Omnicare (NYSE: OCR). Its shares had simply run past Philip's objective analysis of their true worth. Just as discount prices don't last forever, shares don't continue to trade far above their fair values forever. In fact, at its recent price of $44.91, it has fallen more than 24% from Philip's sell price of $59.61. Following the formula Once you've figured out what a company is really worth, its margin of safety will tell you when it's time to buy and when it's time to sell. The lower a company's price with respect to that intrinsic value, the stronger the margin of safety, and the better the chance that buying that company will lead to a profitable investment. The higher a company's price with respect to that intrinsic value, the more that margin of safety has been reversed, and the better the chance that it's time to sell your position and take the extra profits from your bargain-hunting trip. |
| Useful To Me Not Useful To Me | |
|
|
|
|
singaporegal
Supreme |
23-Jul-2006 14:40
Yells: "Female TA nut" |
|
x 0
x 0 Alert Admin |
Good article! |
| Useful To Me Not Useful To Me | |
|
billywows
Elite |
23-Jul-2006 11:53
|
|
x 4
x 0 Alert Admin |
Dreadful Stocks to Avoid
By Warren Buffett's first rule of investing is "Never lose money." To this, he often adds rule No. 2: "Never forget rule No. 1." Of course, following these rules is easier said than done. But Buffett's done pretty well, so it seems unwise to simply dismiss his advice as the semi-coherent ramblings of a man who's read way too many 10-Ks. I take those rules to heart in my investment strategy. I try to focus my investment dollars on sustainable, undervalued businesses that I can easily understand. Buffett has made more than $40 billion for himself using that strategy, and he's made even more for his partners and shareholders over the years. Do you really need to assume a lot of risk to make more than $40 billion? My answer, and the answer of my colleagues at Motley Fool Inside Value, is "Heck, no!" If I make only $40 billion, I'll be perfectly satisfied. People spend a lot of time discussing the companies Buffett buys. But in the spirit of not losing money, it's equally worthwhile to understand the types of businesses that Buffett does not buy, in order to steer clear of potential duds. I see five main categories: 1. Businesses that bet the farm In some industries, companies occasionally have to make critically important decisions. If the company makes the wrong choice, it will be dealt a crippling blow. This is terrible for a shareholder, because even if the company makes the right decision one month, it might fail to do so the next. There is no "three strikes and you're out" policy. One strike, and it's game over -- your money's gone. Consider Boeing's conundrum in the superjumbo jet market. Developing a new jet costs billions of dollars, which can be recouped only if the jet proves to be a huge success. Boeing's competition, Airbus, already has more than 150 orders for its A380 superjumbo. But Boeing's research shows that airlines are moving away from a hub-and-spoke model. Thus, Boeing is betting the farm against the superjumbo, opting instead to develop the 787, a smaller, long-range jet that it expects to better address the market's needs. But if Boeing's analysis is incorrect and the market moves toward the superjumbos, it will lose customers. Either way, it's a tough decision, with potentially terrible consequences for Boeing. 2. Businesses dependent on research It's quite reasonable to believe that research can be a competitive advantage for certain companies. In fact, one reason Juniper Networks (Nasdaq: JNPR) has been successful is that it has been able to continually develop new networking hardware. Nevertheless, there is a downside to research. Often, innovative companies are required to do research simply to maintain their competitive positions. And if the research dries up, a company suffers. For instance, consider the plight of Pfizer (NYSE: PFE). Like many of the huge pharmaceutical companies, Pfizer had an impressive history of earnings growth because of new drug discoveries. But now Pfizer's struggling. Not only is it facing lawsuits over Celebrex and Bextra, but its labs are laboring to find new drugs to replace the old. And in 2011, its biggest drug, Lipitor, is coming off patent. As a large pharmaceutical, it still has many dominating competitive advantages, but fears about its pipeline have kept investors away from the stock. Thus, tech firms, pharmaceuticals, and other companies dependent on research constantly have to be wary of their innovation failing. This is in stark contrast to a company such as American Express (NYSE: AXP), which could develop nothing for a decade and still have a healthy business. While I don't think this is sufficient reason to sell off all your technology or pharmaceutical stocks, I can understand why Buffett tends to avoid such investments. 3. Debt-burdened companies In general, Buffett avoids companies with a lot of debt. This makes sense. During the best of times, large amounts of debt mean that cash that could be put toward growing the business or rewarding shareholders is instead servicing the debt. In a crisis, debt greatly limits a company's options and can sometimes lead to bankruptcy. A more subtle point is that great businesses throw off piles of cash. Great businesses generally don't need to use huge amounts of debt leverage to achieve an acceptable return for shareholders. So if a company needs debt to achieve reasonable returns, it's less likely to be a great business. You can see this with airlines like AMR (NYSE: AMR) and UAL (Nasdaq: UAUA). Both have billions of dollars of debt because they needed to take on that debt to build out their routes and pay the bills during hard times. But when the travel cycle hits a trough, the debt is frequently too large to service, and airlines can be forced into bankruptcy, as UAL was recently. 4. Companies with questionable management Management has incredible power. If executives want to enrich themselves at the expense of shareholders, either directly or by misrepresenting the company's prospects, individual shareholders have almost no hope of stopping them. I strongly recommend avoiding companies where there's even a hint that management lacks integrity. Some clues to look for here include excessively optimistic press releases, overly generous compensation or options grants, and frequently blaming external circumstances for operational shortcomings. WorldCom and Enron shares may have risen for years, but at the end of the day, shareholders received almost nothing. That's why I think questionable management is the worst flaw a company can have. 5. Companies that require continued capital investment Over the long term, shareholders make spectacular returns by buying businesses that are able to achieve extraordinary returns on capital. This leads to excess capital that the company can use to repurchase shares, pay dividends to shareholders, or reinvest in further growth. Companies that constantly need to make additional capital investments to keep the business going are the antithesis of this ideal -- the main beneficiaries will be employees, management, suppliers, and government. In other words, everyone except shareholders. Semiconductor companies, because of the huge expense of building and maintaining chip-fabrication facilities, also suffer from this disadvantage. Chartered Semiconductor Manufacturing (Nasdaq: CHRT) for example, has found profits and free cash flow hard to come by while spending the majority of its revenue over the past few years on capital expenditures. The upshot These characteristics don't necessarily make a company a bad investment. Intuitive Surgical (Nasdaq: ISRG), for instance, has been a great investment over the past few years, despite ongoing R&D and capital expenditures. But a solid understanding of why these types of companies may be undesirable can help you identify whether a company that looks good on the surface might actually cost you money later. We use similar techniques at Inside Value. With every stock, we cautiously evaluate each of these factors -- focusing on competitive advantages, potential threats, the balance sheet, and anything we can glean from SEC filings -- to determine whether the business is likely to provide a solid return for shareholders in the future. In our initial recommendation of any company, we discuss the risks the company faces and provide updates when new risks appear on the horizon. By focusing on great businesses and understanding the potential risks of any company, we endeavor to achieve Buffett's first rule -- "Never lose money." To see the nearly 40 companies we've identified, take a 30-day guest pass to Inside Value. There is no obligation to subscribe. This article was originally published on Oct. 7, 2005. It has been updated. |
| Useful To Me Not Useful To Me | |