Five Hard Truths That I Learnt About Money SUMMARY Some truths about money are consistent no matter how much you earn or invest Here are five truths that I reflect upon about money as I grew older No matter who you are, or how much money you make, or your philosophy and strategy on investing, a few truths apply to almost everyone and the way they manage their finances. Here …
Read MoreWhat Is A Financial Statement ? Part 2 of 2
Profitability 1. Gross Margin Definition Gross Margin is the percentage of Gross Profit out of sales or Revenue. Gross Margin (A: Dec. 2013 ) = Gross Profit (A: Dec. 2013 ) / Revenue (A: Dec. 2013 ) = (Revenue – Cost of Goods Sold) / Revenue = (204.71 – 40.471) / 204.71 = 164.2 / 204.71 = 80.23 % A positive Gross Profit is only the first step for a company to make …
Read MoreWhat Is a Financial Statement ? Part 1 of 2
Financial Statements Consists of Balance Sheet -What a company owns, what it owes & what is left over Income Statement -Sales and Expenses, Profit or Loss Cash flow Statement -Sources, uses and balance of Cash Fundamentals 1.Earnings Per Share (EPS) Definition Earnings Per Share (EPS) is the amount of earnings per outstanding share of the companys stock. In calculating earnings per share, the dividends of preferred stocks need to subtracted …
Read MoreHow To Find Good Stocks Using PESTLE
Hi Friends, In my last post, I shared a framework by Michael Porter – 5 Forces and how we may use it to analyze the business environment. These qualitative analysis methods have been the more difficult part of investing and using business frameworks does help us look at it in a systematic manner. This week, I would like to continue the conversation and share another model that I learnt in …
Read MoreUsing Porter’s Five Forces to Analyse the Business Environment
Hi Friends, In analyzing a business, the quantitative portion is much simpler than the qualitative portion as it is much more subjective. A way to help guide us in understanding a business is to use business frameworks. Today, I would like to share one of these frameworks that is taught in Business School which I feel could help us. #1: Porter’s Five Forces Porter’s Five Forces of Competitive Position Analysis …
Read MoreStock Market Strategies Part 1
Hi friends, “Being known as a fundamental investor and associated with investing the Warren Buffett way, many friends would immediately jump to the conclusion that all I do is to Buy and Hold, loooong term. I would like to clarify that there is difference between analysis and strategies. Value Investing or Fundamental Analysis is an analysis method. We study a stock from a perspective of studying a business, asking questions …
Read MorePhilip Fisher’s 15 Steps To Look for in a Common Stock – Part 1 of 3
Hi Investors , We would like to share it with you Philip Fisher’s , The Investment Secrets in Common Stocks and Uncommon Profits ,fifteen things that a successful investor should look for in his or her common stock investments. About Philip Fisher ( 1907- 2004) Greatest investments minds in history Developed a buy-and-hold value and growth model for investments Wrote several books one of which is watershed Common Stocks and Uncommon …
Read MoreUse “MARGIN OF SAFETY” not “MARGIN”!
Dear friends, You may or may not be familiar with this term, “Margin of Safety”. The idea is that in investments, there is no guaranteed returns of precise calculation of valuation. Thus, we always need to be prudent and be conservative. Now, I may linking this to the using of Margin or Leverage because I have heard from friends who have picked up an investment skill or two and started …
Read MoreValuation Method – Earnings Power Value (SATS as Case Study)
Dear friends, Today, I would like to share a valuation method known as the Earnings Power Value popularised by Professor Bruce Greenwald from Columbia University. Columba University, by the way, in some sense is where Value Investing was given birth to when Profession Benjamin Graham and David Dodd started formulating and teaching the ideas there. As no valuation method is perfect, Prof Bruce Greenwald prefer to look at a company’s current …
Read MoreUsing Net Margin as a Warning Sign
Hi friends, In this post, I would like to share with a financial sign which will alert me to avoid investing in particular stocks. Net Margin From investopedia, “Net Margin is the ratio of net profits to revenues for a company or business segment – typically expressed as a percentage – that shows how much of each dollar earned by the company is translated into profits. Net margins can generally …
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