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 MoreFinding The Business That Will Double, Triple Or Even 50 Times Your Returns
Hi Investors Well, years ago when people tell me that one could really multiply our returns 2X, 10X or even 100X, the first thing that would popped into my mind would be TOTO in Singapore or Lottery. It sounds too good to be true. Well, it can be done though it’s not easy. In this post, I will be sharing a summary of one of the chapters in Peter Lynch’s …
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 …
Read MoreAnalysing Financial Statements Equity (6 of 6)
Hi We have come to our last article Analysing Financial Statements. Today we will be looking Equity. A simple definition of equity would be the value of the asset after the liabilities or debts have been paid. Equity can also be the stock you own in the business. This is called shareholders’ equity. These stocks represent an ownership in a business. It is the measure of the company’s net worth. A …
Read MoreAnalysing Financial Statements – Long Term Liabilities ( 5 of 6 )
In our continuation of our series of articles on Financial Statements, today we will touch on Long-Term Liabilities. The second classification of liability is called Long-Term Liability. As mentioned in my last article, a long-term liability is money owed by a business that must be paid beyond a company’s operating cycle. In other words, it is debt that is due beyond a one year period. Current Liabilities Debts that must …
Read MoreUnderstanding Financial Ratios
Numbers in the financial statements by itself gives us a decent understanding of the business. But as Albert Einstein mentioned, “All things are relative”. A business making $1million consistently may sound like a good business until you realize that the business requires $100million of capital to operate. Such a business only gives 1% return. We might as well put our money in long term bonds which carries minimum risk. …
Read MoreAnalysing Financial Statements – Liabilities ( 4 of 6 )
Hi Investors, Over the past 2 months, we have written articles to explain the components of a balance sheet which shows the extent of entity ownership of assets, liability and equity at a given point in time; a net worth statement for a company. Today we focus on Liabilities. Liabilities are amounts of money you owe to creditors in the form of bills that are due, bank loans you have taken …
Read MoreHow to Read Letters in Annual Reports
To help us put things into context, I want to share a story of a friend of mine, Bruce. Bruce is a brilliant entrepreneur and businessman. One of his cash producing business is a chain of retail shops selling mainly earrings. The story in summary is that Bruce left his job as an auditor at one of the Big 4 Audit firms and started his chain of shops, all starting …
Read More5/15/500 Stock Portfolio
I want to share with you the 5/15/500 rule I created for myself with regard to my stock portfolio. The 5 years rule The “5” in the 5/15/500 rule is a reminder to only use money you do not need for the next 5 years. As I already mentioned in the portfolio timeline guide, we must invest money that we need to use money within the next 5 …
Read MoreAnalysing Financial Statements – Long Term Assets ( 3 of 6)
Hi Investors In our third article, we focus on long term assets (non-current assets). The long term asset category of a classified balance sheet appears immediately after the current assets. Non-current assets are assets that are not turned into cash easily, are expected to be turned into cash within a year and/or have a lifespan of more than a year. Classifications Of Assets On The Balance Sheet Current Assets Read …
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