Welcome to the main investment method Business Analysis or fundamental analysis. The key idea of fundamental analysis is to analyze the stock for what is really is, a business. In simple terms, this can be known as Business Analysis. Ultimately, when we buy a stock, we are in fact buying the business itself. To purchase an entire business can be very costly, so what the stock market provides for …
Read MoreCan Value Investing Really Work in Singapore?
There’s a whole host of evidence that value investing – buying a basket of shares at low valuation ratios – does work over in the USA. For example, there are studies done by investors like David Dreman, detailed in his book Contrarian Investment Strategies: The Psychological Edge, which shows that American shares with the lowest price-earnings ratios do outperform the market. Then, there’s also studies done by academics like the …
Read MoreThe Game of the Stock Market
So how did the stock market started? I researched and found studies showing that the stock market started in the 17th century where dealers met to buy securities in Throgmorton Street. There are also those who stated that it started earlier in the 12th century in France. There were even arguments that stock exchanges already existed in ancient Rome. Well, we do not have a knack for history, and unless …
Read MoreAnalysing Financial Statements – Assets ( Part 2 of 6)
Hi Investors, We are into our second part of the articles focusing on important components of a balance sheet. A recap of a balance sheet. It is a snap short of the company’s financial conditions on a particular date. Conceptually, the balance sheet is based on the accounting equation, which states that the total amount of assets must balance the total amount of liabilities and owner’s equity. Assets = Liabilities + Owner’s Equity. …
Read MoreDo Value Investors look at Charts? – The Truth!
During my sharing, it is a common question I get from the audience, “Do Value Investors look at chart?” The truth is… I don’t know really. But since I used to look at charts and use technical analysis before I learnt about Value Investing, I would like to share my personal opinion. Looking back, looking at charts gives me a snap shot of how the market perceive the price of …
Read MoreAnalysing Financial Statements – Balance Sheet ( Part 1 of 6)
Hi Investors, As Warren Buffett quoted “Account is the Language of Business .You have to understand accounting. Unless you put the effort to learn accounting – how to read and interpret financial statements – you shouldn’t select stocks yourself”. The accounting balance sheet is one of the major financial statements used by accountants and business owners. (The other major financial statements are the income statement and statement of cash flows, …
Read MoreThe No.1 Secret to Value Investing is…
Dear Friends, I hope you are mentally prepared to receive the No.1 secret to Value Investing. If you have watched Kung Fu Panda movie, there is this secret scroll, but the cool news is that the Secret is that…. there is No Secret. And please don’t quote me on this, you can choose to quote someone who is so established, Legendary investor Seth Klarman. Seth Klarman says, ” The …
Read MoreWhen to buy a Great Business that is Overvalued?
Dear friends, I have shared on a number of ways to valuate a business and the textbook answer is to buy businesses when they are undervalued. But what if we found a business we really like and it is overvalued at the point of time we are looking at it? Of course again, the “correct answer” is to wait for the price to drop and when Mr Market give us …
Read MoreSTOCK MARKET – INVESTING IN A PREDICTABLE BUSINESS (Part 4 of 4)
Hi Investors, In the past article, we looked at a concept called Mr Market. In this article, we will be looking at investing in a business that is predictable and successful. From 1965-2012, Warren Buffett has delivered a compounded annualised gain of 19.7% to shareholders, compared to an S&P 500 market index return of only 9.4%. How did Buffett do it? Basically, Buffett looks for predictable businesses to invest in …
Read MoreSTOCK MARKET 102 – MR MARKET (Part 3 of 4)
Dear Friends In the two articles, we looked at investing from a business perspective and circle of competence. In this article, we will delve into another topic called “Mr Market”. When we do value investing, we want to buy businesses that are selling for 50 cents when the actual worth is a dollar. How is this possible? Who is in the right mind would sell something worth a dollar at …
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