DrBourse FA Help for Beginners

[DrBourse]

Anyone wanting to look at a Shortened Version of How Warren Calculates and uses Intrinsic Value might like to watch the following YouTube Video.


Not sure if the link below will work - if not I would suggest that you Google it, or locate it via YouTube directly.

How to Calculate the Intrinsic Value of a Stock (Full Example) - YouTube

or
How to Calculate the Intrinsic Value of a Stock (Full Example) - YouTube.

The above proceedure is what I have been using for th past 30+ years.
Below is an example of my processes for the MND Analysis that I did on 23/11/21.

The following Data Entry -

- Produces the following Analysis.


So after studying Warrens Theories and viewing the above YouTube Vid, you too can calculate your own versions of a Co's IV.
See my IV & Book Value posts on previous pages in this forum.
Good Luck with all that.

Cheers.
DrB

 

[DrBourse]

Anyone wanting to look at a Shortened Version of How Warren Calculates and uses Intrinsic Value might like to watch the following YouTube Video.
View attachment 134312

Not sure if the link below will work - if not I would suggest that you Google it, or locate it via YouTube directly.

How to Calculate the Intrinsic Value of a Stock (Full Example) - YouTube

or
How to Calculate the Intrinsic Value of a Stock (Full Example) - YouTube.

The above proceedure is what I have been using for th past 30+ years.
Below is an example of my processes for the MND Analysis that I did on 23/11/21.

The following Data Entry -
View attachment 134315
- Produces the following Analysis.
View attachment 134316
View attachment 134317
So after studying Warrens Theories and viewing the above YouTube Vid, you too can calculate your own versions of a Co's IV.
See my IV & Book Value posts on previous pages in this forum.
Good Luck with all that.

Cheers.
DrB

Today is 16/12/21 10am - Back on 23/11/12 I posted my Analysis on MND in the "MND – Monadelphous Group" Folder, and then I reposted that analysis in my above post on 15/12/21.

The Chart below shows that punters had 2 chances to buy in @ abt $9.00.


Anyone astute enough to buy in on 29/11/21, the First opportunity, with a sell sometime the next day would have made a reasonable profit.

The second opportunity was on 6/12/21.

Cheers.
DrB

 

[Rabbithop]

I think "beginners" would experience exasperation trying to understand all this...imo.
Won't comment on content, but as a beginner that has traded for 2 years, each post above for me would probably be a 4 hour lesson, first defining terms used then trying to piece together the understanding of it, before working out how to apply.
Thanks for posting it though, I personally might get to it in 10 years time, if not cremated before then.

I fully agree with your comment, it takes time and how deep is your INTEREST in Trading as a hobby or livehood.
Is it long our short term investment and finally there is always a Fund Manager to take your commission and worries away.
A like for your last sentence, gotta laugh.?

 

[Rabbithop]

i'm inclined to agree with tech/a (to be fair that happens a lot, lol). you are data dumping a lot. i recommend you learn how to structure and present your ideas a bit more. appears to be more rambling, data dumping, stream of consciousness, type stuff. it's disorienting trying to read any of it. i suggest you find one of your fav trading books and try to emulate its structure, it will help.

Also agree with your comment, HOWEVER if you have the book written by him ( don't know whether he email it free any more), it's much easier to follow and understand his explanation if you are a newbie or someone trying to self thought like moi. Its only my opinion.
By just looking at his kind posting of "various pages" gives you blur vision and headache.

 

[DrBourse]

Been quite a few uneducated comments about my posting style since I rejoined ASF.

Well listen up folks.

My posts are always a little complicated, sometimes a bit vague, always Blunt and Direct, But always informative and I usually leave punters grasping to understand, but I usually leave clues within most posts - it's an old journalism trick I learnt many years ago.

I do all that ON PURPOSE.

It helps deter those who will never survive in the ASX Sandpit as they usually do not have the desire to dig deeper and try to understand this complicated Profession.

SO, I guess you could say that I'm trying to save them from giving away their "Hard Earned".

Way too many punters are looking for the "easy way into Share Trading" - NEWSFLASH folks", there's no such animal.

Those that have known me over the past 35+ years know that I am always willing to help those willing to help themselves.
I have always "given away free" Educational information, spreadsheets, publications etc to those willing to ask".

I just object to the continual unwarranted & uneducated criticism from the minority - I could just turn a Blind Eye, but thats not my style.
I could just invoke the "ignore button", but again that's not my style.

DrB.

 

[rederob]

Been quite a few uneducated comments about my posting style since I rejoined ASF.

Really?
If you were a trainer (or an educator) then you would know that pedagogy is about teaching methods and styles, and that unless these match the learner you will not be particularly successful.
Many of the comments you appear to regard as "uneducated" instead have explained that your posts are not always easy to understand and that there is no apparent structure to what you are presenting.

That said, what totally confuses me is why anyone doing fundamental analysis (to the extent you have very well described at post #42) would buy one day and sell the next. Those types of "signals" are better derived from TA and would be practised by active traders, wouldn't they? I doubt that Warren Buffet would have done as much work as you did in that post just for a day's profit.

It's all good and well to want to help people, and I am not for a moment doubting your good intentions, but in 3 pages of this thread you have not said what the "purpose" of FA is for those venturing into the stock market. From what I can gather from post #11you are not proposing FA as a tool for long term term investing, which seems the antithesis of deploying the technique.

My final comment which bears heavily on FA is that without an understanding of the stock and the context of the market it operates within, then a lot of work may be in vain. On the positive side, Warren Buffet took what looked at the time as a big punt on a Chinese automaker some 12 years ago, because he saw a trend unfolding.

 

[DrBourse]

I wondered who was going to be the 1st assassin to crawl out of the woodwork – Congrats Rederob, You Win.

So here we go with some final ‘tit for tat’.


You mention
“Many of the comments you appear to regard as "uneducated" instead have explained that your posts are not always easy to understand and that there is no apparent structure to what you are presenting.”

As I mentioned above, and in other posts,
“I do all that ON PURPOSE.
It helps deter those who will never survive in the ASX Sandpit as they usually do not have the desire to dig deeper and try to understand this complicated Profession”.



You mention
"what totally confuses me"

My Reply is
It’s pretty obvious that you really are totally confused.



You then mention
"why anyone doing fundamental analysis (to the extent you have very well described at post #42) would buy one day and sell the next. Those types of "signals" are better derived from TA and would be practised by active traders, wouldn't they? I doubt that Warren Buffet would have done as much work as you did in that post just for a day's profit".


My Reply is
Intelligent “active traders” as you call them, should ALWAYS research FA & TA, NOT just TA – Researching just TA alone is where Beginners start their journey.

My trades, are usually below $100k, BUT often in the $300k to $500k range, and as such deserve an inordinate amount of research.

And, Buffett is primarily LT Investing, his research obviously gives him a pretty good average daily return over the LT – whereas I am ST Trading for 2 or 3 of those good daily returns.



You then mention
"in 3 pages of this thread you have not said what the "purpose" of FA is for those venturing into the stock market".

As I mentioned above
“I do all that ON PURPOSE.
It helps deter those who will never survive in the ASX Sandpit as they usually do not have the desire to dig deeper and try to understand this complicated Profession”.



You then mention
"a lot of work may be in vain"
&
"Warren Buffet took what looked at the time as a big punt on a Chinese automaker some 12 years ago, because he saw a trend unfolding".

My Reply is
That’s why we carry out the extensive FA research - in case you don't understand, Trends can be on any timeframe, in FA after announcements or Volume Spikes etc - and then when carrying out TA on Tick or Minute Chart over a 2 or 3 day period the Trends are as obvious as trends on Dly, Wkly, Mthly & Yrly Charts.
Extensive Research is never in vain, it is usually done in 'downtime', and once done it can very quickly be updated to cover the current time & day.
So Yes you are very confused.

=======================================================================================

Finally, I need to say Hi to Joe Blow and Skate, the attacks are relentless – the decision has been made.

DrB.

 

[rederob]

I wondered who was going to be the 1st assassin to crawl out of the woodwork – Congrats Rederob, You Win.

So here we go with some final ‘tit for tat’.


You mention
“Many of the comments you appear to regard as "uneducated" instead have explained that your posts are not always easy to understand and that there is no apparent structure to what you are presenting.”

As I mentioned above, and in other posts,
“I do all that ON PURPOSE.
It helps deter those who will never survive in the ASX Sandpit as they usually do not have the desire to dig deeper and try to understand this complicated Profession”.



You mention
"what totally confuses me"

My Reply is
It’s pretty obvious that you really are totally confused.



You then mention
"why anyone doing fundamental analysis (to the extent you have very well described at post #42) would buy one day and sell the next. Those types of "signals" are better derived from TA and would be practised by active traders, wouldn't they? I doubt that Warren Buffet would have done as much work as you did in that post just for a day's profit".


My Reply is
Intelligent “active traders” as you call them, should ALWAYS research FA & TA, NOT just TA – Researching just TA alone is where Beginners start their journey.

My trades, are usually below $100k, BUT often in the $300k to $500k range, and as such deserve an inordinate amount of research.

And, Buffett is primarily LT Investing, his research obviously gives him a pretty good average daily return over the LT – whereas I am ST Trading for 2 or 3 of those good daily returns.



You then mention
"in 3 pages of this thread you have not said what the "purpose" of FA is for those venturing into the stock market".

As I mentioned above
“I do all that ON PURPOSE.
It helps deter those who will never survive in the ASX Sandpit as they usually do not have the desire to dig deeper and try to understand this complicated Profession”.



You then mention
"a lot of work may be in vain"
&
"Warren Buffet took what looked at the time as a big punt on a Chinese automaker some 12 years ago, because he saw a trend unfolding".

My Reply is
That’s why we carry out the extensive FA research - in case you don't understand, Trends can be on any timeframe, in FA after announcements or Volume Spikes etc - and then when carrying out TA on Tick or Minute Chart over a 2 or 3 day period the Trends are as obvious as trends on Dly, Wkly, Mthly & Yrly Charts.
Extensive Research is never in vain, it is usually done in 'downtime', and once done it can very quickly be updated to cover the current time & day.
So Yes you are very confused.

=======================================================================================

Finally, I need to say Hi to Joe Blow and Skate, the attacks are relentless – the decision has been made.

DrB.

If you read my posts you might find that I look for evidence of the value of contributions.
I note you think this is a tit for tat, and rather than explain the purpose of FA you instead somehow think this is about "winning" something.

How can your intention be to help others when you indulge in these petty things instead of addressing the reason your thread exists. There are countless threads at ASF about the pitfalls of being in the market and about helping others by offering the benefit of their investment experiences. @Skate has had the most helpful thread in this latter regard at ASF imho for a long while, and it's exceptionally interactive. I'm not beating his drum, just observing that your threads appear to have an expectation that readers will conform to your posting style in order to learn, yet replies to date suggest this is not happening.

Your ad hominem attack of me is unwarranted. You have good content in the main. True to your thread title devote your time to actually being helpful which, to any competent trainer/educator, involves taking on board feedback and not constantly shooting messengers.

 

[DrBourse]

As I’ve mentioned in previous posts, I will visit ASF every so often just to check for any “questions from beginners”.

There is no point in me posting anything new.

Cheers.

DrB.

 

[DrBourse]

Been quite a few uneducated comments about my posting style since I rejoined ASF.

Well listen up folks.

My posts are always a little complicated, sometimes a bit vague, always Blunt and Direct, But always informative and I usually leave punters grasping to understand, but I usually leave clues within most posts - it's an old journalism trick I learnt many years ago.

I do all that ON PURPOSE.

It helps deter those who will never survive in the ASX Sandpit as they usually do not have the desire to dig deeper and try to understand this complicated Profession.

SO, I guess you could say that I'm trying to save them from giving away their "Hard Earned".

Way too many punters are looking for the "easy way into Share Trading" - NEWSFLASH folks", there's no such animal.

Those that have known me over the past 35+ years know that I am always willing to help those willing to help themselves.
I have always "given away free" Educational information, spreadsheets, publications etc to those willing to ask".

I just object to the continual unwarranted & uneducated criticism from the minority - I could just turn a Blind Eye, but thats not my style.
I could just invoke the "ignore button", but again that's not my style.

DrB.

Here is something for those of you that are venturing into the “Financial Aspects of Share Trading Analysis” to think about.



Did you realise that there are Three CPI figures that you should understand?

The following links will get your journey of discovery started.



Firstly there is the “Consumer Price Index”.

Consumer Price Index, Australia, June 2021 | Australian Bureau of Statistics (abs.gov.au)



Then there is the “Consumer Price Inflation”.

Measures of Consumer Price Inflation | RBA



Then you need to understand what the “Underlying Consumer Price Inflation Rate” is.

Then you should find out what the “Headline CPI” is, and what the "Trimmed Mean CPI" is. and what the "Weighted Mean CPI" is, CPIX, etc, etc.

And then you need to understand how each of the above relates to a Company's Intrinsic Value.


Happy Researching.


DrB

 

[Rabbithop]

Hope you are keeping well. It's been a while since your last posting. Don't let the negative comments weigh you down. Your intention and kindness are much appreciated. Keep doing your good job. We should enjoy life and have daily laughter as we don't know what tomorrow brings..

 

[DrBourse]

Hope you are keeping well. It's been a while since your last posting. Don't let the negative comments weigh you down. Your intention and kindness are much appreciated. Keep doing your good job. We should enjoy life and have daily laughter as we don't know what tomorrow brings..

Hi Rabbit,
All Good M8.
Living a quiet retired lifestyle, spending my Trading Profits, mainly on flying Overseas to join Cruises.
I usually don't bother posting much these days, Unless someone asks for my help or if I think of topics (like the CPI question) that I can just throw in front of Beginners.
I'm way past being an assassins target.
Sometimes I can see where a poster may be on, what I feel is the wrong track with their TA, then I may butt in and post something that may help.
I usually drop in a couple of times each week, mostly for a maximum 10 minutes when I read the posts from you, GN, Skate, divs and the Qld Frog..
Cheers M8

 

[DrBourse]

Two words I look for in any announcement are - "Audited or Unaudited"....
In other words, did some junior clerk collate the data then pass it on to the scribe, who passed it on to someone else to publish it all as a price sensitive announcement and as an Unaudited press release....Did the CEO or any members of the Board verify the data.... if so why is that not stated in the press release.....Most Co Execs shy away from such accountable comments....
Unaudited Announcements that do not carry Senior Co Execs Endorsements are suspect IMO.....

OR.....

Has the data been properly Audited by a Reputable Company......

Like the old addage said - "If it sounds too good to be true etc etc"......
We need PROOF and ACCOUNTABILITY.....What we don't need is a bunch of unsubstantiated data......

It seems that some chatters did not appreciate my above post, so thought I would add a 'follow-up'.

Here are a couple of recent UNAUDITED Announcements to show what beginners need to watch out for.



The following is just a small snapshot from page 2 of the RMD 11 page announcement dated 12/8/22.


Using the above RMD 10 pages of UNAUDITED Financials produces a ridiculous set of Intrinsic Values.

Cheers.
DrB.

 

[DrBourse]

It seems that some chatters did not appreciate my above post, so thought I would add a 'follow-up'.

Here are a couple of recent UNAUDITED Announcements to show what beginners need to watch out for.

View attachment 145513

The following is just a small snapshot from page 2 of the RMD 11 page announcement dated 12/8/22.
View attachment 145514

Using the above RMD 10 pages of UNAUDITED Financials produces a ridiculous set of Intrinsic Values.

Cheers.
DrB.

A simple search of "Forums, then Search Forums for the word Unaudited" throws up numerous other examples.

 

[DrBourse]

Hi divs4ever,

Wuz just trolling through some old posts and stumbled across this post of yours in an obscure forum of “Long Term Investing Book” that was started by ‘robertbanking’.


I refer to the following para of yours.


Hope you don’t mind if I Expand on your explanation in the hope of helping Beginners & Newbies.
Feel free to hit the Ignore Button if you feel I have shanghaied your original post .

----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Basically a High Debt/Equity Ratio needs to be investigated before anyone jumps to an incorrect assumption....

Debt can be a problem in some cases, But for some stocks the "Excessive Debt" is Providing Positive Returns to Shareholders....

Remember there is "Good, Productive Debt" But there is also "Bad and Unproductive Debt", the trick is identifying what is OK relative to individual companies....

Say that Debt is helping provide a 2.5% Div Yield,…..Zero Debt they would also probably have a Zero Div Yield - so theoretically a bit more Productive Debt could increase that return substantially - This is where astute directors etc come to the fore - Good Financial Management will make a company greater - Bad Financial Management will send a company broke....

Have you researched the Co Directors and the Financial Team, what is their past record like???....Do they know what they are doing with the current ??% Debt/Equity Ratio???......How much is Short Term Debt, How much is Long Term Debt, What are the Loan Contract Details...are there Roll Over Provisions in the Contracts....What are the Loan % Rates, and are the Rates Competitive, or are they exorbitant????….Look at their Balance Sheet/Financial Position, Do they have money invested that could be used to repay the debts at a minutes notice????…..

What are the Tax Implications with such a High Debt Load, Good or Bad????….

In the current interest rate environment, can higher Debt to Equity ratios be sustained.

Back in the Old Days punters like us only had those mythical % guidelines to help our decision making process - in todays environment we have endless research resources at our fingertips..

The Old Rules like the ones people refer to are just that, "Old Rules".

Basically, the Debt to Equity Ratio (D/E Ratio) is explained as “to express all company liabilities as a % of Shareholders Equity”…..

I should also mention that there are NUMEROUS different ways to calculate the D/E Ratio…

Here are a few of the options:- ….

1. Total Liabilities/Shareholder Equity multiplied by 100 = Ratio %....
2. Interest Bearing Debt/ Shareholder Equity multiplied by 100 = Ratio %....
3. Interest Bearing Debt minus Cash/ Shareholder Equity multiplied by 100 = Ratio %....
4. Shareholder Equity/Long Term Debt multiplied by 100 = Ratio %....
5. Long Term Debt plus Total Equity = Capitalisation THEN That capitalisation Total is used in the final calculation of:- Capitalisation/Long Term Debt multiplied by 100 = Ratio %....
6. Total Liabilities/Net Worth minus Intangible Assets…
7. Financial Debt/ Shareholder Funds minus Intangibles & Preference Capital…

Some Analysts show their D/E Ratio as “Gearing or Leverage Ratios”…

And there are several more ways to calculate a D/E Ratio…

Misinterpreting the D/E Ratio can be fatal to your profits – you may be missing out on a great trade because you used a D/E Ratio that was ridiculously high, when, with the correct calculation is was actually very low…

The bottom line as usual is DYOR…

Find out how your provider calculates their D/E Ratio, and then decide if that calculation is what you need to help in your analysis procedures….

The following snapshot shows just one example of what differences that can be produced – the result for each company’s D/E Ratio can differ by 100’s….


Cheers

DrB

 

[DrBourse]

Anyone wanting to look at a Shortened Version of How Warren Calculates and uses Intrinsic Value might like to watch the following YouTube Video.
View attachment 134312

Not sure if the link below will work - if not I would suggest that you Google it, or locate it via YouTube directly.

How to Calculate the Intrinsic Value of a Stock (Full Example) - YouTube

or
How to Calculate the Intrinsic Value of a Stock (Full Example) - YouTube.

The above proceedure is what I have been using for th past 30+ years.
Below is an example of my processes for the MND Analysis that I did on 23/11/21.

The following Data Entry -
View attachment 134315
- Produces the following Analysis.
View attachment 134316
View attachment 134317
So after studying Warrens Theories and viewing the above YouTube Vid, you too can calculate your own versions of a Co's IV.
See my IV & Book Value posts on previous pages in this forum.
Good Luck with all that.

Cheers.
DrB

And for today's useless bit of Information I submit the following;- ......................

When’s the best time to do a buyback?...............

At Berkshire Hathaway’s 2004 annual meeting, Warren Buffet shared a simple rule of thumb for buybacks:................

“When stock can be bought below a business’s value it is probably the best use of cash.”................

Of course, that’s easier said than done.................

“The tough part is coming up with the intrinsic value. There is a lot more to intrinsic value than P/E,” he said in 2016. He’s also said that there is no single metric that can justify or reject a buyback; instead, a combination of factors must be considered.................

Buybacks can also raise a possible red flag. If a company is doing a buyback, it might be because they can’t think of a good acquisition, asset purchase, or other capital-intensive business expense to deploy their cash towards instead.................

 

[DrBourse]

Not going to post my "FINANCIAL ANALYSIS INTRINSIC VALUE SPREADSHEETS" anymore, unless anyone asks to see them - everybody knows how in depth my calculations are, so it will stop taking up so much space in the Forums......
I will prob just post my "Buy Price (BP), the Intrinsic Value Range ($$ to $$), and my Target Price (TP)".
Cheers.....
DrB.

 

[Sean K]

Not going to post my "FINANCIAL ANALYSIS INTRINSIC VALUE SPREADSHEETS" anymore, unless anyone asks to see them - everybody knows how in depth my calculations are, so it will stop taking up so much space in the Forums......
I will prob just post my "Buy Price (BP), the Intrinsic Value Range ($$ to $$), and my Target Price (TP)".
Cheers.....
DrB.

I can't see why some people wouldn't like to see the entire table DrB. Thanks for the input.

 

[DrBourse]

OK M8,..... Thought I was just cluttering up the sites with info that most punters cannot understand.....Nobody ever comments on the excessive info I post, so I thought I would just back off a bit.....

So, by the power invested in you, I will continue to clutter up the various forums.....
Thnx Sean.

 

[rcw1]

I can't see why some people wouldn't like to see the entire table DrB. Thanks for the input.

Dito DrBourse ...

100%

Kind regards
rcw1