Fundamental investing, all the reports but it's still a guess?

Im definitely interested and leaning towards fundamental investing/ trading.

How ever how do you truly form an opinion on a company you know nothing about when all your reading is there own propaganda?

The reason I say this is I know of a company on here that has recently gone into receivership. Its in my industry so i know it well and it kicked off a few years ago buying up smaller companies that i work in. The thing is the people that were running it and running the smaller companies had very little experience, project managers and the likes. It also grew extremly quickly and boasted of a new technology that everyone working in the industry new to be a joke.
Ive just started investing and going back reading all the old posts it looked like a good deal from an outsider. But to all us on hands guy the company was always a joke???
So how do you find out and read more than just what the company wants you to read???

Re: Fundamental investing, all the reports but its still a guess?

And thats the problem.
They arent going to shoot themselves in the foot with those who are share holders.

I dont recall ever reading a report which states---

"Going a little rough--banks re appraising our servacibility and assetts being re valued---invest with caution!!"

Even so some people wouldnt even consider this.
Blinded by blurb.
You and I know of a stock at the moment which is 10-12c hasnt made a profit and isnt producing---trading at its highest level for 10 yrs---but according to followers this will just keep powering on although us techies can see signs of weakness.

As you know I have no time for Fundamentals.

They can be manipulated.
My perception of those Fundamentals needs to gel with everyone else if it doesnt I could be sitting in a stock for years with only reports and My opinion!
I can see everything I want in seconds on one page on a screen.
I can trade a stock with a few minutes research and pick up a tidy profit.
Can and have traded 25 different companies in a Month and still ---I have a life!!

Is it a guess.
No its an opinion of opportunity.
A perception of analysis.

Re: Fundamental investing, all the reports but its still a guess?

mattryanshares said:

Im definitely interested and leaning towards fundamental investing/ trading.

How ever how do you truly form an opinion on a company you know nothing about when all your reading is there own propaganda?

The reason I say this is I know of a company on here that has recently gone into receivership. Its in my industry so i know it well and it kicked off a few years ago buying up smaller companies that i work in. The thing is the people that were running it and running the smaller companies had very little experience, project managers and the likes. It also grew extremly quickly and boasted of a new technology that everyone working in the industry new to be a joke.
Ive just started investing and going back reading all the old posts it looked like a good deal from an outsider. But to all us on hands guy the company was always a joke???
So how do you find out and read more than just what the company wants you to read???

Click to expand...

Well flicking past the glossy pages of the report is a start.

Re: Fundamental investing, all the reports but its still a guess?

I find its too much work to analyse the financials of numerous companies. I used to copy the financials into excel and make adjustments based on what is in the notes and available elsewhere.

For example: If certain expenses were capitalised in the balance sheet and after reading the notes to the financial statements thought there was no value in those assets, i would increase the expenses (P&L) then decrease the asset in the balance sheets to reflect this. Then recalculate all the ratio analysis.

I think you need a very strong accounting background to be able to read between the lines and understand how they calculate provisions, assets values etc.

It would take me hours and wasn't worth the effort for me.

Re: Fundamental investing, all the reports but its still a guess?

mattryanshares said:

Im definitely interested and leaning towards fundamental investing/ trading.

How ever how do you truly form an opinion on a company you know nothing about when all your reading is there own propaganda?

The reason I say this is I know of a company on here that has recently gone into receivership. Its in my industry so i know it well and it kicked off a few years ago buying up smaller companies that i work in. The thing is the people that were running it and running the smaller companies had very little experience, project managers and the likes. It also grew extremly quickly and boasted of a new technology that everyone working in the industry new to be a joke.
Ive just started investing and going back reading all the old posts it looked like a good deal from an outsider. But to all us on hands guy the company was always a joke???
So how do you find out and read more than just what the company wants you to read???

Click to expand...

Might be an interesting case to look at

Compare charts (TA ) with the thread posts

What was the voting and the weighing --The Charts
revealing compared to stated opinions..

TA as many aspects one is that it is the unstated opinions than sometimes matter the most....

Motorway

Re: Fundamental investing, all the reports but its still a guess?

Yo Tech are you talking about PEN? People get CRAZY bullish about that stock for some reason, hardly fundamental investing at it's finest (an explorer that isn't producing and won't be for some time, pretty hard to value imo).

The whole idea behind fundamental investing is you look at the numbers, and not the pretty pictures on the front, except for massive accounting fraud (e.g. Enron) you should be pretty well led from the cashflow statements (profits can be deceiving). I'd agree that it takes a long time to come to a conclusion on "marginal" companies, ones that MIGHT be a bargain fundamentally, however I've realized all you have to do is find companies that are massively discounted, e.g. 50% or more, based on cashflows/assets. Obviously it takes much longer than Tech's technical analysis, but I'm personally not comfortable trading/investing unless I know what's on the balance sheet etc, each to their own, no need to hate if we all make buckets of g-packs am I right?

PVF.

Re: Fundamental investing, all the reports but its still a guess?

mattryanshares said:

Im definitely interested and leaning towards fundamental investing/ trading.

How ever how do you truly form an opinion on a company you know nothing about when all your reading is there own propaganda?

Click to expand...

I rarely invest in areas I have little knowledge regardless of their potential.
you cant evaluate a business if you have little knowledge or its industries
and market place...

I usually know the area I want to invest in then I go and look for companies
operate in this area, rather then the other way around.

Most of the time you dont need to buy many companies just buy a few right one
once in a while that is all that is needed and spend all the time
in between reading and researching for the right one...

This is a good quote from Sun Tsu
"Invincibility lies in the defence; the possibility of victory in the Attack"

most of the time just sit tight and defense, attack only if you assure victory

Re: Fundamental investing, all the reports but its still a guess?

The Financial statements of a business tell a story and these are more important than the glossy pages full of hopes and promises. But fundamental investings is also more than just that.

Re: Fundamental investing, all the reports but its still a guess?

mattryanshares said:

How ever how do you truly form an opinion on a company you know nothing about when all your reading is there own propaganda?

Click to expand...

Don't have to read their rose tinted glasses outlook. For example, J.P. Morgan Chase and Co. became substantial holders (5%) on the 19th January of CGA Mining by dollar cost average accumulation in prior months. Low and behold, near three weeks later CGA has reported a 400% increase in net profits with the share price daily high cracking a new A.T.H.
Do you think they are privy to details the home boys can't see?

Re: Fundamental investing, all the reports but its still a guess?

mattryanshares said:

Im definitely interested and leaning towards fundamental investing/ trading.

How ever how do you truly form an opinion on a company you know nothing about when all your reading is there own propaganda?

The reason I say this is I know of a company on here that has recently gone into receivership. Its in my industry so i know it well and it kicked off a few years ago buying up smaller companies that i work in. The thing is the people that were running it and running the smaller companies had very little experience, project managers and the likes. It also grew extremly quickly and boasted of a new technology that everyone working in the industry new to be a joke.
Ive just started investing and going back reading all the old posts it looked like a good deal from an outsider. But to all us on hands guy the company was always a joke???
So how do you find out and read more than just what the company wants you to read???

Click to expand...

As other have pointed out...
1. You can reduce your research to industries that you understand well.
2. You can acquire knowledge of new industries.
3. You can look at financial statements which is difficult (and illegal) to just make up.
4. You apply conservatism in your analysis rather than rely on blue sky (If you want to buy blue sky and hype, I would say technical analysis might be better)
5. You apply discipline and get out when your assumptions are proven wrong.
6. You exercise patience and wait for confirmation of your assumptions before entering positions if needed.

tech/a said:

And thats the problem. I dont recall ever reading a report which states---
"Going a little rough--banks re appraising our servacibility and assetts being re valued---invest with caution!!"

Even so some people wouldnt even consider this.
Blinded by blurb.
You and I know of a stock at the moment which is 10-12c hasnt made a profit and isnt producing---trading at its highest level for 10 yrs---but according to followers this will just keep powering on although us techies can see signs of weakness.

As you know I have no time for Fundamentals.

They can be manipulated.

Click to expand...

Don't confuse ineffective fundamental analysis with fundamental analysis is ineffective!

ParleVouFrancois said:

Yo Tech are you talking about PEN? People get CRAZY bullish about that stock for some reason, hardly fundamental investing at it's finest (an explorer that isn't producing and won't be for some time, pretty hard to value imo)

Click to expand...

So true. Value is a relative concept and many people don't / refuse to understand. The only way imo is to do some peer analysis and see what other prospects are being valued at. Just need to keep in mind that any valuation gaps can be closed by your share going up or other shares coming down...

Re: Fundamental investing, all the reports but its still a guess?

Haha I was trying to keep stock names out of this thread but no matter. The company i was talking about wasnt PEN.

The other thing i was getting at is yes you can examine the companies reports and do PE ratios but what would be even harder would be to look at the people involved in the business. Sure you can see who's at the top and calling the so called big shots. But who is quoting the jobs in a construction company, who has innovative impressive engineering that works with the people using it as well as the client. Even safety policies and procedures. The best policy is worth nothing if the employess think its a joke or dont have the experience to to sift the muck from the clay.

I think this is fundamental and i agree i think its wise to invest in industry or areas that you understand other wise it would be extremely difficult.

Thanks for all your replys.

Matt

Re: Fundamental investing, all the reports but its still a guess?

mattryanshares said:

Haha I was trying to keep stock names out of this thread but no matter. The company i was talking about wasnt PEN.

The other thing i was getting at is yes you can examine the companies reports and do PE ratios but what would be even harder would be to look at the people involved in the business. Sure you can see who's at the top and calling the so called big shots. But who is quoting the jobs in a construction company, who has innovative impressive engineering that works with the people using it as well as the client. Even safety policies and procedures. The best policy is worth nothing if the employess think its a joke or dont have the experience to to sift the muck from the clay.

I think this is fundamental and i agree i think its wise to invest in industry or areas that you understand other wise it would be extremely difficult.

Thanks for all your replys.

Matt

Click to expand...

Get information that you can have access to or within your control

no point agonising on information you cant get or impossible to get
access to CEO and have a chat to him is almost impossible unless you
are big fund mangers but there are ways around it that you can do.

You can read a lot of papers, articles and watch business related show eventually you know most of the good one and not so good one, you can observe the way they talk, you can go back to few annual reports and see if they walk that talk.

stuff like that you can build very good profile on management...
I never like TLS until recently, I watch the way Sol talk and recruit senior management I said this is a guy that in for the money not the business so no go zone for me...

Another way you can see how business going is actually do a scuttlebutt techniques By Phil Fishers I constant use them in stocks I have interest.

when Dominos pizza was around $2 and got analyst downgrade and I start to get
interested in it.. I actually went around all the DMP stores in my area and see how
they doing, all I see is business is booming, then I went on holiday and I look for DMP stores around there too and check it out again I see plenty of folks buying pizza.

I then casually ask my friends and family during conversation, hey you reckon pizza hut is a better pizza then dominos and most said they prefer dominos pizza

DMP is a BUY for me despite what analyst are saying, nothing beat the information on the ground not some guys in the high rise office...

I did the same with TRS, I start to like the business but I see competition start to heat up with hot dollars and top bargain open up almost all the places that TRS used to be the only operator... so I decided to stay put and low and behold they came out with a downgrade.

**** like that works you dont need to dig through financial records, well you do but there are many other easy complement techniques

After I bought the stock I still constantly using scuttlebutt techniques and I bail
when I see the sign...

My preferences is to hold forever but should fundamental change I'm out and look for better business...

My Scuttlebutt also tell me a lot about TLS mobile subscriptions this half
I been talking to a lot of people with Vodafone and Three mobiles

Re: Fundamental investing, all the reports but its still a guess?

mattryanshares said:

Haha I was trying to keep stock names out of this thread but no matter. The company i was talking about wasnt PEN.

The other thing i was getting at is yes you can examine the companies reports and do PE ratios but what would be even harder would be to look at the people involved in the business. Sure you can see who's at the top and calling the so called big shots. But who is quoting the jobs in a construction company, who has innovative impressive engineering that works with the people using it as well as the client. Even safety policies and procedures. The best policy is worth nothing if the employess think its a joke or dont have the experience to to sift the muck from the clay.

I think this is fundamental and i agree i think its wise to invest in industry or areas that you understand other wise it would be extremely difficult.

Thanks for all your replys.

Matt

Click to expand...

ok but look at the charts yourself
then

Motorway

Re: Fundamental investing, all the reports but its still a guess?

yeah i will im not much of a chart reader though!!! Learning slowly.

Re: Fundamental investing, all the reports but its still a guess?

mattryanshares said:

yeah i will im not much of a chart reader though!!! Learning slowly.

Click to expand...

The most important thing ?

Is the trend !

Motorway

Re: Fundamental investing, all the reports but its still a guess?

Yes wll looking at the 10 year chart im sure alot of tech traders made a bunch of money, it would be the longterm holders that lost out!!!

Re: Fundamental investing, all the reports but its still a guess?

Just have fun learning and applying both disciplines. Fundamentals however, will have you second guessing your opinions more so than technicals IMHO. It does take a life long journey to master, so be patient. Wait for the right stockmarket correction, wait for the recovery to commence, and begin buying good companies at good prices. It's as easy as that

Re: Fundamental investing, all the reports but its still a guess?

Half the posters in this thread shouldn't really be posting here at all...and should know better, after all you don't see me posting in TA threads or even the stock threads popular with day traders and trendy's etc.

Matt...first up PEN has no fundamentals, PEN has pretty much nothing and so any investment/punting decisions you make in regards to PEN can not be based on any hard fundamentals...i probably shouldn't be posting in this thread either, im at best a light fundamental punter.

For example...Looking at my recent SUN trade i completed today, i brought in on the day of the Toowoomba flood based almost purely on my speculation/belief/thinking that because the SP had not broken below $8 that the worst was over, the panic sellers were taken out and that $8.05 to 8.20 would be the low.

I was subsequently proven correct, and today profited from that...now part of me understands that i could only do that trade because im a long term holder and watcher of SUN and thus was very confident in my understanding of the fundamentals of the stock and the SP...so i could thus buy with fundamental confidence.

motorway said:

The most important thing ?

Is the trend !

Motorway

Click to expand...

Have to agree Motorway...the down-trend is your friend...never be afraid of it as long as you have fundamental understanding of it.

Re: Fundamental investing, all the reports but its still a guess?

Have to agree Motorway...the down-trend is your friend...never be afraid of it as long as you have fundamental understanding of it.

Click to expand...

Yes you can uses a trend anyway that is optimal

eg You do not have to buy breakouts ( that might well fail )

Motorway

Re: Fundamental investing, all the reports but its still a guess?

Lincoln Indicators does FA better than anyone else I've seen. Very expensive, but if I had a multi-mill$ blue chip portfolio, it would be number one on my list of must haves.