Researching

[hardcoremike]

hi folks. i'm fairly new to this stuff so i'm still trying to get the basics down first.

when people say DYOR, what is considered to be enough research?

would looking at broker reports/recommendations be sufficient? or should i look at it more from an accounting point of view with balance sheet/cashflow statements etc.



cheers.

 

[Wysiwyg]

hi folks. i'm fairly new to this stuff so i'm still trying to get the basics down first.

when people say DYOR, what is considered to be enough research?

would looking at broker reports/recommendations be sufficient? or should i look at it more from an accounting point of view with balance sheet/cashflow statements etc.



cheers.

I`ll go first.....what is enough research depends on what are your goals.Time frame is prolly the biggest determinant for me as the longer my time frame, the deeper I delve.For short time frame i look at

a)fundamental overview (where they have been and future plans)
b)chart
c)share/option quantities
d)share turnover.

For longer term it is a discretionary monitoring of company fundamentals.(and severe market corrections)

p.s. there is only x amount of information available so i suppose it`s `how deep do you want to go`.

That`s me briefly.

 

[Wysiwyg]

Left out e)


I`ll go first.....what is enough research depends on what are your goals.Time frame is prolly the biggest determinant for me as the longer my time frame, the deeper I delve.For short time frame i look at

a)fundamental overview (where they have been and future plans)
b)chart
c)share/option quantities
d)share turnover.
e)cash reconciliation

For longer term it is a discretionary monitoring of company fundamentals.(and severe market corrections)

p.s. there is only x amount of information available so i suppose it`s `how deep do you want to go`.

That`s me briefly.

 

[Lukas]

hi Mike
I go straight to the annual reports.
I mainly focus on the financials,ie: liquidity,solvency and profitabilty indicator ratios with particualr interest in the current cash debt coverage, cash debt coverage, and operating cash flow/sales coverage, after all Cash is King.I do all the calculations myself, hence very time consuming.
Cheers
Luke

 

[hardcoremike]

Thanks. would you mind telling me the formulas to working out the coverage ratios?

also, in general how do you guys select the companies that you are going to investigate/research in?

 

[ROE]

Go get some basic knowledge first..you wouldn't understand the mumbo jumbo
in the annual report or from a broker site if you dont understand the fundamentals. Stuff like

Return on Equity
Return on Capital
Profit Margin
Long term debt
Debt to equity ratio
Earning Per Share
Dividend payout ratio
Working Capital etc...

I only look at company that past all my criteria which is not many, once I discover them I buy lot of stocks in it.

 

[nizar]

hi folks. i'm fairly new to this stuff so i'm still trying to get the basics down first.

when people say DYOR, what is considered to be enough research?

Enough research is when you have enough confidence in your strategy to trade it comfortably.

For me the only way to gain this confidence is to see if your strategy or system is in fact profitable -- and this can only be done through correct backtesting methods.

 

[prawn_86]

You cant backtest on fundamentals though Nizar :

Well not using a system anyway. I guess you could do a heap of historic research

 

[nizar]

You cant backtest on fundamentals though Nizar :

Well not using a system anyway. I guess you could do a heap of historic research

Yes i know.
The original poster of this thread says he is new to trading.
Newbies dont have to start trading through fundamentals. I wish I didn't.

 

[Wysiwyg]

[=ROE;234580]Go get some basic knowledge first..[you wouldn't understand the mumbo jumbo] in the annual report or from a broker site if you dont understand the fundamentals. Stuff like

Return on Equity
Return on Capital
Profit Margin
Long term debt
Debt to equity ratio
Earning Per Share
Dividend payout ratio
Working Capital etc....

I only look at company that past all my criteria which is not many, once I discover them I buy lot of stocks in it.

To me, the mumbo jumbo is such by definition and doesn`t make a company s.p. do better or worse.Enough research is when your shares are moving the way you want.

 

[Fool]

care to share your criteria ?? or is that a trade secret??

Go get some basic knowledge first..you wouldn't understand the mumbo jumbo
in the annual report or from a broker site if you dont understand the fundamentals. Stuff like

Return on Equity
Return on Capital
Profit Margin
Long term debt
Debt to equity ratio
Earning Per Share
Dividend payout ratio
Working Capital etc...

I only look at company that past all my criteria which is not many, once I discover them I buy lot of stocks in it.

 

[hardcoremike]

thanks ROE but i'm in my 2nd year doing a commerce degree so i should have an idea with those accounting ratios but i'm not too familiar with the coverage ones.

 

[Lukas]

Thanks. would you mind telling me the formulas to working out the coverage ratios?

also, in general how do you guys select the companies that you are going to investigate/research in?

Hi Mike
Current cash debt coverage=
Net Cash provided by operating activities/Average current liabilities
This indicates a companys abiltiy to repay its liabilities from cash generated from operating activities.

Cash debt coverage=
Net Cash provided by operating activities/Average total liabilities

Cash return on sales ratio=
Net Cash provided by operating activities/net sales
This ratio should be compared with the profit margin ratio, because if the cash return sales ratio is lower it may indicate the company is recognising sales that are not really sales ie sales it will never collect.

Cheers
Luke