Take me under your wing V2.0

[pearcey29]

Hi, I am very new to this and was wondering if any one could help me by explaining
what it means (in beginner lingo) and are there any numbers or areas i should be really looking at

VALUE
Company Market Sector
P/E Ratio 12.17 16.31 13.24
P/B Ratio 2.03 1.47 1.51
P/E Growth Ratio 7.42 1.55 0.72
P/S Ratio 0.68 1.74 3.06

Income
Company (%) Market (%) Sector (%)
Dividend Yield 6.2 4.4 3.6
Franking 65.0
Tax Adj Dividend Yield 4.4 3.0 2.7
Dividend Stability 100.0 91.7 89.3


Risk
Company Market Sector
Beta 1.13 0.93 0.90
Current Ratio 0.95 1.59 3.74
Quick Ratio 0.48 0.97 3.24
Earnings Stability 52.6% 49.9% 50.8%
Income Coverage 5.16 7.82 20.00
Debt/Equity Ratio 114.4% 28.7% 13.8%

Growth Rates
10yr 5yr 1yr 2yr Forecast
Sales -- -- 7.0%
Cash Flow -- -- -17.3%
Earnings -- -- -10.7% 1.6%
Dividends -- -- 0.9% -3.1%
Book Value -- 19.9% 30.8%

 

[galumay]

I wouldn't really look at any of that information, what is the source and context?
I dont believe its possible to be a successful long term investor by selecting businesses based on a group of metrics alone. That doesnt really imply any depth of understanding of either the business or its financial health.

EDIT - I missed your earlier introductory thread, it appears from that you are maybe more interested in trading than investing so I will step back from the discussion as its not my area of competence.

 

[pearcey29]

I wouldn't really look at any of that information, what is the source and context?
I dont believe its possible to be a successful long term investor by selecting businesses based on a group of metrics alone. That doesnt really imply any depth of understanding of either the business or its financial health.

EDIT - I missed your earlier introductory thread, it appears from that you are maybe more interested in trading than investing so I will step back from the discussion as its not my area of competence.

thanks for taking the time to reply. Am i right in saying that trading is more of a short term buy low sell high multiple trades over a short time frame and investing is holding shares for a long time while buying more of the same shares over time

 

[Ann]

thanks for taking the time to reply. Am i right in saying that trading is more of a short term buy low sell high multiple trades over a short time frame and investing is holding shares for a long time while buying more of the same shares over time

Pearcey29, If you want to trade short term my suggestion would be to learn to chart. Once you can chart you will see certain levels for entry and exit points based on indicators which you can relate to. There are certain chart shapes and price levels called resistance and support levels.

I use Incredible Charts they are a real pleasure to use. There is both a subscriber and free access. The subscriber gives you access to more indicators but the free access would be fine to work with for a while as you learn. Have a bit of a play with it. There is a how-to instruction manual on the site which will be good enough to get you started.

http://www.incrediblecharts.com/

 

[pearcey29]

Pearcey29, If you want to trade short term my suggestion would be to learn to chart. Once you can chart you will see certain levels for entry and exit points based on indicators which you can relate to. There are certain chart shapes and price levels called resistance and support levels.

I use Incredible Charts they are a real pleasure to use. There is both a subscriber and free access. The subscriber gives you access to more indicators but the free access would be fine to work with for a while as you learn. Have a bit of a play with it. There is a how-to instruction manual on the site which will be good enough to get you started.

http://www.incrediblecharts.com/

thank you very much ANN

 

[12Percent]

Hi,

These are the basics of this game and I would advise you to read a few books before you start parting with your hard earned money.

There are some introductory courses you can read through on various websites such as ASX and Morningstar etc too.

 

[luutzu]

thanks for taking the time to reply. Am i right in saying that trading is more of a short term buy low sell high multiple trades over a short time frame and investing is holding shares for a long time while buying more of the same shares over time

No, not right. I think that's a misconception about trading and investing.

To buy something and simply hold it doesn't make it grow or profitable.

What makes a purchase profitable, ultimately, is both the dividends and the capital gains.

Capital are gained when you sell something for higher than what you bought them at, ignoring inflation for now... What will make others pay higher, or pay at any price, is the value of your holdings.

So buy what is valuable, don't over pay for it. Hang on until you need the cash or until the business deteriorate.

Sure you can follow the trend, trade in out. But you got to be aware that there are a whole lot of smarter, more experienced, much more better capitalised than you who's more plugged in.

It's not a bad way to make money, just most doesn't have the resources to have a chance in hell.

So as a small investor with a few hard earned bucks... try to hang on to it; deploy it in ways small, under resourced investor could hope to gain the advantage. And that, in my opinion, is not through predicting market movement; but through careful study of the business behind all the stock quotation.

 

[luutzu]

Hi, I am very new to this and was wondering if any one could help me by explaining
what it means (in beginner lingo) and are there any numbers or areas i should be really looking at

VALUE
Company Market Sector
P/E Ratio 12.17 16.31 13.24
P/B Ratio 2.03 1.47 1.51
P/E Growth Ratio 7.42 1.55 0.72
P/S Ratio 0.68 1.74 3.06

Income
Company (%) Market (%) Sector (%)
Dividend Yield 6.2 4.4 3.6
Franking 65.0
Tax Adj Dividend Yield 4.4 3.0 2.7
Dividend Stability 100.0 91.7 89.3


Risk
Company Market Sector
Beta 1.13 0.93 0.90
Current Ratio 0.95 1.59 3.74
Quick Ratio 0.48 0.97 3.24
Earnings Stability 52.6% 49.9% 50.8%
Income Coverage 5.16 7.82 20.00
Debt/Equity Ratio 114.4% 28.7% 13.8%

Growth Rates
10yr 5yr 1yr 2yr Forecast
Sales -- -- 7.0%
Cash Flow -- -- -17.3%
Earnings -- -- -10.7% 1.6%
Dividends -- -- 0.9% -3.1%
Book Value -- 19.9% 30.8%

Most terms in finance and investing are quite literal. The hard part is to understand what each of the variable mean and what the ratio implies.

e.g. P is just price.
E is earning; B is Book value; S is sales [revenue].

So those ratios are just the result of P divide the E, B, S etc.

Easy enough. But more importantly...

What is the E there? Most provider define it as the most recent report [they entered] reported earnings. Some define it as the average reported E last two years. Some define it as this years' and the "consensus" forecast next couple years.

So already there's a few pile to shift through. Which is are they using. Are the actual reported E the company's actual earning power or just the current year's really bad or really good result. Forget about the forecast, they're often just a simple mark up by analyst pretending to do something useful.

So as a beginner, I think you ought to sit back, put your cash away somewhere safe... and study like heck. Sit back some more to figure things out... then slowly enter the market.

To rush in when you're just starting with cash you've saved up and soon enough it's going to go to someone else's pocket. Then you will either take a very long, long time to recover it... or just sell out and give up on investing as it's too risky.

But having said all that, investing is not as hard as it sound. There's a heck of a lot of harder ways to earn a living. To figure out good businesses, own a part of it and only watch it once or twice a year... that's not a bad way to make a living.

But then you might come into the problem of not being able to survive on, say, 10% return on $100K.
That's true but you wouldn't survive on 0% of half that too.

Get rich slowly I supposed.

 

[Ann]

If charting appeals to you and you get the drift you will probably then ask how do you find stocks, that might be worth trading. You could start off with the Yahoo Finance Australia. This is not the only way to find stocks but there are all sorts of things here which may interest you, including some stock screens like this one...https://au.finance.yahoo.com/most-active/

 

[Ann]

If charting appeals to you and you get the drift you will probably then ask how do you find stocks, that might be worth trading. You could start off with the Yahoo Finance Australia. This is not the only way to find stocks but there are all sorts of things here which may interest you, including some stock screens like this one...https://au.finance.yahoo.com/most-active/

I think this is a better stock screen for you. I just found it and it looks excellent. Anyone else have any good stock screening sites? https://au.investing.com/stock-scre...|avg_volume::0,43113484<pair_change_percent;1

 

[Ann]

I think this is a better stock screen for you. I just found it and it looks excellent. Anyone else have any good stock screening sites? https://au.investing.com/stock-screener/?sp=country::25|sector::a|industry::a|equityType::a|eq_market_cap::169020,167660000000|eq_one_year_return::-99.5,6650|avg_volume::0,43113484<pair_change_percent;1

And of course finally (because I thought it was a Premium feature) it appears you can use the stock screen on Incredible charts for free.
https://www.incrediblecharts.com/topic/Stock_Screener

 

[tech/a]

Ann

If you could search for any metric or characteristics
What would they be and why?

 

[Ann]

Ann

If you could search for any metric or characteristics
What would they be and why?

Depends on what I am trying to achieve tech/a.

 

[tech/a]

Thought that would be a profit!

Depends on what I am trying to achieve tech/a.

 

[Darc Knight]

No, not right. I think that's a misconception about trading and investing.

To buy something and simply hold it doesn't make it grow or profitable.

What makes a purchase profitable, ultimately, is both the dividends and the capital gains.

Capital are gained when you sell something for higher than what you bought them at, ignoring inflation for now... What will make others pay higher, or pay at any price, is the value of your holdings.

So buy what is valuable, don't over pay for it. Hang on until you need the cash or until the business deteriorate.

Sure you can follow the trend, trade in out. But you got to be aware that there are a whole lot of smarter, more experienced, much more better capitalised than you who's more plugged in.

It's not a bad way to make money, just most doesn't have the resources to have a chance in hell.

So as a small investor with a few hard earned bucks... try to hang on to it; deploy it in ways small, under resourced investor could hope to gain the advantage. And that, in my opinion, is not through predicting market movement; but through careful study of the business behind all the stock quotation.

OK Si Gung, you're basically saying use Fundamental Analysis over Tech as the big boys are better at Tech?
Problem is ain't the big boys better at Fundamental as well - they have more and better knowledge?

 

[luutzu]

OK Si Gung, you're basically saying use Fundamental Analysis over Tech as the big boys are better at Tech?
Problem is ain't the big boys better at Fundamental as well - they have more and better knowledge?

No they don't. Not better info, just more info, most of which are pretty useless.

An average investor have the same access to the fundamental data - it's in the presentation and annual reports. So the playing field there is more level.

What's more, fund managers and analysts have incentives to follow the crowd rather than following their own thinking. That is, it's safer for the job to be wrong along with the crowd and be wrong alone. That's why you see analyst recommendations and forecast all being very similar.

There's a handful of cowboys of course. But they're far and few... and that's where the average investor can beat them.

When an dude in his "office" in the shed tries to use his couple screens against racks of servers, rows of algo, maths, computer whizzes... all hard at work coding and chugging through price data. They're not going to have much of a chance.

And even if they're smarter and their NBN optic works fast most of the time... meh. Short term pricing manipulation will take them to the cleaners soon enough.

But if they rely on fundamental data. Back their own judgment based on their understanding of the business... all stock prices will eventually go back to that "true value".

Just be a bit more patient in loading up, and in off loading. The market and the smart monies tend to follow and over react both ways.

 

[Darc Knight]

No they don't. Not better info, just more info, most of which are pretty useless.

An average investor have the same access to the fundamental data - it's in the presentation and annual reports. So the playing field there is more level.

What's more, fund managers and analysts have incentives to follow the crowd rather than following their own thinking. That is, it's safer for the job to be wrong along with the crowd and be wrong alone. That's why you see analyst recommendations and forecast all being very similar.

There's a handful of cowboys of course. But they're far and few... and that's where the average investor can beat them.

When an dude in his "office" in the shed tries to use his couple screens against racks of servers, rows of algo, maths, computer whizzes... all hard at work coding and chugging through price data. They're not going to have much of a chance.

And even if they're smarter and their NBN optic works fast most of the time... meh. Short term pricing manipulation will take them to the cleaners soon enough.

But if they rely on fundamental data. Back their own judgment based on their understanding of the business... all stock prices will eventually go back to that "true value".

Just be a bit more patient in loading up, and in off loading. The market and the smart monies tend to follow and over react both ways.

You're an Accountant aren't you? I've got an Accounting degree with extended major in Fin Planning, although I made my money the honest way but I always thought Financial Statements really aren't a good source of information. Auditors sign off on a lot of things.

 

[Darc Knight]

I remember when a dodgey Bloke I know recommended Roger Montgomery''s book. I said you can't value a Company from it's Fin Statements without inside information.

 

[tech/a]

You're an Accountant aren't you? I've got an Accounting degree with extended major in Fin Planning, although I made my money the honest way but I always thought Financial Statements really aren't a good source of information. Auditors sign off on a lot of things.

How true is this!
Most think Charting is Voodoo.
Here is the real smoke and mirrors.

 

[luutzu]

You're an Accountant aren't you? I've got an Accounting degree with extended major in Fin Planning, although I made my money the honest way but I always thought Financial Statements really aren't a good source of information. Auditors sign off on a lot of things.

I'm not an accountant, no. But I have written an accounting software... so accounting for investors?

An investor, in looking at the financial statements, is not really there to value the business precisely.

No one can value a large business precisely, not even the executives, and definitely not the board. This is because the value of a business always move... it is organic, grow and shrinks.

But more importantly, as you know, being an accountant... the data are estimates... in large corporations, larger estimates. Estimates that are often delayed.

But aside from that, a business' value is about where it'll be years from now.

SO already there's two approach to valuing the business - its book value, assuming it's all up to date and approximately about right and honestly estimated. Then there's the future prospects.. i.e. putting those assets to use, expanding into new markets... the likelihood of such possibilities bringing the cash back given the financial position, the product, competitors etc.

Can't value it based on future possibilities of world domination; shouldn't really go for the book value/asset pricing only approach either... So it'll depend on the business you're looking at.

But it is possible to value a business from its financials. Some companies' position made it possible to be more confident about the estimate; some you just don't want to touch.

-----------

Here's how I value Sirtex in three charts.

Remember Sirtex? Its CEO allegedly [ASIC reckons he did it too] trade on insider info. The new products they're planning to expand into "fail" because it didn't extend life in other cancer patient.

From about $20 to $25 its share price drop to $16, then soon after to $10.50s in matter of months?



Above show that Sirtex is not going to go broke. Its cash and receivables alone more than meet coming liabilities. Inventory is produced on demand.

Compare that to Dick Smith and you can kinda see that Dick is in serious trouble if they don't move a large chunk of their inventory.




My favourite chart. Things moving in the right direction. Much like Wal-Mart.
So you know it's a good business.

Other factors also backed this up... Returns, margins etc.

What about the price?



Below a conservative estimate of modest/inflation-pegged "growth" of 2.5% a year.

And that's on the reported earnings during years where they've spent abnormally on R&D, testing to expand their drugs into other areas. With the tests coming to and end, normalised earnings will be higher.

That does not include the planned expansion into China and other markets.

But assuming none of that happened... can the business remain as it is, in its current form and be worth the investment being asked?