myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Tuesday 19 January 2010

Financial Education - Learning the important topics in valuation

Workshop on Equity Valuation & Financial Modeling

Host: Viftech Solutions (Pvt.) Ltd.
Start Time: Wednesday, 20 January 2010 at 09:00
End Time: Thursday, 21 January 2010 at 17:00
Location: PC Hotel, Karachi
Description
This workshop is designed for people who want to learn equity valuation and financial modeling. Participants will be taught to analyze true economic worth of a business, using various valuation techniques. This workshop is ideal for professionals related to corporate finance, investment analysis, risk management, investment banking, corporate banking, brokerage or asset management industries

Pre-requisites
Good understanding of financial statements
Learning Objectives
• Have a clear comprehension of what drives the value of a company
• Make more profitable investment decisions to enhance value
• Understand most widely-practiced and robust valuation techniques
• Know how to critically analyze an investment proposal
• Be better equipped to negotiate terms of an investment transaction
• Be able to choose a valuation method appropriate for your company
Course Outline
Day 1
• Background of company valuation
• Uses of company valuation
• Concept of TVM in financial analysis
• Prepare financial models on Microsoft Excel
• Forecast future earnings/balance sheet/cashflow
• Why accrual accounting can be misleading
• Benefits of cashflow based analysis
• Calculate free cash flow forecasts
• Calculate the enterprise and equity value of a business
• Calculate terminal value of a business
• Explain why WACC is used to discount company free cash flows
• Calculate WACC, cost of debt and cost of equity
• Calculate equity risk premium
• Calculate terminal growth rates
Day 2
• Discuss and apply various cash flow valuation techniques, including dividend discount model, free cash flow to firm and free cash flow to equity
• Discuss Relative Valuations Techniques including P/E, P/S, P/B and EV/EBITDA based valuations
• Discuss other valuation methods including CAPM and Arbitrage Pricing Theory
• Determine the optimal capital structure of a company and its dividend policy
• Work through an example on a listed company
The workshop will include a practical example of equity valuation and financial modeling on a listed company.

Trainer Profile: Mr. Ali Reimoo – National Trainer
Ali Reimoo is an Equity Research Analyst at Habib Bank (Global Treasury). Prior to his current position, Ali has worked as an Equity Analst at Foundation Securities Limited (a Fauji Foundation Company and an affiliate of Macquarie Bank in Pakistan) and BMA Capital. He has been involved in investment analysis industry for over three years, during which he has written and published several analytical reports. His major job responsibilities include; analyzing companies from the perspective of their business risk, growth prospects, investment value and financial wellbeing.

Due to his sound analytical skills, Ali has made a decent reputation for himself. He is also a regular on major TV channels like CNBC Pakistan, Business Plus, GeoTv etc, where he is regularly called as a guest to share his views on the country’s investment climate.

Apart from being an investment analyst, Ali is also a trainer and consultant. His unique skills of understanding client needs and helping them overcome their knowledge gap makes him stand apart from other trainers.

He has successfully helped various professionals develop/improve their financial and analytical skills. Some of the beneficiaries whom he has helped include professionals from reputed organizations like, State Bank of Pakistan, Faysal Bank, HSBC Bank Pakistan, National Bank of Pakistan and Johnson and Johnson Company.
His academic qualifications include; MSc in Finance & Investment from University of Edinburgh, Scotland and BBA/MBA from College of Business Management Karachi. currently he is a CFA level 2 candidate.
Workshop Schedule:
Venue: PC Hotel, Karachi.
Date: 20-21 January, 2010 | 9am to 5pm
Workshop Includes:
Training materials, certificates, tea and snacks, lunch and networking opportunities.
Workshop Investment:
Rs. 11,000/- per participant | Before Due Date
Rs. 12,000/- per participant | After Due Date
10% discount on more than 2 participants from the same organization received before due date.
Participant will bring own Laptop will get Rs. 800/- Off. (Should inform and register before due date)
Other Details
• All the cheques are required be made in favor of ‘Viftech Solutions (Pvt.) Ltd.’
• All nominations shall be confirmed on first–come-first-served basis.
• Limited Seats Available
• Due date for registration is 14 January, 2010
Click this link to Download Registration Form:
http://www.viftech.com.pk/images/Registration%20Form.doc
Further Information & Registrations
Viftech Solutions (Pvt.) Ltd.
Mr. Jahangir Sachwani
Assistant Manager Marketing & Corporate Trainings
Phone: (+92) 332 2109221 | (021) 35055379-80 - 35053480
Email: Jahangir.sachwani@viftech.com.pk

http://pakhr.blogspot.com/2010/01/workshop-on-equity-valuation-financial.html

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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Tuesday 19 January 2010

Financial Education - Learning the important topics in valuation

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All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

Political and Economic News

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