Very good advice for the younger investors contemplating stock investing

When is a good time (age) to invest in the stock market?

3:02 am on January 28, 2010

Hi, I am 20 years old and am looking to start investing into the stock market. I have been told that I am too young to invest and that I will end up broke. I am going to be an accountant, so I know how to handle my money. Also, I was curious if there is a minimum to invest at a time or if I can invest a small amount now and invest more once I have established myself? And finally am I too young to invest?

Donald F 3:02 am on January 28, 2010 Permalink

I am glad that you are asking this question at your age. Like in everything else in life, there’s nothing like starting early. You are studying to be an accountant, so you already know the power of Compounding, and what it can do. Consider this excellent article about the benefits of starting early and what Compounding can do for you, when you start early.
Power of Compounding
http://www.valueresearchonline.com/story/h2_storyView.asp?str=4007

Next, I would recommend you to first get solid grounding in Investing. 3 must read books. If you haven’t heard of these, buy them NOW, today. They will be your invaluable guides to safe & prosperous investing and future wealth creation.
1. Intelligent Investor -Benjamin Graham
Considered the bible of all investors, this will foremost teach you the basics and most importantly, how not to lose money. Thats the first lesson you need, believe me
2. One up on Wall Street -Peter Lynch
This is another classic. Tells you how to spot winners from what you see around you. successful products, companies. Practically shows you how you do not need to be a hot shot financial analyst to be able to spot good moneymaking opportunities in stocks
3. Common stocks Uncommon Profits- Phil Fisher
As you dabble for 1 or 2 years, make some money and also make some small (hopefully) mistakes, you will start itching to catch the multi-baggers, the ones that go up 4x-10x in a couple of years! This book show you how to sift out probable winners
As you start reading the books, start an online trading account like someone mentioned e-Trade, use the principles in the first book to buy a few good stock at a reasonable price. Start listening in on the financial channels, start reading a business daily, daily. Check out great investing basics websites like
http://beginnersinvest.about.com/
http://www.investopedia.com/articles/basics/
http://www.kiplinger.com/moneybasics/
And ask questions to the more experienced investors at popular forums, hang in lurk at some of the great investing forums for pearls of wisdom and when you have a query that you have to have answered post a quick one. Consider Chucks Angels -a nice yahoogroup for wannabe investors too http://finance.groups.yahoo.com/group/chucks_angels/
Good Luck. You are not too early by any standards. I would say just about right time. Get cracking, boy!

Eka A 3:02 am on January 28, 2010 Permalink

When the stock market have got into bullish.But it up to the economics,although perhaps economics slow down but you can get profit in bearish.it up to your skill.I will show you and example that present you about the US recession can’t effect to everyone,thus you can make progit on this situation. here this link
http://finance-fantasy.blogspot.com/2008/05/us-financial-crisis-has-not-had-bad.html


cashing 3:02 am on January 28, 2010 Permalink

Try <— http://earn-cash-today.com/stock
Good luck!

jjunit 3:02 am on January 28, 2010 Permalink

"I have been told that I am too young to invest and that I will end up broke."
ha ha ha thats funny im 16 and i invest in stock options

Liz A 3:02 am on January 28, 2010 Permalink

You can invest at any point in your life and start with small amounts if you like. There are alot of different investment options out there so study up on it first and see what fits for you. If you go with stocks, remember the old saying "buy low – sell high"
To start, go to you local bank and talk to an advisor. They can give you some good option advise for free, that’s their job. Of course they would like you to invest through them, but you don’t have too.

andy 3:02 am on January 28, 2010 Permalink

When I was in the Navy, there were people your age investing in the stock market and making money. If you have spare money and can handle the risks go for it. I would start with an online stock trader such as e-trade to get your feet wet. It usually takes a few hundred dollars to get started. Good luck and happy investing.

Ray 3:02 am on January 28, 2010 Permalink

Anytime is good to invest. Your age is NOT a factor if you understand the marketplace and it’s ramifications.
There is no minimum – but you need to understand you pay commission per trade and buy the stock at it’s current market price.
And hope the price goes up. Then you sell it for profit.
However, there are also stock options you can trade as a tool to hedge your investments.
You should also look at futures trading as a tool for investment and hedging.
In the futures market (also called "commodities"), you can buy OR sell without ownership. You are "betting" or speculating the price of gold, or crude, or sugar, or wheat will go up OR go down. Much riskier than stocks, but you can make a lot of money in a short period. (you can also loose it just as fast!)
You can use a broker who will offer advise or trade yourself online- like schwab online.
However, it is the your responsibility to do the research.
What type of stock and the companies you invest in will determine your chances of success.
Dump it all on one stock or smaller amounts in a few different stocks? These are some things you will have to decide.
Also- DO NOT listen to people who give you TIPS. Chances are, by the time you hear the "hot tip", it’s too late. Someone else has already cashed in.
Watch the movie Boiler Room. IT will teach you a good lesson- how you can get scammed by what appear to be legitimate brokers.
DO YOUR HOMEWORK FIRST before you give anyone a cent.
Good Luck-

Sheri Dev 3:02 am on January 28, 2010 Permalink

Ziggy,
Investing in direct equity market without proper knowledge is risky. Till achieving the required knowledge, you can select mutual fund path by applying SIP (systematic Investment Plan) with best available funds today. that is recommended.
Still, you want to know about the time buy stocks, please read further.
There are two types of activities with share and stock. 1. Stock trading 2. Stock Investing.
Stock traders commonly buying stocks today and selling immediately the same day or next day to get small profits. This is dangerous for someone doesn’t have proper knowledge. The method most of the traders using to analyze a stock called Technical Analysis using trend and historical performance charts. It is a kind of speculation that can give you money or cost you money.
Stock Investing also same but, investors throughly analysis companies using various fundamental analysis tools and once they found a good one, the will invest on that. compare with the above, stock investing have long term investment perspective of 5 to 15 years. This will give them proper profits time to time from there in vestment.
Now about the time to invest:
There is a basic approach seeing that, buy stocks in low and sell at high. This is OK but you have to watch a lot and have skills to identify the stock moves.
The best time is to buy stocks is "Any Time" you want. But if you buy stocks at any time, you have to follow some criteria.

• First, you should have a long term investment perspective of 5 to 10 years.
• Second, you should study and analysis companies to know whether the stock of this company is suitable to invest or not. to analyze a company, great investors like Benajamin graham and warren buffett provided some valuation methods. read the same here: http://uliponline.blogspot.com/2008/05/ten-points-ben-grahams-last-will-and.html  if the company is suitable to this valuation methods and your investment horizon is long, buy the shares at any time not considering the market status and hold the shares. You will certainly get handsome profit.

Think and act intelligently. Nobody can make money from stock market within a day or two, a week, a month or an year. Money will always grow with time. Remember that.
Best wishes and go ahead.

gampublic 3:02 am on January 28, 2010 Permalink

Two things first: Generally, I’ve found accountants great with tax forms/laws, not so hot as investors, so beware of overconfidence. Second, you’re asking how to time the market, and history and study after study shows no one is worth a darn at it over time.

So the short answer is "A soon as possible *when* you know what you are doing".
Here’s my stock answer to investing rookies. Two suggestions:
1. Get professional advice from a fee only financial planner. Someone who sells advice – NOT products on commission like a stockbroker does. Fee Only Planners have no reason to give you anything but their best advice, since they want you to be happy and refer friends. And their compensation isn’t tied to what you invest in, eliminating conflicts of interest as much as possible. I think this makes sense in the same way it makes sense to hire a mechanic to fix your car – you just don’t want to spend the time and effort to figure it out for yourself. This is the most expedient method, but is more expensive out of pocket, than DIY, much like a mechanic. It still should be much cheaper than a stockbroker’s loads, fees and commissions however.
Full disclosure, I am such an advisor.

-or-

2. Do It Yourself – Read Books – for investing, my favorite authors are Larry Swedroe, Rick Ferri, William Bernstein, and John Bogle. Basically, they skip over the “pop finance” garbage (most media) that’s simply a distraction, and get down to real professional quality investing while still being accessible to most reasonably intelligent people. You will find this has nearly nothing to do with accounting as you study it. If you don’t mind spending the time to figure it out right, and are interested in the topic, this is a perfectly good choice, and less money out of pocket.

Your Call. Good Luck.

brckr1 3:02 am on January 28, 2010 Permalink
best time was about 2 months ago, or when the market was low. your not too young to invest, just talk with a brokerage firm or your bank…do alot of research first…..then wait….you may not make money fast but if you invest in good companies and look to the future………look at alternative energy stock, wind, solar, fuel cells, companies thet reclaim waste and those that turn waste emissions into energy…GRGR.PK on the NYSE….TMG.V,APV.TO and SBX.V all on the TSX………read what T. Boone Pickens has announced………



http://investing.hirby.com/when-is-a-good-time-to-invest-in-the-stock-market/

Picking Your Own Stocks

If you have the time and the inclination, you can embark on a thrilling lifetime adventure:  picking your own stocks.

This is a lot more work than investing in a mutual fund, but you can derive a great deal of satisfaction from picking your own stocks.  Over time, perhaps, you'll do better than most of the funds.

Not all your stocks will go up - no stockpicker in history has ever had a 100% success rate. 

Warren Buffett has made mistakes, and Peter Lynch could fill several notebooks with the stories of his.  But a few big winners is all you need.

If you own 10 stocks, and 3 of them are big winners, they will more than make up for the 1 or 2 losers and the 6 or 7 stocks that have done just OK.

If you can mange to find a few triples in your lifetime - stocks that have increased threefold over what you paid for them - you'll never lack for spending money, no matter how many losers you pick along the way. 

And once you get the hang of how to follow a company's progress, you can put more money into the successful companies and reduce your stake in the flops.

You may not triple your money in a stock very often, but you only need a few triples in a lifetime to build up a sizeable fortune.

Here's the math:

If you start out with $10,000 and

• manage to triple it 5 times, you've got $2.4 million, and
• if you triple it 10 times, you've got $500 million, and
• 13 times, you're the richest person in America.

Before you risk your cash - put yourself through some practice drills first

There is nothing to keep you from investing in mutual funds and buying your own stocks as well. 

Much of the advice here is useful:

• the advantages of starting early,
• of having a plan,
• of sticking to the plan, and,
• of not worrying about crashes and corrections.

How do I figure out which stocks to pick or which fund to invest? Where do I get the money to buy them?

Since it's dangerous to put money into stocks before you figure out how to pick them, you should put yourself through some practice drills before your risk your cash. 

You'd be surprised how many people lose money by investing in stocks before they know the first thing about them!  It happens all the time. 

A person goes through life with no experience in investing, then suddenly receives a lump-sum retirement benefit and throws it all into the stock market, blind, when he or she can't tell a dividend from a divot.  There ought to be some formal training for this, the way they have drivers' ed in school.  We don't put people on the hghway without giving them a few lessons in the parkng lot and teaching them the rules of  the road.

If nobody else is going to train you, at least you can put yourself through training, trying out various strategies on paper, to begin to get a feel for the way different kinds of stock behave. 

Again, a young person has an advantage. 

• You have the luxury of experimenting with imaginary investments, at least for a while, because you have many decades ahead of you. 
• By the time you have the money to invest, you'.ll be fully prepared to do it for real.

Comment: 
The safest and best way for young investors is to have a mentor with a proven track record.

Your main reason for buying stocks in the first place.

To own shares in good companies.


People are always looking around for the secret formula for winning on Wall Street, when all along, it's staring them in the face: Buy shares in solid companies with earning power and don't let go of them without a good reason. The stock price going down is not a good reason.

Consistently losing money in stocks - don't blame the stocks, it is not the fault of the stocks. You need a plan.

When people consistently lose money in stocks, it's not the fault of the stocks.

Stocks in general go up in value over time.

In 99 out of 100 cases where investors are chronic losers, it's because they don't have a plan.

They buy at a high price, then they get impatient or they panic, and they sell at a lower price during one of those inevitable periods when stocks are taking a dive.

Their motto is "Buy high and sell low," but you don't have to follow it.

Instead, you need a plan.

Groundwork for a lifetime of investing in Stocks

The Pros and Cons of some basic investments.

Stocks

Stocks are likely to be the best investment you will ever make, outside of a house. 

When you buy a bond, you're only making a loan, but when you invest in a stock, you're buying a piece of a company.  If the company prospers, you share in the prosperity.  If it pays a dividend, you'll receive it, and if it raises the dividend, you'll reap the benefit.  Hundreds of successful companies have a habit of raising their dividends year after year.   This is a bonus for owning stocks that makes them all the more valuable.  They never raise the interest rate on a bond!

Stocks have outdone other investments going back as far as anybody can remember.  Maybe they won't prove themselves in a week or a year, but they've always come through for the people who own them.

More than 50 million American have discovered the fun and profit in owning stocks.  That's one in five.

These aren't all whizbangs who drive Rolls-Royces.  Most of these shareholders are regular folks with regular jobs:  teachers, bus drivers, doctors, carpenters, students, your friends and relatives, the neighbours in the next apartment or down the block.

You don't have to be a millionaire, or even a thousandaire, to get started investing in stocks.  Even if you have no money to invest, because you're out of a job or you're too young to have a job, or there's nothing left over after you pay the bills, you can make a game out of picking stocks.  This can be excellent training at no risk.

People who train to be pilots are put into flight simulators, where they can learn from their mistakes without crashing a real plane.  You can create your own investment simulator and learn from your mistakes without losing real money.  A lot of investors who might have benefited from this sort of training had to learn the hard way, instead.

Friends or relatives may have warned you to stay away from stocks.  They may have told you that if you buy a stock you're throwing your money away, because the stock market is no more reliable than a casino.  They may even have the losses to prove it.  Looking at the annual rates of returns of selected investments, stocks been the best performers, averaging 11% annualy over decades.  If stocks are such a gamble, why have they paid off so handsomely over so many decades?

When people consistently lose money in stocks, it's not the fault of the stocks.  Stocks in general go up in value over time.  In 99 out of 100 cases where investors are chronic losers, it's because they don't have a plan.  They buy at a high price, then they get impatient or they panic, and they sell at a lower price during one of those inevitable periods when stocks are taking a dive.  Their motto is "Buy high and sell low," but you don't have to follow it.  Instead, you need a plan.

This introductory material hopefully will lay the groundwork for a lifetime of investing.

Invest Now! What are you waiting for?

Many people wait until they are in their thirties, fourties, and fifties to start saving money.

The trouble is, by the time they realize they ought to be investing, they've lost valuable years when stocks could have been working in their favour.

One of the best way to avoid this fate is to begin saving money as early as possible, while you're living at home.  When else are your expenses going to be this low?  You have no children to feed - your parents are probably feeding you.

Money is a great friend, once you send it off to work.  It puts extra cash in your pocket without your having to lift a finger.

If you invest $500 a year in stocks instead of putting it in the bank, the money gets a chance to do you an even bigger favour, while you're off someplace living your life.  On average, you will double your money every 7 or 8 years if you leave it in stocks. 

A lot of smart investors have learned to take advantage of this.  They realise that capital (money) is as important to their future as their own jobs (labour).

Warren Buffett, America's second richest man, got there by saving money and later putting it into stocks.  To him, a $400 TV set he saw in the store wasn't really a $400 purchase.  He always thought about how much that $400 would be worth twenty years later, if he invested it instead of spending it.  This sort of thinking kept him from wasting his money on items he didn't need.

If you start saving and investing early enough, you'll get to the point where your money is supporting you.  This is what most people hope for, a chance to have financial independence where they're free to go places and do what they want, while their money stays home and goes to work.  But it will never happen unless you get in the habit of saving and investing and putting aside a certain amount every month, at a young age.

In the past people felt great pride when they worked hard and made certain sacrifices in order to pay for something all at once.  It made them nervous to owe money to the banks, and when they paid off their home mortgages, they had parties and invited all the neighbours to help them celebrate.

It wasn't until the 1960s that Americans got into the habit of using credit cards, and it wasn't until the 1980s that average families were hocked to the limit on mortgages, car loans, home equity loans, and the unpaid balances on their cards.

It is OK to pay interest on a house or an apartment, which will increase in value, but not on cars, appliances, clothes, or TV sets, which are worth less and less as you use them.

Debt is saving  in reverse.  The more it builds up, the worse off you are.  We see this in households across America, people struggling to make the payments, and in the government itself, which at the moment is hopelessly in debt.

America was once a nation of savers.

People of all income levels put aside as much money as they could, mostly in savings accounts at the local bank.  They made money on this money as it grew with interest, so eventually they could use it for a down payment on a house, or  to buy things, or to draw on in family emergencies.  In the meantime, the bank could take people's savings and lend them out to home buyers, or home builders, or businesses of all kinds.

Save as much as you can!  YOU'll be helping yourself and helping the country.

The Importance of Saving, Investing and Acquiring Financial Education Early

A Beginner's Guide to the Basics fo Investing and Business. Why save and invest early?

The junior high schools and high schools of America have forgotten to teach one of the most important course of all.  Investing.

What's often left out is

• how saving money from an early age is the key to future prosperity,
• how investing that money in stocks is the best move a person can make, next to owning a house, and
• how the earlier you start saving and investing in stocks, the better you'll do in the long run.

We are taught little about the millions of businesses, large and small, that are the key to our prosperity and our strength as a nation.  Without investors to provide the money to start new companies that hire new workers, or to help older companies grow bigger, become more efficient, and pay higher wages, the world as we  know it would collapse and there'd be no jobs for anybody, and the United States would be out of luck.

In our own schools, we don't teach the basics of how this economic system works, and what's good about it, and how you can take advantage of it by becoming an investor.

Investing is fun.  It's interesting. 

• Learning about it can be an enriching experience, in more ways than one. 
• It can put you on the road to prosperity for the rest of your life, yet most people don't begin to get the hang of investing until they reach middle age, when their eyes start to go bad and their waistlines expand. 
• Then they discover the advantages of owning stocks, and they wish they'd known about them earlier.

There is nothing about investing that a woman can't do as well as a man.  Also, when you hear somebody say, "He is a natural-born investor,' don't believe it.  The natural-born investor is a myth.

The principles of finance are simple and easily grasped.  Principle number one is that savings equal investment. 

• Money that you keep in a piggy bank or a cookie jar doesn't count as an investment, but any time you put money in the bank, or buy a savings bond, or buy stock in a company, you're investing. 
• Somebody else will take that money and use it to build new stores, new houses, or new factories, which creates jobs. 
• More jobs means more paychecks for more workers. 
• If those workers can manage to set aside some fo their earnings to save and invest, the whole process begins all over again.

It's the same story for every family, every company, every country. 

• Whether it's Belgium or Botswana, China or Chile, Mozambique or Mexico, General Motors or General Electric, your family or mine, those who save and invest for the future will be more prosperous in the future than those who run out and spend all the money they get their hands on. 
• Why is the United States such a rich country?  At one point, we had one of the highest saving rates in the world.

A lot of people must have told you by now that it is important to get a good education, so you can find a promising career that pays you a decent wage.  But they may not have told you that in the long run, it's not just how much money you make that will determine your future prosperity.  It is how much of that money you put to work by saving it and investing it.

The best time to get started investing is when you're young. 

• The more time you have to let your investments grow, the bigger the fortune you'll end up with.  But this introduction to finance is not only for the young people.  It's for beginning investors of all ages who find stocks confusing and who haven't yet had the chance to learn the basics.

People are living much longer than they used to, which means they'll be paying bills for a lot longer than they used to.

•  If a couple makes it to 65, there's a good chance they'll make it to 85, and
• if they make it to 85, there's a decent chance one of them will reach 95. 

In order to cover their living expenses, they'll need extra money, and the surest way to get it is by investing.

It is not too late to start investing at age 65.  Today's 65 year olds might be looking at 25 more years during which their money can continue to grow, to give them the wherewithal to pay the 25 years' worth of extra bills.

When you're 15 or 20, it's hard to imagine the day will come when you'll turn 65, but if you get in the habit of saving and investing, by then your money will have been working in your favour for 50 years.  50 years of putting money away will produce astonishing results, even if you only put away a small amount at a time. 

The more you invest the better off you'll be, and the nation will be better off as well, because your money will help create new businesses and more jobs.


Ref:

Preface
Learn ot Earn
by Peter Lynch and John Rothchild
A Beginner's Guide to the Basics of Investing and Business

The 3 key variables in any investing plan

Why You Shouldn't Give Up on Stocks
By Dan Caplinger
January 20, 2010

You'd think that with all the good news investors have gotten lately, all the doomsayers would be laying low. Yet even after the stock market's big rally from last year's lows, some pundits still question whether investing is a hopeless cause.

Keeping your head above water
An article in The Wall Street Journal earlier this week took a close look at the unrealistic expectations that many investors have about the returns they can generate from their portfolios. After a decade during which the broad stock market has laid a big fat goose egg in the return column, a survey showed that investors expect average annual returns of nearly 14% over the next 10 years.

Yet that isn't the most sobering fact about the misconceptions people have about the financial markets. When asked how much they could expect to keep in terms of purchasing power, after accounting for the impact of taxes, investing costs, and inflation, a group of financial advisers estimated a return of between 6% and 9% annually.

Should you hope for returns that are that good? You bet. But should you count on earning them? No way. Fortunately, if you're smart about how you structure your investment plan, you don't have to earn that high a return from your portfolio.

Keep it real
It's easy to understand how people mislead themselves about how much they can earn from investing in stocks. The secret comes down to success stories: We hear the most about winning stocks, while the much larger group of mediocre performers tends to get lost in the shuffle. Take this group of stellar stocks, for instance:

Stock
20-Year Average Annual Return

Dell (Nasdaq: DELL)
32.9%

Oracle (Nasdaq: ORCL)
21.7%

Altria Group (NYSE: MO)
15.4%

United Technologies (NYSE: UTX)
15.2%

Hewlett-Packard (NYSE: HPQ)
14.5%

Source: Yahoo! Finance. As of Jan. 19.

Combine the bull market of the 1990s with the lost decade since 2000, and you'll see that these stocks have greatly outperformed the overall market. Yet when you take away a few percentage points for inflation, a few more for taxes, and another point or so for trading costs, you'll notice that only the best performers manage to stay in double-digit territory.

More importantly, recall that these are the big winners. For every stock like this, there are several like Dow Chemical (NYSE: DOW) and Citigroup (NYSE: C) that have languished with much smaller gains -- and others, such as General Motors, that have contributed substantial losses to the overall picture.

Stay on target
But don't let the sobering reality of the investing world convince you that it's impossible to reach your financial goals. There are three key variables in any investing plan:

• how much you can save,
• how much you earn on your investments, and
• how much you need to spend.

Investors tend to focus almost solely on their portfolios' earning potential and think a lot less about the other keys to financial success.

If you're not making the most of your financial situation to save as much as you can, then you're making a huge mistake with your money. By saving less than you could afford to save, you'll take bigger risks than you need to. Sometimes, those risks will go sour, costing you what would have been an easily attainable financial goal. Just as millions of investors learned too late that their portfolios included more high-risk investments than they really needed, you could be making big bets that you don't need to make in order to have a safe, secure retirement.

You'll get there
What you do need to do, though, is have realistic expectations. If you're more conservative about the return assumptions you make, you'll have to find more savings to reach a certain target value for your portfolio. But you'll also have more options to help you get there, rather than relying on finding tomorrow's top performers at all cost.

If you can do that, then you won't be fooling yourself about your investing. As hard as it is to rein in expectations during a roaring rally, doing so will leave you in a better condition to make rational decisions about your portfolio -- decisions that are likely to lead to exactly the returns you need to reach your goals.

Many people are nervous about 2010's prospects.

http://www.fool.com/retirement/general/2010/01/20/why-you-shouldnt-give-up-on-stocks.aspx

The Four Essentials of Successful Investing

In brief, here are the four rules:

Start early in life to invest.


Invest in common stocks.


Be thrifty.


Pick the right investment.

Investment students need only two well-taught courses

"In our view, though, investment students need only two well-taught courses -

• How to Value a Business, and
• How to Think About Market Prices."

- Warren Buffett

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

Give the Gift of Smart Investing

Received an email commercial in my post today.

Stocks have history running in their favor, averaging 11-12% a year, and they outperform just about every type of investment. The trade-off is that stocks come with greater risk. Average market returns are no comfort if you buy at the market peak and sell during the graveyard. Still investing in stocks is no longer as mysterious or as elite an activity as it used to be. Armed with the desire to learn, you can make stocks a powerful source of returns in your portfolio.

Financial success requires an understanding of the investment process and the various factors affecting stocks, bonds, & other financial securities. The Forbes Stock Market Course compiles the information you need to increase your wealth over time.

Since you are already a member of the Forbes family, we'd like to offer you a special deal. If you order the Forbes Stock Market Course today, you will get $50 off the regular price!
 
http://www.forbesinc.com/stockmarketcourse/FSMC-TOC.pdf
 


Comment:

The course content includes all the standard topics essential for those interested in investing. These topics are also dealt with by most investing books.

It is unlikely that one can get enough information by attending a half day session to learn investing. At most you can only have a glimpse of this wide field. Interestingly, a recent course by a blogger widely advertised before the talk was deafly silent post-course! Just wondering.


Merry Xmas folks.

Wealth Begins with Better Knowledge

http://www.stock-market-investors.com/stock-investing-basics/

Learning the Ropes of Investing

Learning the Ropes of Investing
Six Benefits of Joining an Investment Club
© Odiete Eneakpodia

Oct 18, 2009
The path to financial freedom goes beyond just earning money from a regular job and saving it. Successful wealth accumulation begins when we learn how to multiply our money.

A lot of people are today familiar with the need to invest their money however they don’t have the requisite knowledge to make profitable investment decisions especially since the world of investment is fraught with risks and uncertainties.

One way to build knowledge and gain confidence about investing is through investment clubs.

1. What is an investment club?

2.  Benefits of investment clubs

(Access to investment ideas that could boost your personal investment activities
Club meetings provide you access to smart ideas on attractive investment opportunities such as what stock is currently a must buy in the market, new private placement opportunities etc. Sharing in the research of others and the extra bonus of a group setting for discussing investment ideas and issues often enriches the quality of our investment decision making.

Many clubs also develop unique learning activities that could include listening to and watching investment training videos from top investment experts, playing investment games like cash flow 101 developed by Robert kiyosaki, attending investment workshops, etc.)

3.  You could become your own stock analyst

(One thing a rookie investor can learn form joining and participating in the activities of your investment club is the skill to pick stocks he wants to invest in rather than relying on his intuition or his stock broker.

It gives him the skill to analyze stocks and other investments on his own before putting his money. This knowledge acquired will prove useful in his own personal investment activities.)

4.  Leverage the power of numbers to minimize risk

5.  Build wealth gradually and achieve financial independence

(Joining an Investment club enables a newbie investor master the discipline of setting aside a part of your income periodically to invest an ideal strategy to gradually build wealth and achieve financial independence.)

6.  Social networking



Read more: http://investment.suite101.com/article.cfm/learning_the_ropes_of_investing#ixzz0UKk1xBKa

Be an intelligent investor through financial education

In day to day conversations, one can easily gauge that the MAJORITY of "investors" in the market are not intelligent.  An intelligent investor is as defined by Benjamin Graham in his book, The Intelligent Investor.

How can these investors acquire the financial education to guide them through the stock market investment minefields?  How can they acquire the investing philosophy and strategy to help them over many years (or decades) of their investing lifespan?  Above all to ensure that they do not lose their money in the stock market while seeking for a reasonable return.

Inevitably, this will involve acquiring a set of RELEVANT knowledge through their reading, their interactions with the other investors, their interactions with investment professionals and the market.  From personal experience, there is a huge core knowledge that has to be acquired.  This is probably too overwhelming for many potential investors. 

Therefore, though it is good to attend an hour's presentation on investment here and there, or even pay a small sum for a half day session on investment talk, this is not going to transform one into a intelligent investor.   At best, these are introductory sessions to highlight areas of investments where you may wish to explore further. How much knowledge can be acquired in a half day presentation that you cannot acquire from a good book?  At worst, you are "convinced" that you know investing when in fact the small amount of new knowledge you acquire is in fact very detrimental to your long term investing.

There is no substitute to hard work.  You would need to acquire the necessary core financial and investment knowledge.  You do not need very high power investment or financial knowledge.  However, you do need to acquire some simple knowledge in the relevant important fields to guide your investing.  Above all, you will also need to understand behavioural finance to guide your emotions.

By the way, with blogs springing up everywhere, you too have another avenue to observe investing by various individuals.  Learn their good and bad habits.  You will probably find some benefit reading this blog too. 

Good luck in your investing.

http://myinvestingnotes.blogspot.com/2008/12/investment-philosophy-strategy-and.html

http://myinvestingnotes.blogspot.com/2009/09/investing-for-beginners.html

http://myinvestingnotes.blogspot.com/2009/08/learn-to-invest-in-10-steps.html

http://myinvestingnotes.blogspot.com/2009/08/8-signs-of-doomed-stock.html

Do You Need To Make Your Money Work Harder?

Do You Need To Make Your Money Work Harder?

If you are anything like the rest of us, life is becoming harder financially. In days and years gone by, it was easy to put money in the bank or into a stock fund and simply forget about it. As time passed, it would have increased and life was good.

But the world is changing rapidly. Globalisation is increasing demand for everyday goods around the world. This is pushing up the price of nearly everything. Inflation seems to be rising and wages are not keeping up. The purchasing power of money in a bank account seems to be falling - fast.

If that wasn't enough, financial companies seem to be handing the risks in our investments over to us. If you have heard the words 'self-invested' when applied to your pension planning, you will know that things are changing.

On the one hand, being able to choose how to invest for your retirement sounds liberating! But on the other, it brings massive responsibility. If it goes wrong - and it might - only one person is responsible. That person is YOU!

This is a massive change in responsibility for the future of you and your family.

What can be done about it?

The obvious place to start is in building up an increased financial knowledge. Whether you choose to take full responsibility or not, you clearly have some work to do.

Finding your way to a website like this with lots of free information was a good start. Well done! But there must be more. Simply gathering knowledge will not make anyone wealthy.

That knowledge needs to be put to profitable use.

It is important to try and define your strategy. Some people are suited to long-term investment and others to trading. Some have time to spend thinking, analysing and researching whilst others do not. Some people are very aggressive with their money and want big profits, whilst others are more cautious.

However you view yourself, there is a trading approach for you. Whether you need to increase the value of your capital or add an extra income stream to help the family finances, you need to take more control of your money.

Many years ago, investment newsletter writer and guru, Harry Schultz, suggested this: "Trading is for orphans and widows, investment is for gamblers." He thinks we should all be flexible in our approach to money. Markets rise and fall - why bet on them going in only one direction?

Skilled traders can make money when a market rises, falls or moves sideways!

However, most traders don't!

Whilst in theory traders can make money in any market conditions, the reality is that most are broke within a year. The ones that learn and survive can make vast amounts of money. It is an all or nothing business.

But economic problems mean that even experienced traders need help. The issues in credit and banking markets, market volatility and global political turbulence make it difficult - if not impossible - for one person to work successfully alone. We all need some help!

Most if not all successful traders subscribe to some form of market advisory service. You might know it better as a financial newsletter. Of course in the internet world, it isn't how we might think of a newsletter!

These services have a different perspective that can help any investor to see through the fog of market movements. They also suggest trades - some daily and others weekly - to help produce the profits that pay for the service and more.


http://www.stockexchangesecrets.com/online-trading-service.html

Tips for retail investors to stop losing money in stock market

Wednesday July 29, 2009
Tips for retail investors to stop losing money in stock market



IN the stock market, there are two main types of investors – smart investors and retail investors. While smart investors have been able to make money from the stock market, the majority of retail investors suffer losses most of the time.

As the market saying goes, only one out of 10 investors can make money from the stock market. The rest always incur losses in the stock market.

Some retail investors believe they can make quick money from the stock market. They believe that investing in the stock market is one of the best ways to accumulate wealth in a short period of time.

However, due to lack of proper financial training, investing knowledge and intelligence, they always find themselves at the losing end. When they are excited about investing, the stock market may be nearing to the peak.


On the other hand, when they are suffering losses, losing patience about investing and intending to cut their losses in the stock market, the market may be touching the bottom, and that, in fact, is supposed to be the best time to invest.

A majority of retail investors seldom pay attention to the stock market. They will only start doing so when newspapers or TV news headlines show that the market is touching a new high.

Driven by greed and the thought of making fast money, they will follow their friends or tips from their brokers to invest without paying much attention to the fundamentals of the stocks.

Due to lack of discipline to cut losses, more often than not, they find themselves holding on to a lot of poor quality stocks when the market collapses to a very low level.
(My comment: By sticking to high quality stocks, one hardly ever have to sell or to cut loss. However, it is extremely important to buy these stocks at bargain prices. Buying them at high prices may mean holding these stocks at a loss in the early years and also accepting a potentially lower compound annual return over the long term.)

We believe that the majority of retail investors do buy a mixture of good and poor quality stocks. However, they tend to hold on to poor quality stocks and sell the good ones when the stock market collapses.

This is because when the stock market crashes, poor quality stocks will drop much faster than good fundamental stocks.

Most retail investors find it difficult to sell poor quality stocks as the stocks may drop far lower their buying prices within a short period of time.

As retail investors refuse to admit their mistakes, they will hold on to these stocks, hoping to break even again in the future.

Unfortunately, they overlook one important market saying, which is: What goes up may come down, what goes down may never go up.

We may have emotional feelings about stocks but we should not refer to our purchase prices to determine whether we can cut our losses.

Our purchase prices are only important to us; they mean nothing to the overall market.

As our purchase prices may be much higher than those of other investors, even though we may not be able to sell the stocks, other investors, especially the company owners, can still liquidate their stocks.

We need to be careful when trading in speculative stocks especially those with prices that are much higher than the book values of the companies. The book value of a company reflects the owners’ costs in the company.

Hence, even though the stock prices tumble to a very low level, as long as the prices are still higher than the book values, a lot of company owners can still liquidate the stocks as their market prices are still higher than the cost invested.

For example, assuming the stock of a company is at the book value of only 30 sen and the stock price before the rally is 50 sen.

Due to the bullish sentiment and speculative play, the stock price may be pushed up to RM3. If our purchase price in the company is RM2, selling lower than RM2 means cutting a loss.

However, unfortunately, a lot of retail investors, instead of cutting losses continue to average down their purchase prices.

They may start averaging down their purchase prices at RM1.50, RM1, 80 sen and 50 sen.

If the company has poor fundamentals and has been incurring huge losses over a long period of time, averaging down our purchase prices this way means we will be incurring more losses.

While we are doing this, the owner of company can still sell the stock at 50 sen as his investment cost is only 30 sen!

(My comment: Therefore the importance of cutting loss early should your stock fundamentals suddenly deteriorated or should you realise that you have made a mistake in buying a stock.)

(My comment: Another reason why buying a share at a bargain price is important. The margin of safety is there, ensuring that any loss to your capital is minimised. Buying at a low or bargain price ensures the probability of upside is greater than that of downside. Also, the potential for greater reward should the upside be realised, and the minimisation of loss should the downside be realised.)

Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting


http://biz.thestar.com.my/news/story.asp?file=/2009/7/29/business/4407802&sec=business

Where Kids Learn All About The Bulls and the Bears

Where Kids Learn All About The Bulls and the Bears

(By Tim Grajek For The Washington Post)

By Candice Lee Jones
Kiplinger's Personal Finance
Sunday, June 21, 2009

Long division or long stock position? Both are part of the curriculum at Chicago's Ariel Community Academy, a public school sponsored by Ariel Investments, where the kids are managing real-life portfolios.

Each first-grade class is given $20,000 to seed a portfolio. At first, the money is invested on their behalf as they study the savings-and-investment curriculum, a joint project of Ariel Investments and Nuveen Investments.

Finance classes start with counting coins. By sixth grade, students take more control of their portfolio.

Teacher Connie Moran says students usually choose to invest in names they recognize -- Nike, Target, McDonald's. And yes, their investments are down just like yours. Between March 31, 2008, and March 31, 2009, class portfolios fell an average of about 40 percent.

"They're no different than other investors; they're not happy with the loss," Moran said. Academy instructors are turning those losses into lessons learned.

When each eighth-grade class graduates, the original grant is donated to the incoming first-grade class. Half of any profits go toward a gift that the class gives the school -- hence, students also learn about philanthropy -- and the other half is divided among the students. (The school is hoping that this year will not be the first without profits.)

When the proceeds are divvied up in August, each student can either keep the cash or invest it for college. Lessons must be sinking in -- 95 percent of the students choose to invest.

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/19/AR2009061903908.html

Financial education for Life

Finally I read something MAKE SENSE from our education ministry : ONLY TEN SUBJECTS for SPM. This is looooong over-due(like the correction in KLSE? Haha) ... and many not-so-knowledegable-cum-kiasu-cum-kiasi parents were wanting their kids to take 14As if possible!! The crazy rush was from the weakness in our un-educated education ministers officers(they are POLITICIANS with their hidden political agenda ... u think they care how u people feel about education ar? Bodoh la ... kita cari makan saja. Makan, they did.)

Parent 1 : How many A's your daughter scored ar?

Parent 2: Hai ya ... that lazy girl arr ... I told her to take 14 subjects, she took 12 only. So, only get 12 A's la. Luckily she got all A1 la, otherwise I don't know where to put my face leh.

Parent 1 : Wah .... 12 A1 arr. Next year my boy taking SPM. I must ask him to take 15 subjects la. Currently he is also planning to take only 12 subjects. What you think arr?

Parent 2 : Ya loh ... ya loh ... must leh. Otherwise hor, u will 'drop your spec' leh. Regret like me now too late liao.

Parent 3 : Excuse me ladies ... u didnt read the paper ar? Our gov said next year onwards students can only take max 10 subjects leh.

Parent 1 : WHAT!! Stupid goverment hor ... now my son could not beat MRS XYZ of 12A's liao. Hai yo ...

Parent 2 : Hehe ... don't worry, MRS ABC. Ask him to tak piano test, ballet test, swimming test and may be SIDC test also la. That add up also 14 subjects ma. Haha

Parent 1 : %&##*&^%

Parent 3 : My son and daughter doing very well now tho they only took 8 subjects and obtained only 3-5 A's. I teach them 'financial prudency' at home and they learnt 'investment' from their dad. They do not need to get all the A's to get employed but they are employing others to manage a wealth-management company at the moment. I m so proud of them.

Parent 1 and Parent 2 are very puzzled. How on earth could a parent taking it so cool that their kids not getting ALL A's? You mean the subjects in our school will not teach them financial-survival in REAL lives? But ... but ... they are taking Economy, Accounting, Business Studies, Mathematics, Additional Mathematics ... surely they know how to count $$$ la.

Yeah, right. You scored A in your MORAL subject doesnt mean you are morally correct, ok? Do I need to give more examples WHY our education system is irrelevant when it comes to personal FINANCIAL? I was never taught to be financial-savvy, ok?


Reference: http://cpteh.blogspot.com/