Recently, I've realized that my typical day involves constant encounters with indicators. For example, when the alarm clock rings, it's an indicator that it's morning and time to get up. I am checking the phone and once again paying attention to the indicators: battery charge and network signal level. I figure out in just one second that such a complex element of...
In my previous post , we started to analyze the most popular financial ratio in the world – Price / Earnings or P/E (particularly one of the options for interpreting it). I said that P/E can be defined as the amount of money that must be paid once in order to receive 1 monetary unit of diluted net income per year. For American companies, it will be in US dollars,...
In one of my first posts , I talked about the main idea of my investment strategy: buy great “things” during the sales season . This rule can be applied to any object of the material world: real estate, cars, clothes, food and, of course, shares of public companies.
However, a seemingly simple idea requires the ability to understand both the quality of...
In the previous post we learned what financial ratios are. These are ratios of various indicators from financial statements that help us draw conclusions about the fundamental strength of a company and its investment attractiveness. In the same post, I listed the financial ratios that I use in my strategy, with formulas for their calculations.
Now let's take...
I hope that after studying the series of posts about company financial statements, you stopped being afraid of them. I suggest we build on that success and dive into the fascinating world of financial ratios. What is it?
Let's look at the following example. Let's say you open up a company's balance sheet and see that the amount of debt is $100 million. Do you...
In the previous post we started to analyze the Cash flow statement. From it, we learned about the existence of three cash flows - operating cash flow, financial cash flow, and investment cash flow. Like three rivers, they fill the company's "lake of cash" (that is, they go with a "+" sign).
However, there are three other rivers that flow out of our lake,...
Today we're going to start taking apart the third and final report that the company publishes each quarter and year - it's Cash flow statement.
Remember, when we studied the balance sheet , we learned that one of the company's assets is cash in accounts. This is a very important asset because if the company doesn't have money in the account, it can't buy raw...
The famous value investor, Mohnish Pabrai , said in one of his lectures that when he visited Warren Buffett, he noticed a huge handbook with the financial statements of thousands of public companies. It's a very dull reading, isn't it? Indeed, if you focus on every statement item - you'll waste a lot of time and sooner or later fall asleep. However, if you look at...
In the previous post , we began looking at the Income statement that the company publishes for each quarter and year. The report contains important information about different types of profits : gross profit, operating income, pretax income, and net income. Net income can serve both as a source of further investment in the business and as a source of dividend...
Today we are going to look at the second of the three main reports that a company publishes during the earnings season, the income statement. Just like the balance sheet, it is published every quarter and year. This is how we can find out how much a company earns and how much it spends. The difference between revenues and expenses is called profit . I would like...
With this post, I am concluding the analysis of the company's balance sheet. You can read the previous parts here:
Part 1 - Balance sheet: taking the first steps
Part 2 - Assets I prioritize
Part 3 - A sense of debt
Now we know that every company has assets on one side of the balance sheet and liabilities and equity on the other side. If you add liabilities...
In the previous two posts, we explored how assets are grouped in a company's balance sheet.
Part 1: Balance sheet: taking the first steps
Part 2: Assets I prioritize
Now let's deal with Liabilities and Stockholders' equity. Let me remind you that these are the sources of funds that give a company assets. And indeed, with what funds can a company have assets?...
In the previous post Balance sheet: taking the first steps , we began parsing the balance sheet of the imaginary workshop and focused on assets. Today, I suggest looking at what types of tangible and intangible property are classified as current assets and what types are classified as non-current assets.
Current assets contain the following items:
- Cash and...
Today we are going to start learning about fundamental analysis of companies. In my opinion, this is the basic skill you should have when picking stocks to invest in.
Once again, the main principle of the strategy I follow is to pick outstanding companies and buy their stocks at a discounted price.
You may have noticed that first-class products are occasionally...
Isaac Newton, who turned people's view of the world upside down, once said: "If I have seen further than others, it is by standing on the shoulders of giants". And indeed, each of us has a chance to discover something new for ourselves and others by drawing on the wisdom of our predecessors. I want to say a big thank you to Benjamin Graham, David Dodd, Warren...
Previous parts of the post:
Part 1: My Three Comrades: the Chart, the Screener, and the Watchlist
Part 2: Two captains of the same ship
The market is an element we take for granted. It can't stop when we're busy doing other things, and it can't work if the stock market is off and you personally have work days.
The small investor's impact on the market is...
Previous part of the post: My Three Comrades: the Chart, the Screener, and the Watchlist
Now let's move on to the fundamental analysis. Remember in this post I gave the example that a joint stock company can be thought of as a hotel, and owning shares can be thought of as owning one or more rooms in that hotel. So, imagine now that our hotel has a terrible...
Today we will continue to explore the fascinating world of stock investing. And TradingView will help us with that. I sincerely recommend making friends with this platform, as I haven't found anything more convenient to implement my strategy yet.
After you have registered on the site, move to the main menu "Products" > "Chart+" . This is where you'll spend most...
