Archives for February 2011

Long Term Investing vs Speculation

A lot of people when they think about investing in stocks, they imagine trading stocks. So, let's try to get the basics cleared up about what I mean when I say "investing" on this site. At a very basic level, there are two distinct ways to profit from the stock market - 1) exploit the short term pricing inefficiencies in the market, 2) share a piece of the future profits of a business by buying shares of the company when they are temporarily mis-priced in the market and holding the shares for … [Read more...]

Stock Valuation Flow Chart

Even with all its shortcomings, discounted cashflow (DCF) valuation is one of the most widely used/abused stock valuation approaches. However, the plain vanilla DCF model needs a number of adjustments to be practically useful as a valuation tool. I captured the end to end process in this flow chart  - (Note: Click on the image for a larger view of the picture.) 1. Quarterly (10Q) and Annual (10K) Filings I typically start reading last four quarters 10Qs and at least the last 10K. All the … [Read more...]