Discounted Cash Flow Models – The Crown Jewel of Valuation or Black Magic Alchemy
Many sophisticated share market investors hail DCF (Discounted Cash Flow) Models as the one and only way to estimate the true intrinsic value of a company. For them, it is indeed the crown jewel of valuation techniques. Other investors, most notably technical analysts, scoff at DCF models as nothing more than complex smoke and mirrors,…
Want Growth and Value Shares? – Try the GARP Investing Strategy
With the exception of hard-core technical analysts, all investors want to invest in shares of companies that are “fundamentally sound.” Not even the most risk-tolerant among us wants to put money into a company that has minimal chance of some kind of future success. The question for all of us is how we define “fundamentally…
Cash Flow Ratios – Tools of Choice for the Professional
Newcomers to share market investing quickly learn the near universal acclaim awarded the Price to Earnings Ratio (P/E). As a valuation ratio, it reflects the share price the market is willing to pay for each dollar in earnings the company generates. However, as those same newcomers continue their education they soon discover that the tools…
Go With the Flow Using Elliott Wave
Elliott Wave (EW) principle has a tarnished reputation among traders because it has been misunderstood and misused. Unlike a simple moving average (SMA) generated using charting software-for example SMA is calculated by summing the closing prices and dividing the sum by the number of periods-Elliott Waves cannot be reliably plotted by a computer. Therefore, the…
CANSLIM Investing – Does It Really Work?
Last week we introduced the CANSLIM investing strategy, pioneered by American investment guru, William O’Neil. Although it truly is a valid investing strategy for growth stocks, it is controversial to some who see O’Neil’s organisational support in the publication Investors Business Daily and at Investors.com as blatant efforts at commercialising the system. Somehow, investment gurus…
Play The CFD Market Like A Professional
For CFD users, pairs trading is a standard strategy that lets you ignore the current trend in the overall market, or even in a stock. You make money if your favoured stock – the one you buy – outperforms another similar one that you sell. But there are traps, including the need for close monitoring….
The Buy and Hold Obituary – A Skeptic’s View
In the past several weeks share markets worldwide have been on a daunting roller coaster ride with the rising price of oil and the prospect of a continuing upward price spiral. The 11 March “Days of Rage” in Saudi Arabia came and went without incident serving only to highlight the wild nature of some of…
Know Your Strength? Relative Strength Index (RSI)
How many indicators does technical analysis have? Simply put, too many indicators to count, and most charting software will give you the option of customizing existing ones or creating your own. However, the situation was different 33 years ago in 1978, when J. Welles Wilder (engineer, turned real estate developer, turned technical analyst) self-published his…
In Search of the Source of All Ratios – Financial Statements
Ratio Analysis is one of the most widely used investment tools all over the globe. With the exception of the hard-core technical analyst types, most investors rely on financial ratios of all kinds to evaluate shares. It is the cornerstone of fundamental analysis. Even the most recent newcomers to share market investing quickly discover the…
Dingoes Of The ASX 50
Stockmarket investors who don’t want to go to the trouble of sifting through stock tips or poring over charts for under-valued trading opportunities can always fall back on a ‘mechanical’ strategy, where the investor simply buys stocks that fit a selection criterion, or set of criteria. It could be the stocks with the lowest price/earnings…
