Lessons from the Gurus – Sir John Templeton
If you search the Internet for history’s greatest investors, Sir John Templeton will surely be on the list. An American by birth, later in life he emigrated to the Bahamas and became a British citizen. In his early years he worked for a Wall Street investment firm but in 1937 he and a few…
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…
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…
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…
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…
How To Calculate Your Share Gains And Losses For Tax
Newcomers to the wonderful world of retail investing in the Australian share market are initially far more concerned about buying shares than selling shares. Eventually, however, the time comes to sell and they are confronted with the dreaded issue faced by investors of all types in all countries – how much will the taxman take?…
How To Make Money By Thinking Big Picture
Think of top down investing as a “big picture” strategy. The big picture is the global market and all it encompasses. If you think of the global market as a forest, if it looks green and healthy, you enter the forest looking for the healthiest trees. When you find a grove of healthy trees, you…
Tools for Finding Safer Shares (Part 2) – The Quick Ratio
Something happened a short time ago – January 24th, 2011 – that shines a spotlight on the issue of finding safer shares. Australia’s giant retailer, Woolworths (WOW), lowered its guidance for the first half of 2011. Today’s earnings release cited the following conditions that led to the revised forecast: • Consumer Confidence Levels • Inflation…
Tools for Finding Safer Shares (Part 3) – The Cash Conversion Cycle
If liquidity is a key metric to consider when looking for safer shares, what is the best measure of liquidity? Financial websites tell us to focus on a combination of the Current Ratio and the Quick Ratio. As you know, both have flaws relating to the time required to turn assets into available cash. The…
