The man, a 62-year-old salesman who wants to keep his identity under wraps, recently found that some stock he thought he had sold long ago had been quietly gaining value for 13 years. A week ago, it was worth about $4 million.
The investor said he bought 3,000 shares of EMC, the data storage company, on a
tip from his cousin in 1987, but soon sold 2,000 of them to pay for his
children's college tuition. He forgot about the remaining 1,000 until the
state's Abandoned Property Division, noticing the inactivity, contacted him last
month.
Sure enough, after spending three days in his cellar with a kerosene lamp, he found the still-sealed envelope with the stock certificates. The shares, for which he paid about $15.75 each, have split several times, making him the owner of 48,000 shares whose latest 52-week high was $104.94.
No sooner did he claim his property at the statehouse last Wednesday, though, than he saw EMC's share price slip along with the rest of the Nasdaq. ''I lost $600,000 in two days,'' he told The Boston Herald. ''But I can't find anyone to give me any sympathy.''
Welcome to the world of high-tech investing. Julie Flaherty
2. FUTURE CASH_GENERATING ABILITY (NOT EARNINGS)
3. GROWTH, DURATION AND RISK
4. EXPECTED RETURNS (RELATIVE TO ALTERNATIVE INVESTMENTS OF EQUAL RISK)
5. DISCIPLINE AND "WHEN TO SELL" = cornerstones of success (See Link Below)
http://www.thestreet.com/pf/funds/managerstoolbox/1141727.html
6. TRADERS BECOME INVESTORS BY MISTAKE; INVESTORS BECOME TRADERS BY CHOICE
TOTAL RETURN (share price appreciation + dividends) = what we're after. For Example,
A. Wall Street Journal Total Return Scorecard: The BEST & WORST http://interactive.wsj.com/public/current/summaries/scoreboard2001.htm
B. Dow Jones Industrials (Average Annual Return: 1990-1995; 1990-1999) http://www.finfacts.ie/stockperf.htm
C. Fortune 500 Highest Total Return to Shareholders: 1 Year and 10 Years (1988-1998): http://www.worldcom.com/investor_relations/annual_reports/1998/shareholder_value/scorecard/fortune.shtml
D. If you invested $1,000 in 1990...
A look at some of the nominees for "stock of the
century" by the editors of Individual Investor magazine and what $1,000
invested in 1990 is worth today:
Microsoft, $94,610.
Intel, $38,170.
Wal-Mart, $12,320.
General Electric, $9,600.
IBM, $4,580.
Ford, $2,440.
AT&T, $1,680 (not including shares of Lucent Technologies
and NCR Corp., which were spun off in 1996).
Some high-tech stocks that didn't exist in 1990 have fared
even better. They are among Individual Investor's picks for a stock to buy today
and hold for the next decade.
Here's a look at what $1,000 invested in these stocks on the
day they went public is worth today:
America Online, $693,710. (March 1992)
Nokia, $80,950. (March 1995)
Lucent Technologies, $13,010. (April 1996)
E. Stocks,
Bonds, Bills and Inflation: Historical Returns, 1926-1987
(Roger Ibbotson, Rex Sinquefield)
7. INFORMATION
a. At Best: Knowing what noone else knows
b. At Least: Knowing what everyone else knows
c. At worst, not knowing what everyone else knows
8. Worst Case Investing Situation: Tie up capital in a losing position for a long time
9. When enter "Prayer Mode" (i.e. stock's price going against you) = time to get out
10. Charts - Visual aid, puts perspective on stock's price past and prospects
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Tuesday, May 22:
Analysis: Fundamental & Technical
http://www.investorama.com/bestoftheweb/Stock_Market/Stock_Analysis/
A. Fundamentals > Future Cash-Generating Ability (ABOVE THE COST OF CAPITAL):
1. Markets
2. Products
3. Competition
4. Pricing
5. Costs
B. Management Decisions: There Are ONLY Three
1. Investing Decisions (CEO):
Goal: Sustainable "Growth Opportunities" (positive net present value investing):
(Not "sustainable profitable growth")
a. Least amount of shareholders' capital
b. Invested at the widest spread between cost of capital and expected returns
c. For the longest period
2. Financing Decisions (CFO): at the lowest average cost of capital (equity + debt)
3. Operating Decisions (COO): operating at margins greater than the cost of capital
a. With least expense
b. Generating cash at the widest margin above the cost of capital
b. For the longest period
(Cost of Capital = Investors' Expected Returns on a company's equity securities = (Market Risk + an Equity Risk Premium). The resulting number, called a "hurdle rate", varies per company and management must make its best calculation of the returns investors expect on investing in their securities. See http://newarkwww.rutgers.edu/guides/business/fin-cap.htm
| A History of Risk-premia Estimates for Equities, 1944-1978 / by Robert F. Vandell and George W. Kester. (Charlottesville, VA: Financial Analysts Research Foundation, 1983): 136 p. |
C. Earnings Per Share: Dependable? Yes. Reliable? No.
1. Cash-Generating Ability (Net Operating Profit After Taxes) not Earnings
2. Earnings = an accounting convention; can be manipulated and "managed"
http://www.kellogg.nwu.edu/ext_rel/clipping/98224lat.htm
3. A company's TRUE cash-generating ability can be disguised/distorted
4. Management dupes shareholders (= knowing what noone else knows)
5. When accounting "tricks" unveiled, stock gets killed, shareholders lose
D. Economic Value Added: Dependable? Yes. Reliable? Yes
EVA is net operating profit minus an appropriate charge for the opportunity cost of all capital invested in an enterprise. As such, EVA is an estimate of true "economic" profit, or the amount by which earnings exceed or fall short of the required minimum rate of return that shareholders and lenders could get by investing in other securities of comparable risk.
EVA =[Net Operating Profit After-Tax] - (Capital Employed x Cost of Capital)
http://www.sternstewart.com/evaabout/whatis.shtml
E. Fundamental Securities Analysis (Analysts)
1. Oxford Health (OHP) - where were the analysts?
a. Closing Price Friday, October 24, 1997: $68.75
b. Closing Price Monday, October 27, 1997: $25.75
Source: The New York Times Section: 1245 words Abstract Lead Paragraph Oxford Health Plans, the big New York area health plan that has been invoked as an industry model for its ability to keep costs down while satisfying patients, said yesterday that it had been losing money because it fell behind in sending bills to cu... |
2. Sunbeam (see below) - where were the analysts?
(March 1999 - about $60 per share; currently delisted)
3. The questions which must be asked - but of whom?
4. Ratios Examined
a. Income Statement - Profitability
b. Balance Sheet- Asset Management, Liquidity, Debt
http://www.ventureline.com/MBASamples/Sample_covsind.htm
http://www.bizmove.com/finance/m3b3.htm
5. Which information is the "best" information?
b. EVA (above)
b. AMA Sample Course in Financial Analysis: http://www.seminarfinder.com/deluxe/seminar/5845.html
F. Technical Analysis (Stock Price Forecasting)
1. Complementary
2. Trend Confirmation
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G. Earnings Manipulation - Happens Too Often
1. See NYU Case Study on Earnings Management at Sunbeam (www.stern.nyu.edu/ross/Sunbeam%20case.pdf)
2. See NYU Case Study on Earnings Management at Cendant (www.stern.nyu.edu/ross/cendant.pdf)
3. NEW YORK TIMES (Front Page) May 16, 2001S.E.C. Accuses Former Sunbeam Official of Fraud
By FLOYD NORRIS
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Despite Recovery Efforts, Sunbeam Files for Chapter 11 (Feb. 7, 2001) Bringing New Order to Sunbeam's Chaos (Aug. 27, 2000) Sunbeam's Board, in Revolt, Ousts Job-Cutting Chairman (June 16, 1998) Market Place: A Big Sales Gain for Sunbeam Proves Costly to Investors (May 7, 1998) For a Struggling Sunbeam, Shock Therapy (Aug. 11, 1996) |
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lbert
J. Dunlap directed a huge accounting fraud as chief executive of the Sunbeam
Corporation
Mr. Dunlap, who embraced the nickname Chainsaw Al, became a corporate star in the 1990's, making tens of millions for himself as he laid off thousands of employees in the name of efficiency. Sunbeam's stock leaped nearly 50 percent the day he was hired to run the company in 1996, and his memoirs became a best seller. But the S.E.C. suit, filed in federal court in Miami, said the Sunbeam turnaround directed by Mr. Dunlap was a sham.
The executives "orchestrated a fraudulent scheme to create the illusion of a successful restructuring of Sunbeam and facilitate the sale of the company at an inflated price," the S.E.C. said.
"This case is the latest in our ongoing fight against fraudulent earnings-management practices" that have cost investors billions of dollars, said Richard H. Walker, the commission's director of enforcement.
Sunbeam, a maker of such products as Sunbeam electric blankets and Oster blenders, is now in bankruptcy reorganization. Without admitting or denying the charges, the company settled related administrative proceedings filed by the S.E.C., accepting a cease-and-desist order barring further violations of securities laws. The S.E.C. did not seek monetary damages.
Mr. Dunlap, who was fired from Sunbeam in the summer of 1998, said he would fight the accusations, as did four other former top officials of the company and Phillip E. Harlow, the Andersen partner who was in charge of auditing Sunbeam.
In a statement released by his lawyer, Mr. Dunlap called the charges "totally false," adding that "I am outraged that the S.E.C. has chosen to bring these baseless charges against me."
The S.E.C. is seeking to bar Mr. Dunlap and his colleagues from serving as officers and directors of publicly traded companies, seeking to order them not to violate securities laws and seeking to fine them an unspecified amount.
Sunbeam's fortunes initially seemed to improve under Mr. Dunlap. The company took a huge write- off in 1996 as it closed plants and laid off employees, but its reported profits soared in 1997, persuading many analysts that Mr. Dunlap had turned the company around.
"We are winning in every aspect of our business," Mr. Dunlap told analysts in the conference call announcing 1997 earnings. "What an amazing year we had."
But the recovery was a myth, the S.E.C. said. "In fact, at least $62 million of Sunbeam's reported $189 million in income for the year did not comply" with accounting rules, the S.E.C. said in its complaint against Sunbeam.
The S.E.C. said that Mr. Dunlap and Russell A. Kersh, then Sunbeam's chief financial officer and a longtime close associate of Mr. Dunlap, used numerous improper tactics to inflate earnings. Millions of dollars in expenses in 1997 were wrongly charged to 1996, when the company had taken the write-off for Mr. Dunlap's reorganization. The S.E.C. said the reorganization created what it called "cookie jar" reserves, which could be used to create fake profits in 1997. It also said that Sunbeam unreasonably reduced the value of its inventory so that it could record large profits when the goods were sold.
In 1997, the S.E.C. said, Sunbeam recorded some sales that were not real, through a variety of methods, and recorded other sales that came from "channel stuffing," putting inventory onto the books of distributors and retailers. In one case, the S.E.C. said, electric blankets that had been packaged for a certain retailer were sent to a distributor who agreed, in return for a guaranteed profit, to hold the blankets until the retailer was ready to accept them. Other sales were made by offering deep discounts to persuade customers to buy merchandise that they would not need for many months. The S.E.C. said that the company should have disclosed those discounts and that the sales should have been recorded in later quarters.
The S.E.C. said that some of the fraudulent transactions were uncovered by Mr. Harlow, the Andersen partner, who asked the company to change its financial statements.
But the company's management refused to make most of the requested changes, and the auditors agreed to certify the financial statements anyway, the S.E.C. said, having been convinced that the challenged numbers, which produced 16 percent of the company's 1997 profits, were not material and therefore did not have to be corrected.
A lawyer for Mr. Harlow, the Andersen partner, said his client had acted properly and expected to be cleared. A spokesman for Arthur Andersen said it was standing behind Mr. Harlow, the managing partner of its Fort Lauderdale, Fla., office, adding that "the S.E.C.'s allegations reflect professional disagreements about the application of sophisticated accounting standards" and "should not form the basis for allegations of fraud."
The 1997 profits reported by Sunbeam at first impressed investors and the board. The stock, which had been at $12.50 the day before Mr. Dunlap's hiring was announced, peaked in early 1998 at $52. At about that time, the board gave Mr. Dunlap a new contract, doubling his base salary to $2 million a year.
Sunbeam had hired investment bankers to find a buyer for it in 1997, something the S.E.C. said would have enabled Mr. Dunlap to make millions from selling his stock and cashing in his options. But no buyer materialized.
In early 1998, Sunbeam announced three acquisitions: Coleman, a camping
equipment company; First Alert, a smoke-alarm company; and Mr. Coffee, the
coffee-pot maker. Coleman was then controlled by Ronald O. Perelman, the
financier whose other companies included Revlon
But the ride was near its end. The company's stock plunged to $34.63, a 25 percent fall, on April 3, 1998, after Sunbeam disclosed that it had lost money in the first quarter.
By early June, Barron's published an article noting that Sunbeam had negative operating cash flow in 1997 and suggesting that all the company's profits had come from questionable accounting maneuvers. Mr. Dunlap was soon forced to resign after board members began looking into the claims and hearing from employees of questionable accounting practices.
After Mr. Dunlap's departure, Sunbeam became a disaster for virtually everyone involved. The new chief executive, Jerry W. Levin, failed to turn the company around, and in February it filed for bankruptcy protection. Mr. Levin had been an aide to Mr. Perelman, who has taken large losses on his investment.
Yesterday, Mr. Levin called the settlement "an important milestone" for Sunbeam and said he was pleased that the matter had been resolved.
The bankruptcy plan filed by the company, a plan opposed by some creditors,
puts the value of the company at $1 billion, or less than the $1.6 billion owed
to the company's banks, which have also taken large credit losses. They are led
by Bank of America
Sunbeam's shares still trade, however, and closed yesterday at 7.3 cents, down a tenth of a cent, in over- the-counter trading. They will be worthless if the bankruptcy plan is approved.
After Mr. Dunlap was fired, Arthur Andersen, along with another accounting firm, reaudited the books and concluded that the 1997 profits should have been far lower. The Andersen spokesman said the firm stands by the re-audit. It has since settled a shareholder class-action suit by agreeing to pay $110 million in damages. That suit against Mr. Dunlap is scheduled for trial in January.
When Mr. Dunlap was hired by Sunbeam, he was viewed as a corporate star after his tenure at Scott Paper, which was sold to Kimberly- Clark on terms that Mr. Dunlap said provided him with $100 million. The S.E.C. suit does not address Mr. Dunlap's conduct at Scott.
But the Sunbeam collapse, along with reports that the Sunbeam layoffs were excessive and had damaged the company's ability to do business, damaged his reputation, and he has not been hired as an executive at another company.
Mr. Kersh, the former chief financial officer, said yesterday that he believed that the company's financial statements "were true and accurate in all material respects and in accordance with generally accepted accounting principles." He called the charges "totally false."
Others named in the complaint were Robert J. Gluck, Sunbeam's former controller; Donald R. Uzzi, the former marketing vice president; and Lee B. Griffith, the former sales vice president. A lawyer for Mr. Gluck said his client's conduct "was in accord with the law and with accounting standards." Lawyers for the other two defendants said their clients were not accountants and knew of no improper accounting.
The former general counsel of Sunbeam, David C. Fannin, accepted a cease-and-desist order from the commission, which said he participated in the issuance of improper news releases. He did not admit or deny the allegations.
4. Computer Associates
May 1, 2001, Tuesday
Source: The New York Times
Section:
775 words
Abstract
Lead Paragraph
Computer Associates said yesterday that its accounting conformed to standard rules and that it had not inflated its results, a day after The New York Times reported that former employees and analysts had raised serious questions about the company's f...
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H. Model Investigation of a Company
1. Spectrum of Resources
a. From the Company
1. Where is company located (how do you make contact)? www.business.com
2. Whom do you call? - Who is in charge of Investor Relations
3. What do you ask for?
a. Annual and Quarterly Reports
b. Analyst Reports
c. Articles on the Company: from Trade (Industry) Publications and Press
d. Other Information Company Considers Relevant
b. From the SEC
c. Online: Perspective - stock price performance (total return) relative to profit prospects
2. Now What?
3. The Decision: To Invest of To Pass?
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May 29, 2001
New Sites:
i-soft.com http://www.traderslibrary.com/forum/?icode=I266
Public Register's Annual Report Service - online. http://www.annualreportservice.com/
StockSheet.com (Media General QuickSource Data-One Web Page http://www.stocksheet.com/
Company Conference Calls Ranked #1 by Barron's) http://bestcalls.com/
___________________________________________________________________
Technical Analysis Trading Forum, June, 2000 (Washington, DC) http://www.traderslibrary.com/forum/?icode=I266i-
Technical Analysis Trading (180 Sites) http://www.moneysearch.com/cgi/search.cgi?SEARCH_CATEGORY=Technical+Analysis
Fundamental Analysis (154 Sites) http://www.moneysearch.com/cgi/search.cgi?SEARCH_CATEGORY=Fundamental+Analysis
______________________________________________________________________
JUNE 5, 2001
9:40 PM, May 31, 2001 - The Server is up again (only down for 6 days).
Response to Gerry Anderson's Question about Index Structure:
(Russell/Mellon analytics are used by over 1,500
institutional investors responsible for the management of more
than US $3 trillion in assets - Russell established its reputation in the late
1960s as one of the pioneers of objective money manager analysis and pension
fund consulting) - products are designed to allow fund sponsors, consultants and
money managers a wide range of choices and maximum control as they seek to
enhance returns and manage risk.
Russell US Equity Indexes: Methodology and Construction http://www.russellmellon.com/products/indexes/Index_const/Index_const.htm
Russell Index Reconstruction: How It Works http://www.russell.com/US/Indexes/GreenwoodRecon1.asp
Russell Reconstruction Fact Sheet http://www.russell.com/US/Indexes/US/membership/reconstitution.asp
"US Market Snapshot" - UBS Paine Webber http://painewebber.com/market_frame.htm
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Re: Whit Bourne's comments on Fox TV's "Bulls Vs. Bears" (esp. 'Chartman' segment) http://www.foxmarketwire.com/story/0,2933,25892,00.html
"Encyclopedia of Chart Patterns" by Thomas N. Bulkowski (Wiley) http://www.amazon.com/exec/obidos/ASIN/0471295256/qid=991491012/102-6869831-6158510
________________________________________________________________
Follow Up: Stock Screens in Action (New York Times, Sunday 6/3/01)
Investing With Robert H. Lyon: ICAP Select Equity Portfolio
By CAROLE GOULD
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Investing With Karey Barker and Ajay Krishnan: Wasatch Ultra Growth Fund (May 27, 2001) Investing With Maura A. Shaughnessy: MFS Utilities Fund (May 20, 2001) Investing With Peter J. R. Trapp: Needham Growth Fund (May 13, 2001) |
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ttention,
investors: the free ride is finally over, according to Robert H. Lyon, who runs
the $52 million ICAP Select Equity Portfolio.
"We're entering a period of much lower equity returns that will persist for a long time," Mr. Lyon said from his office in Chicago. "We're looking for returns in the mid- to high single digits, not the 15 percent to 20 percent that people are used to. Valuations are still very high, and the outlook for corporate profits, even with the economic recovery, will be subdued."
Skills in picking stocks, as opposed to gauging broad economic trends, will now be more important, he contended. And stock by stock, his fund has built handsome returns. It gained 14.6 percent a year, on average, for the three years through Thursday, versus 5.4 percent for its peers in the large value group and 6.1 percent for the Standard & Poor's 500, according to Morningstar Inc. The fund rose 13.1 percent in the 12 months ended Thursday, versus 7.4 percent for its group and a loss of 10.7 percent for the S.& P.
Mr. Lyon, 51, is president and chief investment officer of the Institutional Capital Corporation, the fund's adviser; it manages about $15 billion, primarily for institutions, that is invested in large-capitalization value stocks.
He calls risk management a crucial goal for the fund. "We tend to approach the market from a pretty conservative point of view," he said. "A lot of our success over the years is avoiding losers rather than always hitting home runs."
To uncover value, Mr. Lyon works with 14 analysts who contribute ideas on potential buys to a pool of about 450 companies. He starts by screening the pool for what he calls relative value, which takes into account the company's price-to-earnings multiple, his target P/E and consensus earnings estimates. He uses that information to eliminate all but about 100 companies whose stock prices he thinks can increase at least 15 percent over 12 months.
Next, Mr. Lyon screens for earnings stability. He compares the most recent monthly change in consensus earnings estimates with the average monthly change over five years.
"When you put the two screens together," he said, "you get the intersection of companies with a minimum 15 percent upside, but maybe as high as 30 or 40 percent, and earnings that aren't falling apart. That's the sweet spot of the market for value stocks."
Additional research eliminates all but about 15 to 25 of the 75 stocks that pass both screens. A crucial factor is the presence of a catalyst — like a new product or service, new management or corporate restructuring — that can lift a stock price.
The largest chunk of the fund is in financial stocks, at 22 percent of assets. "We expect interest rates to decline somewhat further and stay at a relatively low level for at least another 12 months," he said. "That's a real positive for financial stocks."
Technology, by contrast, is now just 4 percent of the portfolio because of concern about valuations. That is down from 22 percent 12 months ago.
He considers selling when earnings estimates deteriorate, a catalyst becomes questionable or the stock reaches what he calls full value. Selling big positions in a concentrated portfolio creates a high turnover — 400 percent last year — but the fund tries to offset gains with losses in other areas to minimize taxes.
Financial stocks should benefit from restructuring efforts by individual
companies as well as from additional rate cuts, Mr. Lyon said. A favorite is
Citigroup
"The new Citi is better diversified and even more of a growth stock," he said. "We believe that the combination of growth and diversification will let its P/E expand up toward its competitors." Citigroup sells for 17.4 times 2001 earnings; he thinks that multiple can reach 20 in 12 months. He expects the stock price to reach $70 in that time; it is now at $51.80.
Mr. Lyon also likes MetLife
Mr. Lyon began buying shares of the Loews Corporation
Its Lorillard Tobacco unit, he added, is gaining market share while tobacco litigation is turning less hostile. And the CNA unit, which sells commercial property, casualty and other insurance, is improving.
"You have a collection of operating businesses that are all poised to do very well," Mr. Lyon said, "and they're selling at a very low multiple" of 10 times 2001 earnings.
He expects the stock to reach $100 in a year; it is now at $68.16.
________________________________________________________________
Investing Strategy:
1) Top Down: Trends in Economy/Industries, then Company
Example: "Thematic Approach" at UBS Paine Webber http://painewebber.com/indinv/research/thematic/intro.htm
Top-Down Investing Philosophy http://www.investors-routemap.co.uk/AboutUs_investing_strategies.htm
Trends Research http://www.trendsresearch.com/
Swiss National Bank - Monetary Policy Simulation Game (created to explain role of central banks - vs. commercial banks) http://www.snb.ch/d/index3.html
MoPoS (short for: Monetary Policy Simulation Game) is a computer game which lets the player act out the role of a fictitious central bank by implementing monetary policy in a simple virtual economy. The purpose of the game is to give the player a feel for the options and limitations of monetary policy. http://www.snb.ch/e/publikationen/text_mopos.html
UBS PaineWebber Research Department Structure http://painewebber.com/indinv/research/team/introTeam.htm
Ralph Acampora (Prudential): Tech Talk (Technical Analysis of Markets) http://www.prudentialsecurities.com/market_news/ralphcom.htm
Symbols for Major Indexes on ClearStation: Dow Industrials (_indu) and NASDAQ Composite (_compx)
2) Bottom-Up: Company-Specific (Technical & Fundamental Analysis)
Technical Analysis - Oriented Sites
IBD: Using Charts to Round Out Stock Selection http://www.investors.com/learn/b09a.asp
MurphyMorris.com (home of CNBC Technical Analyst John Murphy) - See "Free Analysis Tools" + "Visual Investing" (Murphy's book) http://www.murphymorris.com/
eCharts.com - A Complete Technical Analysis Resource Center http://www.echarts.com/
ChartHelp.com: Free Stock Chart & Indicator Education http://www.charthelp.com/
InvestingSites.com: Technical Analysis and Charting (Portal) http://www.investingsites.com/technical_analysis.htm
Stock-Investing-Software.com - Portal for software http://www.stock-investing-software.com/charting.html
Omega Research (Trade Station) - 10-Day Free Trial http://www.omegaresearch.com/
WindowonWallStreet.com ("The new standard in streaming real-time charts, quotes and news) - 10-Day Free Trial http://www.windowonwallstreet.com/default5.shtm
WindowonWallStreet.com with >40 technical indicators http://www.windowonwallstreet.com/features/indicator_pop.htm
StockCharts.com - Charting School http://www.stockcharts.com/education/Resources/Reading/pointFigure.html
Investopedia.com - Popular Charting Patterns http://www.investopedia.com/university/technical/technical10.asp
NetStock: Multiple Stock Quote Program http://www.splitcycle.com/
StockSpreadCalculator (effects of buy and sell prices per share upon the net profit generated by a stock
transaction)
http://www.wheatworks.com/freeware.htm
Fundamental Analysis-Oriented Sites
Value Sheet: Stock Investment Analysis Template for Microsoft Excel (a quick easy way to analyze potential stock market investments) - SEE Recommended Reading & Websites http://www.valuesheet.com/
Combining Fundamental & Technical Analysis
Ralph Lauren (RL) Example, Restoration Hardware (RSTO)
TheLion.Com (Message Boards) http://www.thelion.com/
Investor.Cnet.com http://investor.cnet.com/
StockSelector.com - Research, Select & Monitor http://www.stockselector.com/
COMPARE TO:
ClearStation.com
______________________________________________________________________
New Sites/Products
AvidTrader.com - "All charting, technicals, all of the time..." http://www.avidtrader.com/
Day Trading - Site with Good Links http://daytradingstocks.com
Trusted Old Stock and Bond Certificate Superstore http://www.scripophily.net/
_______________________________________________________________
June 12, 2001
1. Total Return, 1925-2000 (Charles Schwab Advertisement, NYT 6/10/01)
Growth in value of $1 invested from 1925 through (at end of) 2000:
Small Cap Stocks: $3,986.04
Large Cap Stocks: $2,586.52
Bonds: $ 48.59
Cash: $ 16.52
Inflation: $ 9.72
Source: Stocks, Bonds, Bills & Inflation 2001 Yearbook (Ibbotson Assoc.). Figures assume reinvestment of dividedns on stocks and coupons on bonds, and no taxes or transactions costs.
___________________________________________________________________________________________________________________
2. Investing Ideas
a. Investing Philosophy: How Do You Characterize Yourself
How Do You Feel About This
1.) Growth -Aggressive (Momentum): Cap. Aprec./Small Cap.
2.) Growth: Capital Appreciation/Large Cap Stocks
3.) Value: deeper the discounts, greater the risk
4.) Conservative (Income): Yield (high dividends/coupons)
b. Top Down Strategy (Economy/Industry/Company)
1). Economic Indictors (US Congress-May, 2001) http://www.access.gpo.gov/congress/eibrowse/01maybro.html
http://www.economic-indicators.com/
2.) Industry Research on the Internet
http://home.sprintmail.com/~debflanagan/industry.html
3.) Company Research
a. Call the company (ask for Investor Relations Department)
b. SEC: www.edgar-online.com
c. Articles on company:
4.) News and Brokerage Reports
5.) Message Boards (Look for references to familiar names)
6.) Visual Aid
7.) AVOID EVENT RISK: Check Next Earnings Date
c. Bottom-Up (Company-Specific)
1). Moves: Price Percentage Gainers (or Actual $ Losers)
a.) "Stock Market Data Bank" - Page C2, Section 3, daily WSJ
b.) "Market Indicators" - Section C, daily NYT
c.) http://www.tradingday.com/
2). Reasons for Moves (changes in marketwide expectations)
a.) News on company (Fundamentals)
3.) How Move Looks
4.) Expectations on Trade
a.) Gain: Total Return: how much is enough? (TR Calculator)
http://quote.bloomberg.com/tra/tra.cgi
b.) Loss: How much are you willing to lose?
Recommended: Stop Loss Orders (< 10% loss)
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Summary Concepts
1. PROFITABILITY IS THE KEY TO VALUE
2. Future Cash-Generating Ability = What It's All About
3. Growth Opportunities (Not Growth):
Growth in Positive Net Present Value
Investing Opportunities (> Cost of Capital)
4. Fundamentals of Profit:
Markets, Products, Competition, Pricing, Costs
5. EVA - Not Earnings Per Share
6. TOTAL RETURN = NAME OF GAME
7. Trade Today on Tomorrow's Prices = Everyone's Goal
8. Re: Securities Analysts: Buyer Beware To Whom They Are Beholden
9. Information Quality Varies with Sources
10. Old News = newspapers/magazines/analyst reports
11. Prayer Mode = Beware!!!!
12. Discipline - When To Sell
13. Success = Long on Discipline/Short on Ego
14. The Market IS = Right? Wrong? JUST IS!!!!!!!
15. Fundamentals - Long-Term Oriented; Can Change At Any Time
16. Technicals - Short-Term Oriented; Can Reflect Changes in Fundamentals
17. Make Your Analysis Clear (to you), Not Complicated
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BEST TOOLS:
Quotes: www.freerealtime.com
Charts: www.clearstation.com
Earnings (Pre-announced): www.earningswhispers.com
News: www.bloomberg.com
Message Boards: www.thelion.com
Conference Calls: www.bestcalls.com
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From Forbes: "Best of the Web" (Summer 2001):
Stock Screening:
www.insiderscores.com
www.marketguide.com
www.marketscreen.com
www.stockworm.com
www.wallstreetcity.com
Porfolio Trackers:
www.cbsmarketwatch.com
www.ft.com
www.gainskeeper.com
www.morningstar.com
Value Stocks:
www.berkshirehathaway.com
www.focusinvestor.com
www.numeraire.com
Technical Analysis:
www.bigeasyinvestor.com
www.echarts.com
www.metastock.com
www.sixer.com
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