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Rank: Elder Joined: 5/26/2009 Posts: 1,793
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>> What methods do you use to estimate the true value of a stock to know whethe its overvalued or undervalued in stock markets?....any resources on this subject are welcome.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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@kenmac this is a very strange question to ask because there are so many ways of valuing stocks.. i would suggest a few ways for example P/E ratios, Net Asset Value.. but these valuation methods are supposed to be backed up with a lot of financial knowledge of the way markets operate... so to you i can best suggest that you join a unit trust or talk to a broker extensively because if you play this game without the right knowledge.. you WILL get burned Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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Tried, tested and proven. 1) Write down all listed companies on pieces of paper. 2)Place the pieces in a sufuria. 3) Decide the number of companies you want to buy into. 4) Pick as many pieces of paper from the sufuria as the number of companies you want to buy into. 5) Place order with your broker. There is no better method than that this.
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Rank: Chief Joined: 1/3/2007 Posts: 18,098 Location: Nairobi
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@GG - I prefer throwing darts... more entertaining... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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@gordon and @VVS... y'all are "crazy"...  are you trying to get this guy roasted from head to toe on the NSE??? Mark 12:29
Deuteronomy 4:16
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Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi
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Put a finger on it. Failing that, get off your fat backside, do some research on company fundamentals, do your research on Kenya's economic prospects and then invest... The Governor of Nyeri - 2017
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Rank: Member Joined: 8/14/2009 Posts: 244
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@kenmak
The easiest way to start is to buy into a company which you admire a)what it does, or b)the CEO. try that this week and report your progress
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Rank: Elder Joined: 2/16/2007 Posts: 2,114
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@Kenmac,
This is what I do whenever I have spare cash:
Buy shares in companies manufacturing products or providing services that you use i.e if you love beer then have some EABL,If you love tea go Mumias,If you like talking on your mobile and you are on Safcom get some Safcom as well,since you cannot do without power get some Kengen and KPLC....but I do this for the long term
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Rank: Member Joined: 1/26/2010 Posts: 124
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As a beginner, I found these recources (see below) helpful. Not specifically to tell whether a stock is overvalued or undervalued, but nevertheless very useful in getting a clearer understanding. From what I have read so far, if there was anyone that knew exactly how to tell, there would be nothing left for the rest of us ordinary folk to buy. So do yourself a favor and do some research, learn about the companies that are listed, study the historical trends then go by what your (informed) gut feel directs. http://www.investmentguide.co.uk/shares1.htm
http://www.wisegeek.com/...-when-buying-stocks.htm
Tired of mediocrity. Am going to the very top!
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Rank: Elder Joined: 2/7/2007 Posts: 11,935 Location: Nairobi
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@Wa-ithaka, Long before anything,you do some reading about stocks.Much of this information is available on the internet.....thereafter,you can research....and for heaven's sake,don't put your money on a microscope or two...lol Nothing great was ever achieved without enthusiasm.
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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Gordon Gekko wrote:2)Place the pieces in a sufuria. I know nothing can replace sufurias as we all know they are low risk high return but supposing I don't have one, which container comes a distant second?
BBI will solve it :)
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Rank: Veteran Joined: 10/11/2009 Posts: 1,223
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A pot. History will not remember you for your IQ. It will remember you for what you did. “Genius is 1 percent inspiration, 99 percent perspiration.” Thomas Edison
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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I know of no one way of choosing stocks. One way i know not to choose stocks is to jump into a stock where everyone else is jumping into. Life is short. Live passionately.
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Rank: New-farer Joined: 1/29/2010 Posts: 23
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I buy major players in different sectors.
I like the financial sector more, they seem to
always rake profits.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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2012 wrote:
I know nothing can replace sufurias as we all know they are low risk high return but supposing I don't have one, which container comes a distant second?
what?? Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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@kenmac anything with a low p/e of less than 8times is a cheap stock except for agricultural stocks Mark 12:29
Deuteronomy 4:16
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Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi
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@guru267. what's the significance of 8times p/e and why doesn't it apply to agriculturals? “We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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guru267 wrote:@kenmac anything with a low p/e of less than 8times is a cheap stock except for agricultural stocks Why 8 times?
BBI will solve it :)
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Rank: Member Joined: 8/14/2009 Posts: 244
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What of negative pe like KQ?
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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Scubidu wrote:@guru267. what's the significance of 8times p/e and why doesn't it apply to agriculturals? @scubidu i say 8 times because a p/e of 8 and below is considered cheap by most analysts and there is huge chance for price increase if there is profit growth.. it doesnt work for agriculturals as these stocks tend to have low p/e due to extremely volatile earnings and lack of interest/demand by investors... Mark 12:29
Deuteronomy 4:16
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