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fundamental investment
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ProverB
#41 Posted : Tuesday, May 04, 2010 8:45:23 AM
Rank: Veteran

Joined: 3/12/2010
Posts: 1,199
Location: Eastlander
and now to matters speculation...

price is for most part a creature of human behavior..
when investors think the price will go up next week.. they will rush to buy now and infact prices will now go up this week!!!
so... case in point... Mumias and Unga group...half year results were good.. "investors think" full year results will be gud too.. and assume it is only they who know this...
considering themselves "smarter" than any one else.. they project..that good full year results will make everyone else believe mumias/unga are good to invest in and so this "everyone else" will decide to buy then... "smart investors" assume..this decision by "everyone else" to buy will spur demand for the share..hence increase the price.. so.. in their smartness.. they rush to buy now befor full year is over.. Tehehehehehe! eti smart investing. hence the small rally mumias had a month ago
..Let your light so shine before men, that they may see your good works, and glorify your Father which is in heaven...Matt5:16
- 1769 Oxford King James Bible 'Authorized Version
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mukiha
#42 Posted : Tuesday, May 04, 2010 9:34:43 AM
Rank: Elder

Joined: 6/27/2008
Posts: 4,114
Cowpoke wrote:
@Mukiha, The way to analyse a company's fundamentals is by starting by analysing firm's financials, the quality and utilisation of the firm's assets, liabilities, and equity using the various ratios....

How do you tell good quality assets from bad ones? And how do you analyse "utilisation of the firm's assets, liabilities"?
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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ProverB
#43 Posted : Tuesday, May 04, 2010 9:44:28 AM
Rank: Veteran

Joined: 3/12/2010
Posts: 1,199
Location: Eastlander
mukiha wrote:
Cowpoke wrote:
@Mukiha, The way to analyse a company's fundamentals is by starting by analysing firm's financials, the quality and utilisation of the firm's assets, liabilities, and equity using the various ratios....

How do you tell good quality assets from bad ones? And how do you analyse "utilisation of the firm's assets, liabilities"?



@mukiha!! BRAVO!!!!! Applause Applause Applause
you really know how to rouse our thinking!! i'd be honored to converse with you in a different forum.. contacts?
I'm impressed.
..Let your light so shine before men, that they may see your good works, and glorify your Father which is in heaven...Matt5:16
- 1769 Oxford King James Bible 'Authorized Version
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sheep
#44 Posted : Tuesday, May 04, 2010 11:53:55 AM
Rank: Veteran

Joined: 7/24/2008
Posts: 781
@mukiha,

ROIC will do.

But mostly I like using Ben Fishers methodology,putting more emphasis on good management and research rather than just using figures and ratios.
The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
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kenstat
#45 Posted : Tuesday, May 04, 2010 12:11:04 PM
Rank: New-farer

Joined: 12/31/2009
Posts: 43
Location: Tundra
mukiha wrote:
Cowpoke wrote:
@Mukiha, The way to analyse a company's fundamentals is by starting by analysing firm's financials, the quality and utilisation of the firm's assets, liabilities, and equity using the various ratios....

How do you tell good quality assets from bad ones? And how do you analyse "utilisation of the firm's assets, liabilities"?



Take KQ. What is the average age of their aircraft? What is the average age of the aircraft in their industry, especially within africa? As far as utilization, what is the average trip of the planes compared to their peers? This is one way.

You have still not answered my question from hapo juu...
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kenstat
#46 Posted : Tuesday, May 04, 2010 12:12:17 PM
Rank: New-farer

Joined: 12/31/2009
Posts: 43
Location: Tundra
sheep wrote:
@mukiha,

ROIC will do.

But mostly I like using Ben Fishers methodology,putting more emphasis on good management and research rather than just using figures and ratios.


I concure on ROIC.
I think it's a fallacy if anyone thinks they can arrive to the value of a stock without looking at the financials.
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mukiha
#47 Posted : Tuesday, May 04, 2010 2:11:21 PM
Rank: Elder

Joined: 6/27/2008
Posts: 4,114
sheep wrote:
@mukiha,

ROIC will do.



What value of Return on invested capital (ROIC) do you consider the threshold? I.e., the go / no-go point?
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Wa_ithaka
#48 Posted : Tuesday, May 04, 2010 3:29:31 PM
Rank: Veteran

Joined: 1/7/2010
Posts: 1,279
Location: nbi
Mukiha-I know your questions are rhetorical but will answer it anyway.

Your ROIC must be higher than the return you'd get from a risk-free investment (e.g. t-bill or saving account) plus a risk-related premium.

That is, if you can get 10% interest rate on a t-bill per year, the return you get from buying a share must be 10% + an additional gain to reflect your perception of a share's risk...

After all the transaction charges of course
The Governor of Nyeri - 2017
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VituVingiSana
#49 Posted : Tuesday, May 04, 2010 7:42:31 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,351
Location: Nairobi
I assume the Financials are accurate (not rigged or manipulated)

ROE as well as ROIC & ROA... all are important

Financials are important... esp Balance Sheet which shows the 'strength' of the firms...

In many cases, the ROA may be low (eg KPLC & KenGen) but the nature of the industry has to be considered... For utilities the low ROA is 'acceptable' since they can leverage their Balance Sheets...

P/E is tricky coz historical P/E is just that... HISTORY...
Forward P/E is full of assumptions...
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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the deal
#50 Posted : Tuesday, May 04, 2010 8:02:03 PM
Rank: Elder

Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
value=(earnings+dividend yield)/PBV...a reading of above 10 is a buy...then PSR to compare industry peers...then ROA +ROE...
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