Post Category → Investment Process

Buying is easy, selling is not. Here are some of the best reasons to sell a stock.

As an investor, it’s important to know when to sell a stock. While there’s plenty of information on buying stocks and investing strategies, there’s not as much coverage on when to sell a stock. Selling a stock is just as important as buying one, yet many investors don’t have a sell strategy in place.

As an investor, it’s important to know when to sell a stock. While there’s plenty of information on buying stocks and investing strategies, there’s not as much coverage on when to sell a stock. Selling a stock is just as important as buying one, yet many investors don’t have a sell strategy in place. TABLE… Continue reading →

What is the best way to use the Multiples Valuation approach to value stocks?

Multiples Valuation Analysis is a relative valuation method using financial ratios such as the P/E ratio or the EV/EBITDA ratio. This approach values a company based on specific operating metrics, such as earnings or cash flow. It is also referred to as the market-based approach, as it suggests that similar companies should have comparable valuations based on underlying assets.

Multiples Valuation Analysis is a relative valuation method using financial ratios such as the P/E ratio or the EV/EBITDA ratio. This approach values a company based on specific operating metrics, such as earnings or cash flow. It is also referred to as the market-based approach, as it suggests that similar companies should have comparable valuations… Continue reading →

What is the best way to use the Reverse DCF Model to value stocks?

The Reverse DCF Model is an excellent tool for valuing a stock based on the market’s pricing rather than your own forecast. This model uses the Inversion concept which is a modified version of the Discounted Cash Flow model. By beginning with the current stock price and adjusting the expected growth of the business, we can determine the amount of growth that is factored into the share price.

The Reverse DCF Model is an excellent tool for valuing a stock based on the market’s pricing rather than your own forecast. This model uses the Inversion concept which is a modified version of the Discounted Cash Flow model. By beginning with the current stock price and adjusting the expected growth of the business, we… Continue reading →

Using this powerful formula is one of the best ways to estimate your expected returns on stocks.

Estimating expected returns is a crucial aspect of valuation. After using one of the valuation models, I calculate the estimated yearly return by running a simple formula. Expected Returns = Shareholder Yield + Earnings Growth +/- Multiple Expansion or contraction.

In this article, we will be using a powerful formula to determine the expected returns of an investment. I use this formula in combination with my preferred valuation method the reverse DCF model. TABLE OF CONTENTS: Although the formula is easy to apply to past data, it can be quite challenging to create a forward-looking… Continue reading →

Is learning Financial Modelling one of the most valuable first steps in stock valuation?

Financial Modelling is a process that recreates a hypothetical forecasted scenario of a company’s future operations and financials. Financial modelling uses past data and creates a summary of the company’s likely projected expenses and earnings that can guide investment decisions. Modelling is most used in corporate finance and includes using various models such as the three-statement model, merger model, DCF, Leveraged Buyout Model (LBO), comparable company analysis and the Sum of the parts model.

Financial Modelling is a process that recreates a hypothetical forecasted scenario of a company’s future operations and financials. Financial modelling uses past data and creates a summary of the company’s likely projected expenses and earnings that can guide investment decisions. Modelling is most used in corporate finance and includes using various models such as the… Continue reading →

Using a Margin of Safety can be one of the most practical ways to invest.

Margin of Safety is a term used to describe the difference between the current share price of a stock and its intrinsic value. In other words, it is the discount at which the stock is trading in comparison to its actual worth. The Margin of safety is not necessarily an equation but a guiding philosophy grounded in investment discipline. It invokes logical decision-making, fundamental analysis, a long-term mindset with a focus on risk management.

Margin of Safety is a term used to describe the difference between the current share price of a stock and its intrinsic value. In other words, it is the discount at which the stock is trading in comparison to its actual worth. The Margin of safety is not necessarily an equation but a guiding philosophy… Continue reading →

What is the meaning of Intrinsic Value and why its one of the most important terms?

This is where the concept of Intrinsic Value comes in. It is a measure of the true worth of an asset. This is independent of the Market Value which is determined by what investors are willing to pay.

What is Intrinsic Value? Knowing whether you are paying a fair price for a stock can be challenging. This is where the concept of Intrinsic Value comes in. It is a measure of the true worth of an asset. This is independent of the Market Value which is determined by what investors are willing to… Continue reading →

The right investment process can lead to better investing decisions and make you more money.

The Investment Process is a systematic approach to investing, which can be useful for private investors who want to succeed. It's not only reserved for professionals. You cannot rely on intuition alone in investing. You need a logical reason for why you invest in certain ideas and not others, based on reasoning and facts. This is where the Investment Process comes in handy. It can help you understand why you are investing your hard-earned capital in a particular company.

The Investment Process is a systematic approach to investing, which can be useful for private investors who want to succeed. It’s not only reserved for professionals. You cannot rely on intuition alone in investing. You need a logical reason for why you invest in certain ideas and not others, based on reasoning and facts. This… Continue reading →

One of the most powerful ways to invest is with an Investment Checklist.

The Investment Checklist is a valuable resource that private investors should consider adopting as an essential part of their Investment Process. A checklist is used at the bottom of the filter, after generating investment ideas, but before finalizing the Investment Thesis. Its purpose is to act as a pre-thesis due diligence process to quickly sift through ideas and determine if they are worth investing in.

The Investment Checklist is a valuable resource that private investors should consider adopting as an essential part of their Investment Process. A checklist is used at the bottom of the filter, after generating investment ideas, but before finalizing the Investment Thesis. Its purpose is to act as a pre-thesis due diligence process to quickly sift… Continue reading →

What is an Investment Thesis and why is it one of the most helpful ways to invest?

An Investment Thesis is a written document that outlines why you are investing in a particular idea. It is grounded in your research and analysis and forms the cornerstone of the Investment Process. The Investment Thesis will help to explain with reasoning why you believe a certain investment is viable and how you came to that conclusion.

An Investment Thesis is a written document that outlines why you are investing in a particular idea. It is grounded in your research and analysis and forms the cornerstone of the Investment Process. The Investment Thesis will help to explain with reasoning why you believe a certain investment is viable and how you came to that… Continue reading →