Guide To Analysing Companies

A good revision for basic financial accounting concepts, ratio analysis, and interpretation skill of financial statements.

匯豐金融帝國

It is a brief history of HSBC.

How to Refine Your Stock Strategy

Fat-Pitch Strategy:

1. look for wide-moat companies
2. always have margin of safety
3. don't be afraid to hold cash
4. don't be afraid to hold relatively few stocks
5. don't trade very often

Avoid behavioral finance like overconfidence, active trading, mental accounting

20 stock investing tips

1. keep it simple (company with economic moats, margin of safety, long time horizon)
2. have the proper expectation
3. be prepared to hold for a long time
4. tune out the noise (focus on company performance instead of market price)
5. behave like an owner
6. buy low, sell high (but how?)
   
7. watch where you anchor (avoid behavioral finance)
8. remember that economics usually trump management competence (economy is more important than management ability)
   
9. be careful of snakes (poor management, principal-agency problem)
10. bear in mind that past trends often continue
11. prepare for situation to proceed faster than you may think
12. expect surprises to repeat
13. don't be stubborn (sell when you make mistake or situation not as expected)
    
14. listen to your gut
15. know your friends, and your enemies (who buy with or sell against you)
    
16. recognize the signs of a top
17. look for quality
18. don't buy without value
19. always have a margin of safety
20. think independently

Graham's simple formula:
implied growth rate g = (P/E ratio - 8.5)*(1/2)*(100%)

Fisher's 15 points for growth stock

1. does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
2. does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of current attractive product have largely been exploited?
3. how effective are the company's research-and-development efforts in relation to its size?
4. does the company have an above-average sales organization?
5. does the company have a worthwhile profit margin?
6. what is the company doing to maintain or improve profit margin?
7. does the company have outstanding labor and personnel relations?
8. does the company have outstanding executive relations?
9. does the company have depth to its management?
10. how good are the company's cost analysis and accounting controls?
11. are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition?
12. does the company have a short-range or long-range outlook in regard to profits?
13. in the foreseeable future, will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholders' benefit from this anticipated growth?
14. does management talk freely to investors about its affairs when things are going well but "clam up" when troubles and disappointments occur?
15. does the company have a management of unquestionable integrity?

Fisher's 3 reasons to sell a stock

1. you have made a serious mistake in assessment of the company
2. the company condition deteriorate
3. could reinvest the money in another far more attractive company (but can you sure one good company is certainly better than another good one? )

投資奇才曼格─巴菲特首席智囊

An interesting book describing the story of Buffett's best partner in Berkshire Hathaway, who is also a very disciplined value investor.

百年利豐－從傳統商號到現代跨國集團

a must read to understand the history & philosophy of Li&Fung (00494)

Hot Commodities- How Anyone Can Invest Profitably in the World's Best Market

1. commodity prices are determined by supply & demand. The trend of commodities usually persists for many years.

• bear market creates sharp reduction in capacity, and thus large supply & demand imbalance.
• bull market induces over-investment, thus increase in supply. However, it takes years to increase capacity.

2. prices of commodities show negative correlation to price move of stocks & bonds. (i.e. good diversification effect in portfolios.)
3. Historically, commodities are tangible assets, no credit risk of itself and their values never fall to zero.
4. commodities prices can rise even when the economy is bad.
5. commodities returns outpace inflation.
6. history shows that war & political chaos push commodity prices higher.

Money Masters Of Our Time

some thinking about reading the book:

1. 70% core holding (growth at reasonable price): buy & hold for well-managed growth companies until they slow down, avoid market timing. growth stock can be characterized by higher peaks & troughs across business cycles.
2. try not to touch cyclical stocks or sector funds, if really want, buy low & sell high within the business cycles, but avoid trying to catch the peaks & troughs
3. always keep certain amount of cash for emergency use
4. use funds for unfamiliar areas (emerging markets, small cap, etc)