Everything you need to know in 100 words or less
One of the requirements of these blogs is that we are supposed to share and teach others how to invest. I'll share the wisdom that was shared with me by one of the smartest business managers I've ever know: Wayne Flourey of Retail Credit Co. later called Equifax. One of Wayne's favorite saying was: It's better to be approximately right, than precisely inaccurate. The old KISS Keep It Simple Stupid method. So here goes my 100 word or less attempt to explain what is taught in an entire Modern Portfolio Management MBA program.
"In the real investing world only 4 things matter: Revenues, Margins, Net Earnings and Price. In the long run if Revenues, Margins and Earnings increase, the Price will follow. If Revenue, Margins and Earnings shrink, the price will go down. The rate of price change is tempered or amplified by the collective optimism or pessimissim that investors have about the overall health of the economy as a whole and in particular how it will effect the earning prospects of this stock."
Well there you have it, in 80 words; that's all you need to know. You really don't need to "trend" or analyis anything else. All the MBAs with all their Fundemental and Technical Analysis formulas, models and computers are just trying to see it the first 3 are trending up or down and using that information to predict what the price will do.
Fully understand those 80 words in the middle paragraph and you've unlocked the "secret" of stock market analysis.
Comments: View Comments | Tuesday June 3, 2008
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Archive Comments (2)
All the MBAs with all their Fundemental and Technical Analysis formulas, models and computers are just trying to see it the first 3 are trending up or down and using that information to predict what the price will do.
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In many cases you will find them charging "sky high" fees too, for mediocre performance they produce and btw presenting, many times a persuasive "too much talk little help" stories which as result don't affect my investment decision at all.
Posted by astuk June 4, 2008 9:01 AM
Jim,
You have 20 words left. Why waste them ?
The First 80 apply to a Market of Stocks - individual issues..
Use the last 20 to say a few words about the Stock Market - a collective like Indexes for example.
Often general market trends unfatrly punish a perfectly good stock for real reason related to the stock's individual qualities.
What I say is this :
In the Short term the market is a VOTING Machine; in the Long run, it's a WEIGHING Machine"
That's 19 words, if you count contractions as two words.
Don L. Ferk ( fka VikingWarrior aka Durdy Wurdy Don because I use wurdy Durds sometimes )
Posted by don ferk June 6, 2008 7:00 PM