I know there are threads about trading but I am not sure we have ever had a real in depth conversation about Value Investing.

Does anyone here perform real security analysis to find the intrinsic value to support buy/sell decisions?

I gave it a lot of thought and a little research, and almost picked up Benjamin Graham's book. But, I then decided to just stick with index funds. It did interest me a ton though. I was downloading and combing through 10ks to compare competitors and markets, but I just found I don't really have the time for it.

I hear you on the time.

I am going to take a stab at trying to value one company and then maybe posting here with a summary of the process and see if smarter people can shoot holes or agree with the valuation. Probably over the weekend.

Ragoo said:

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I hear you on the time.

I am going to take a stab at trying to value one company and then maybe posting here with a summary of the process and see if smarter people can shoot holes or agree with the valuation. Probably over the weekend.

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Good idea. I wouldn't be able to say yae or nay, but I would love to see what other in the know would say.

I do. I use the Graham formula to value stocks. I can't remember what book or author told me to use it (probably Buffet), but the argument was that Graham's formula only has one forecasting number in it. DCF and others use two or more. If you have to forecast, it can mess up your value formula, so use as little as possible.

It doesn't take long to calculate up the value of a company using that formula. I get the data from yahoo finance, but have used others at times.

For me, it helps take emotion out of the decision to buy or sell. Buy if it is at a value, and sell if it is overvalued.

Ragoo said:

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I know there are threads about trading but I am not sure we have ever had a real in depth conversation about Value Investing.

Does anyone here perform real security analysis to find the intrinsic value to support buy/sell decisions?

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I have done quite a bit. One thing I will tell you is that having a good screening process greatly increases your chances of finding undervalued stocks.

jh0400 said:

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Ragoo said:

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I know there are threads about trading but I am not sure we have ever had a real in depth conversation about Value Investing.

Does anyone here perform real security analysis to find the intrinsic value to support buy/sell decisions?

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I have done quite a bit. One thing I will tell you is that having a good screening process greatly increases your chances of finding undervalued stocks.

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my goal is first thing first.
Pick a well known company to perform the analysis.
Then get feedback.
Deploy across more companies.
Once familiar with how to value companies, then figure out how to find undervalue companies.

You can do quick work with usual metrics like Book value, Pe, PEG, and dividends

Just be cautious as to the numbers that a company puts out. Some of them are much easier to monkey with than others.

Ragoo said:

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jh0400 said:

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Ragoo said:

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I know there are threads about trading but I am not sure we have ever had a real in depth conversation about Value Investing.

Does anyone here perform real security analysis to find the intrinsic value to support buy/sell decisions?

---

I have done quite a bit. One thing I will tell you is that having a good screening process greatly increases your chances of finding undervalued stocks.

---

my goal is first thing first.
Pick a well known company to perform the analysis.
Then get feedback.
Deploy across more companies.
Once familiar with how to value companies, then figure out how to find undervalue companies.

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For your first one, I'd recommend finding a small company that has a single operating segment. Trying to aggregate a larger conglomerate or company with multiple business can be really hard even when you do it all the time.

Read up on Dimensional Fund Advisors (DFA).

Imo, it's about figuring out where you have an advantage over the Wall Street big shots.

I like to focus on small and mid cap companies in industries I know well. It helps to understand the business as well as what metrics, financial and non financial, are really important. I try to avoid complex legal and capital structures as well as the consumer goods/retail stocks that everyone knows about. I figure if 99% of America and 90% of Wall Street has never heard of the company, I'm a lot more likely to beat the market to a correct valuation. Right now, for example, I think I've tagged a couple companies that will initiate dividends soon but they are still priced like they won't.

Sometimes I start with screens, other times I work backward from industry/ sector trends to companies that are poised to exploit those trends.

Fast graphs is a good tool to use.

Also I sometimes screen using historical dividend yield average vs current to try and find undervalued stocks.