goosmurf's finance page
I'd love to hear your thoughts (and tips ;) - email firstname.lastname@example.org
Ownership - is the company majority owned by its management?
Management who have no personal interest in the company have much less
incentive to manage the company well. They're comfortable taking risks
since its not their money to lose, and if those risks pay off they're the
first to be congratulated. In addition, in today's culture of job-hopping
the downside of failure is simply resignation - there's plenty of other
stupid companies out there who'll take you on.
Business - can you understand how the company makes money?
What is/are their primary product(s)?
Too many products may indicate a lack of focus/direction.
Who makes up the bulk of their customer base? Consumers? Businesses?
How does their product compare against their competitors?
Would YOU buy their product? (if you were in the target market)
Simplicity - can you understand their primary sources of income?
Its often difficult to determine the sources of incoming for larger companies.
This leaves you open to all sorts of accounting and market craziness.
I personally favour smaller companies for this reason - if the company
has a few simple products its usually much easier to understand their
business - company A sells X widgets for $Y at $P profit.
Risks - what threats does the company face?
Every company faces competitive, regulatory, economic, and other threats.
You should be able to figure most of these out even just by browsing
and searching the web.
If you can't answer these questions for a particular company then consider
investing in another company where you can.
There sure as hell ain't any shortage of good investments.
This is in order of utility.
- Yahoo! Pipe providing RSS feed for announcements from specific companies
- Commonwealth Securities - my broker. Westpac are also good. Just find the cheapest reputable service - be wary of any broker that forces you to lodge funds with them prior to trading. CommSec and Westpac don't have this restriction. AFAIK only the povo wannabe brokers do this.
- Medved QuoteTracker - this is a program that sits on your desktop/system tray which tracks your stocks by scraping real-time data from your broker's site. I use this with CommSec, it kicks ass. Apart from being much more convenient than a web interface it also lets you set alerts and all sorts of fancy guff. It can send email alerts so if you tie it with an email to SMS service you can pretty much get instant alerts wherever you are. I use Internode SMS.
PubMed - public interface to MedLine database. If you're into biotech stocks you should learn to read medical journals - it takes years of research before a product is anywhere near commercialisation and during that time lots of peer review happens. The same "behind the scenes" principle applies to other industries. If you're into tech stocks then find the blogs/forums/mailing lists/whatever that people in the industry use. Most commercial publications are too slow and generally parrot what's already public opinion, or re-write press releases. Yes, <insert your favourite tech publication> is too slow. AFR is too slow. That doesn't mean you shouldn't read them but don't rely on them as your sole source of up to date information - and know that by the time you're reading it the industry folks have already acted.
Companies I hold
Thu Feb 11 19:06:43 EST 2016