Saturday, September 20, 2008

Reading Notes (430)

Dorsey, Pat. The Five Rules for Successful Stock Investing: Morningstar’s Guide to Building Wealth in the Market, 2004. (HG4521. D646 or 332.63 22 dc22)

Five Rules:

  1. Do your homework.
  2. Find economic moats – a firm’s competitive edge.
  3. Have a margin of safety – buy stock for less than they’re really worth.
  4. Hold for the long haul.
  5. Know when to sell
– you make a mistake
– the fundamentals have deteriorated
– stock has risen well above its intrinsic value
– better other opportunities
– taken up too much space in your portfolio
Analysis a company
  1. Growth
  2. Profitability: free cash flow
  3. Financial health: ROE, Debt to Equity, EBIT, Quick Ratio
  4. Risk Bearance
  5. Management: competitive, character

Valuation

– Price to Sales (P/S)
Price to Book (P/B)
Profit Earning Ratio (P/E)
P/E to Growth Ratio (PEG )
Yield

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