A Newbie Guide to Investing

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Hi all investors,

I'm a newbie to value investment and have just completed the value investing course.Because I have no knowledge in business nor accounts, I still don't really understand how to valuation a company. For instance, the PE ratio. I was told to look for low PE ratio but sometimes high PE ratio is good. Different company uses different valuation approach and how should I suppose to know? I read some company case studies and looked for information about the company but I couldn't find those informations given on the case studies? Hope I could learn and pick up more understanding on value investment from this forum. Thanks all  Smile
Reply
Hi all investors,

I'm a newbie to value investment and have just completed the value investing course.Because I have no knowledge in business nor accounts, I still don't really understand how to valuation a company. For instance, the PE ratio. I was told to look for low PE ratio but sometimes high PE ratio is good. Different company uses different valuation approach and how should I suppose to know? I read some company case studies and looked for information about the company but I couldn't find those informations given on the case studies? Hope I could learn and pick up more understanding on value investment from this forum. Thanks all  Smile
Reply
(26-09-2016, 02:20 PM)Dreamhigh Wrote: Hi all investors,

I'm a newbie to value investment and have just completed the value investing course.Because I have no knowledge in business nor accounts, I still don't really understand how to valuation a company. For instance, the PE ratio. I was told to look for low PE ratio but sometimes high PE ratio is good. Different company uses different valuation approach and how should I suppose to know? I read some company case studies and looked for information about the company but I couldn't find those informations given on the case studies? Hope I could learn and pick up more understanding on value investment from this forum. Thanks all  Smile

hi Dreamhigh,
Welcome to ValueBuddies (and value investing). Investing is a lot like sex, no amount of theory will replace practice (and practice makes perfect). Smile
As such, I do encourage you to start with small amounts. Buy into a blue chip and with your vested interest, you will be "forced" to study hard on everything about the company. That may help u to pick up the concepts in practice along the way. Eventually, maybe the return of investment will be low, but the return of brain damage, wouldn't.

Here's a book that really helped me in my early years. For your reference:
http://www.barnesandnoble.com/w/warren-b...1100831875
Reply
(26-09-2016, 02:20 PM)Dreamhigh Wrote: Hi all investors,

I'm a newbie to value investment and have just completed the value investing course.Because I have no knowledge in business nor accounts, I still don't really understand how to valuation a company. For instance, the PE ratio. I was told to look for low PE ratio but sometimes high PE ratio is good. Different company uses different valuation approach and how should I suppose to know? I read some company case studies and looked for information about the company but I couldn't find those informations given on the case studies? Hope I could learn and pick up more understanding on value investment from this forum. Thanks all  Smile

hi Dreamhigh,
Welcome to ValueBuddies (and value investing). Investing is a lot like sex, no amount of theory will replace practice (and practice makes perfect). Smile
As such, I do encourage you to start with small amounts. Buy into a blue chip and with your vested interest, you will be "forced" to study hard on everything about the company. That may help u to pick up the concepts in practice along the way. Eventually, maybe the return of investment will be low, but the return of brain damage, wouldn't.

Here's a book that really helped me in my early years. For your reference:
http://www.barnesandnoble.com/w/warren-b...1100831875
Reply
I am also not very good in reading accounts.
But what I do is to read the company's submission to the SGX.

( It can be found in the SGX website under "Company Information".. hover over that, more drop down
diaglouge boxes will appear, choose Company Annoucements and a new page opens up.
Surf and click to explore more options)

Companies listed in the SGX must provide quarterly & annual financial statements.
The SGX requires about 20 parameters to be reported. These can give a rough idea on the
state of the business, but not entirely either. But I think its a fair entry point, and the parameters
are constant across all businesses, companies. 

Explore this area and if you can gather some idea, it may help you understand by merging theory with practice ( as Weijian says ). Its just an entry point with some constant structure. When you get more
familiar with that format, there should be more curiosity, and from there, you will need to read the full annual reports... and through time, will zero in on certain parts only for certain types of businesses.

I am not a certified accountant, or financial adviser... I lose 50% of my investments. Tongue
Reply
I am also not very good in reading accounts.
But what I do is to read the company's submission to the SGX.

( It can be found in the SGX website under "Company Information".. hover over that, more drop down
diaglouge boxes will appear, choose Company Annoucements and a new page opens up.
Surf and click to explore more options)

Companies listed in the SGX must provide quarterly & annual financial statements.
The SGX requires about 20 parameters to be reported. These can give a rough idea on the
state of the business, but not entirely either. But I think its a fair entry point, and the parameters
are constant across all businesses, companies. 

Explore this area and if you can gather some idea, it may help you understand by merging theory with practice ( as Weijian says ). Its just an entry point with some constant structure. When you get more
familiar with that format, there should be more curiosity, and from there, you will need to read the full annual reports... and through time, will zero in on certain parts only for certain types of businesses.

I am not a certified accountant, or financial adviser... I lose 50% of my investments. Tongue
Reply
(27-09-2016, 09:25 AM)Porkbelly Wrote: I am not a certified accountant, or financial adviser... I lose 50% of my investments. Tongue

I am sure, you are more knowledgeable, and probably wiser, with the "fee" paid.

My best wish to your future venture. Big Grin
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
Reply
(27-09-2016, 09:25 AM)Porkbelly Wrote: I am not a certified accountant, or financial adviser... I lose 50% of my investments. Tongue

I am sure, you are more knowledgeable, and probably wiser, with the "fee" paid.

My best wish to your future venture. Big Grin
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
Reply
CF,
Thanks for the good wishes... am going to need it.
Being an investor & money lender are 2 different things.
Yes, I am one of those being "Swi..bed".

No wisdom is acquired when all is well.
And, yes.. we are ( should ) be wiser.. but wisdom is found
usually when after the horse has bolted.
Tongue Sad Sad
Reply
CF,
Thanks for the good wishes... am going to need it.
Being an investor & money lender are 2 different things.
Yes, I am one of those being "Swi..bed".

No wisdom is acquired when all is well.
And, yes.. we are ( should ) be wiser.. but wisdom is found
usually when after the horse has bolted.
Tongue Sad Sad
Reply
Thanks all for your advises. I'll put in my best effort to understand. Please do assist me if I may have queries in the future.
Reply
Thanks all for your advises. I'll put in my best effort to understand. Please do assist me if I may have queries in the future.
Reply
My opinion for newbies is to read as widely as possible, do not limit yourself to one topic eg Fundamental or Technical analysis

See what works for you
Reply
My opinion for newbies is to read as widely as possible, do not limit yourself to one topic eg Fundamental or Technical analysis

See what works for you
Reply
(27-09-2016, 10:18 AM)Porkbelly Wrote: CF,
Thanks for the good wishes... am going to need it.
Being an investor & money lender are 2 different things.
Yes, I am one of those being "Swi..bed".

No wisdom is acquired when all is well.
And, yes.. we are ( should ) be wiser.. but wisdom is found
usually when after the horse has bolted.
Tongue Sad Sad

There is no shame, as one of those "Swi..bed", as long as it is not repeated mistake.

I was one of those "PCCW", both caused permanent capital lost and related to debt. I learned about debt, especially LBO, even with big name(s) behind.  Big Grin

Enjoy the journey.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
Reply
(27-09-2016, 10:18 AM)Porkbelly Wrote: CF,
Thanks for the good wishes... am going to need it.
Being an investor & money lender are 2 different things.
Yes, I am one of those being "Swi..bed".

No wisdom is acquired when all is well.
And, yes.. we are ( should ) be wiser.. but wisdom is found
usually when after the horse has bolted.
Tongue Sad Sad

There is no shame, as one of those "Swi..bed", as long as it is not repeated mistake.

I was one of those "PCCW", both caused permanent capital lost and related to debt. I learned about debt, especially LBO, even with big name(s) behind.  Big Grin

Enjoy the journey.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
Reply
(24-09-2016, 05:04 PM)Greenrookie Wrote:
(24-09-2016, 04:02 PM)specuvestor Wrote: When a company is "Limited" it means the loss is limited to the equity of the company

But banks are also not stupid. So if they don't trust your $2 equity incorporation they will ask for collateral or even personal guarantee. The company can have a $100k asset and $2 equity but collateralised by the asset means the bank will lend say $50k and have right to seize and liquidate the asset in times of distress. That's why Hanjin ships were stuck cause they don't dare to be docked and be seized. If it is a personal guarantee in theory the owner assets can be seized but also depends where is the assets located eg China

And yes of course the interest of owners and opmi can differ if they have "side interest" Aligning shareholder interest is more than just having shares in the company, though that's one way. That's why they have to get shareholder approval for interested party approval to disclose the "side interest". Obscene remuneration is also a side interest.
Thanks Specuvestot,

How about this? I have a wel-run and strong balance sheet company A, to go into a risky venture, I set up B. I inject money but there are several leverage ways to magnified borrowings, so the buck stop at B. Those investors are B screwed? 

B can be an investment company that can invest or trade with contra or margin that loan more than their worth

(24-09-2016, 07:18 PM)specuvestor Wrote: Actually that's how individual property projects and ships to give an example, are set up. So most of the time buying and selling is through these entities rather than through the underlying asset, though news report that so and so asset is sold or bought

And sometimes for tax purpose it may be a few layers as well.

What Heeton doing now is a good example. Always better to learn from REAL TIME REAL DEAL than ex-post perfect hindside textbook cases
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply
(24-09-2016, 05:04 PM)Greenrookie Wrote:
(24-09-2016, 04:02 PM)specuvestor Wrote: When a company is "Limited" it means the loss is limited to the equity of the company

But banks are also not stupid. So if they don't trust your $2 equity incorporation they will ask for collateral or even personal guarantee. The company can have a $100k asset and $2 equity but collateralised by the asset means the bank will lend say $50k and have right to seize and liquidate the asset in times of distress. That's why Hanjin ships were stuck cause they don't dare to be docked and be seized. If it is a personal guarantee in theory the owner assets can be seized but also depends where is the assets located eg China

And yes of course the interest of owners and opmi can differ if they have "side interest" Aligning shareholder interest is more than just having shares in the company, though that's one way. That's why they have to get shareholder approval for interested party approval to disclose the "side interest". Obscene remuneration is also a side interest.
Thanks Specuvestot,

How about this? I have a wel-run and strong balance sheet company A, to go into a risky venture, I set up B. I inject money but there are several leverage ways to magnified borrowings, so the buck stop at B. Those investors are B screwed? 

B can be an investment company that can invest or trade with contra or margin that loan more than their worth

(24-09-2016, 07:18 PM)specuvestor Wrote: Actually that's how individual property projects and ships to give an example, are set up. So most of the time buying and selling is through these entities rather than through the underlying asset, though news report that so and so asset is sold or bought

And sometimes for tax purpose it may be a few layers as well.

What Heeton doing now is a good example. Always better to learn from REAL TIME REAL DEAL than ex-post perfect hindside textbook cases
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply
Hi investors,

May I ask where and how do you get information on a company other than annual reports? Annual reports always wrote on the good side of the company only. How can I get more in-depth information on a company?

Thanks in advance.
Reply
Hi investors,

May I ask where and how do you get information on a company other than annual reports? Annual reports always wrote on the good side of the company only. How can I get more in-depth information on a company?

Thanks in advance.
Reply


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