Stock market analysts

I used to read recommendations by stock market analysts and thought of them as really clever people who seem to know everything. I thought to myself that these people must get very rich since they know what to buy and sell all the time. Alas, I learned the hard way that nothing beats doing our own research.
I have discovered that the best investments are still those which I have thoroughly researched using primary data provided by the companies, coupled with my understanding of the trends in business, government policies and economics. These are investments which I have the conviction to hold through rough patches as they progress in time. Of course, the buy price is important as well since we do not want to overpay. This can be determined with the help of charts. Ultimately, if we do not feel comfortable with the price for whatever reason (no matter what FA or TA says), don't go in as we would lack the fortitude to soldier on. Being comfortable with our investment decisions is very important as it lets us sleep better at night.

Reports by analysts could be catalysts for us as they bring our attention to certain counters and we should follow up with our own research if we are interested enough. These reports are also useful as they give us information which we might otherwise find hard to obtain such as up to date data provided by interviews with key company executives. Just don't take what analysts say as the gospel truth.

There are many books on FA and TA in the bookshops and I've found the DUMMIES series very easy to read and digest. If we want to be an investor, we have to know fundamental and technical analyses. Of course, as we grow older, we accumulate priceless experience. There is simply no substitute. I am still working towards the goal of having enough passive income to free myself from a life of work because I have to. Equiping myself with FA and TA skills is the way to go. Identifying trends and value: FA and TA

Identifying trends and value: FA and TA.

When someone looks at a company's financial statements and says he thinks a company is worth $X, he is arriving at a value that the books tell him. This kind of FA is useful if we are doing comparison within the industry or just looking at how well the company is doing stand alone. It helps to determine if the company is a worthwhile investment in itself and if there are better companies to invest in within the same industry.

Now, if we wanna find the next big thing, FA alone is not enough. We need knowledge which is very insider in nature. Now, this does not mean necessarily being on the inside of a company but we have to be inside an industry or know the industry very well. There are also some very broad trends in the economy which are identifiable if we are in tune with the economic currents. All these are beyond standard FA.

For example, a friend of mine is thinking of selling their family business and they have had a couple of offers so far. Offer number one came from a business professional but the person looked at the books and gave a value which was considered too low. Offer number two came from a person in the same industry and was willing to offer twice the value!!! Offerer number two saw value which could not be seen in the books.

Basic FA can be quite easy once we get the hang of it, just like basic TA. But to go beyond the basics, that is a different ball-game. I would be very contented if FA constantly finds me good value and TA constantly helps me find good entry and exit prices.