This is Nagesh and I am a newbie investor. I have been in market since 2 yrs and buying stocks based on some sites recommendations and never felt that I can also be in the stage where I can recommend some value stocks until I reach this site. Have started to go through basics and found this is excellent educational site and any new investor can start his alphabets from here and can reach to Jr Buffets’ level. Appreciate everybody’s hard work here and will try to contribute myself once reach to that stage. I am thinking of 3-6 months time frame for me.
IO have started to go through basics and would like to know what are the accepatble limits (to start a research on some stocks coming out of stock screener) for ROA, ROE, ROIC, PE and other financial health ratios by industry wise for value investing point of view. or please provide me link if already exists.
Thanks Nagesh for your kind words. I have been travelling and missed your query here.
Like your enthusiasm …thats the only ingredient needed for you to keep learning. Encourage you to follow the forum discussions on stocks like Manjushree, Ridhee Sidhee (learn to wtach out for red flags), Astral Poly Technik, Balaji Amines, etc which have seen active participation from members -much to learn by lurking…and asking questions on something that you dont understand.
Re: basics - read up all you can.
The first-step is to understand the various Ratios and stock market terms using ValuePickr Stock Research Glossary - Profitability Ratios - like RoA, RoE, RoIC, Op Margin, Net Margin, Financial Ratios, and the like, and their implications.
You can get started at ValuePickr Stock Analysis and ValuePickr Stock Valuation frameworks, but you have to get your hands dirty -the sooner the better. just pick up an idea that you like and go the whole hog. If you want to analyse and pick stocks like the pros, the best book I can recommend is PAT Dorsey’s 5 Rules for successful investing.
You may find references at several blogs and sites. There is no easy answer to the what is a good benchmark for some of these ratios for a specific sector. You have to work at assembling data on all the leading players in that sector - in other words competition data.
We have made a start on this at ValuePickr by classifying the DB into sector, industry, and sub-industry levels and calculating industry medians for all the important ratios. Atleast you can compare the best with the worst in the industry, or an outstanding performer in a lousy industry will easily stand out ala Manjushree.
You can use the company search box at the top banner. type manjushree e.g., and click on the link, next click on Key ratios.
Hi Donald sir, Hitesh sir and all top VPers. I am a newbie just taking baby steps in the direction of investment learning. I recently passed out Engineering (2014) and currently working at a PSU for nearly one year. My interest towards stock market aroused from reading the famous book of Robert Kiyosaki “Rich Dad Poor Dad” followed by more readings at Quora on ‘stock market and investing’, then few more books on behavioral investing like “Stocks to Riches” by Parag Parikh.
From quora I came to know about many forums and blogs regarding investing in stock markets through TA(Technical Analysis). Then I started learning about TA of stock market by reading few books on TA. I started following charts and trends which I found quite easy to understand being from a technical background. I did not understand anything about fundamental aspects of any companies as I dont have any MBA or economics background (dont know whether needed or not as I am an Engineer and I think myself not even comparable to a professional mechanic).
I opened my online trading and D-mat account at Zerodha and instantly allocated 80k for trading. After trading derivatives for few days I managed to win nearly 20k, taking my account value to 1 lakh. Then after few more days of trading in options, I lost nearly 35k and my account went to nearly 70k.
Moreover it is taking toll on my work at office (60 hrs/week) as it is very much difficult to track many companies using technical analysis and have to watch price action frequently to enter and exit at favourable timings which takes much time to study and analyse.
Then after few more days I decided not to invest in derivatives and will only trade in equities by cigar butt strategy or simple TA tools. It will keep me calm and will need less tracking of markets price action and volume.
Then I read the book called " The Warren buffet Way" and after surfing many blogs such as “Dr vijay malik” and his wonderful stocks analysis, “Safal Niveshak’s blog”, “Value picker threads”,“Prof Sanjay Bakshi’s blogs” I thought to go by fundamental way as I think trading and TA is not my cup of the tea. Although in most of the blogs and threads I could not understand anything but I simply kept on reading trying to get the dots aligned together somehow.
On youtube I was watching anything I could find such as videos by “PPFAS financial opportunities forum” , “lectures of Warren buffet and charlie mungers”, “seminars of pat dorsey regarding finding moats”, " prof Bakshi’s seminars at various universities". But one very huge problem I am facing is how to understand balance sheet and cash flow systems of the businesses. I dont understand any financial or AR’s terms or what ratios to consider. After looking at many VP threads and discussions on BQ, I understood that in investing I really need to understand business and how to read AR’s and notes of companies.
I am trying to learn various financial terms from Investopedia and Youtube but I think it is much of theoretical than practical. Regarding practicality and hands on training to understand business and financial statements (BS,P/L,CF) I urge seniors and top VPers to kindly guide us and all newbies in this path to become a better investor and help us to be a rational being rather than rationalising one as quoted by Mr. Munger so that we can also unwind the VPers thread and can separate wheat from the chaff more refined.
Any link or any learning materials will be immensely helpful as it will be learning from the masters and wealth wizards. Please Pardon any mistakes in reviving this wonderful learning thread as this is my first.
Yes I have read all modules of zerodha varisity, but I think it is not quite adequate and insightful compared to what is discussed at valuepicker threads. Many points have not been discussed in detail but overall it gives a basic pictures of fundamental investing. Pardon me for this, but I think it is oriented more towards than trading than investing.
While calculating owner earnings we use
Owner earnings=PAT + Depreciation/amortization/non cash expense - Maintenance capex
How do we we find the maintenance capex? Is it from Cash flow statement(purchase of Fixed assets) or Balance sheet(change in (net fixed assets+intangible+CWIP) + depreciation of that year). And if we do calculate it from either, how do we distinguish growth capex from maintenance capex?
Please correct me if I am wrong anywhere. @bheeshma@desaidhwanil and all others, seeking your help in this matter. Any comments are most welcome.
I am trying to reorganise balance sheet(not balance though) into Operating Assets/Liabilities and Financial Assets/Liabilities. Here I took an example of BS of Asian paints for experiment. Request all VPers to correct/comment for better analysing.
Hi you could look at the excel sheet shared by donald on the zenith fiber thread and the screener thread. It contains many important calculations that are useful. The formulaes are easy to trace and there are many aha moments if you spend about an hour on the sheet. This is how i felt when i first saw the sheet.
I was looking at the customised excel sheet as advised, but got stuck in data sheet itself. I am unable to match the data mentioned in the AR with that of the screener excel data sheet. I believe there are many back end calculations also before putting data into excel data sheet. How can I find how the data is calculated at screener excel from company’s ARs?