How much research do you do before to buy? - Page 2
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Thread: How much research do you do before to buy?

  1. #11
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    I don't read annual reports anymore, but that is not to discourage those who want to. I think every DIY investor should learn to read them.

    I rely on the reaseach of others that is available on the internet and in libraries. Such sources supply me with a list of sound companies that I'm unlikely to lose money on, and likey to gain on all of them.

    With that list in hand, I'm similiar to Rusty, as I use technical analysis to help me know when to buy. Once bought I plan to hold forever, unless the fundamental story changes for the worse.

    In short, I don't spend hardly any time at all. which doesn't mean you shouldn't. You should research until you know you have done enough.

    We can not know things as they are in themselves, but only as they appear to us.

  2. #12
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    Eclectic 12 I doubt that even you read random annual or quarterly reports of companies you are not interested in. I suspect you have picked out a company as being of interest for some reason related to the news, and then get the reports.

  3. #13
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    As a general practice - no I don't read reports randomly or for companies I already know I am not interested in. Maybe if someone was paying me, I would have the time.


    At the same time, being aware of leveraged split share corps from articles in the late '90's plus news of the general market panic that made me think a leveraged split share corp, heavy with Canadian financials for a fixed amount could be a good multiplier of a rebound. Some internet searches showed the types of shares had changed dramatically as well as a helped me build a short list. SEDAR made it easy to download the reports to be sure of the rules/share class rations and evaluate them (http://sedar.com/homepage_en.htm).

    The news items on split corps that mentioned the one I bought was a couple of years after I'd sold out, having made +240% on the share price and dividends worth 40% of the purchase price being paid while holding. It was interesting to read the articles condemn the class of shares I'd used as being "for suckers only, avoid at all costs".


    I suppose one could argue that the articles about the general market trends were what prompted my search/report reading but the corps themselves were not in the news, nor was anyone that I read suggesting them as a way to play a rebound scenario at a cheap cost.


    Cheers
    Last edited by Eclectic12; 2017-03-10 at 02:50 PM.

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  5. #14
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    Research must also take into account not only when or what to buy but also when to sell & how much to put on the table.

  6. #15
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    Well, I am not a great investor and don't do much research but manage to churn out good overall returns. I have a strong financial services industry background but as I have been retired 15 years my experience is no longer that relevant; however, banks make up 45% of my portfolio and have treated me well. I also read this site daily and take note of other peoples opinions. As I do not normally invest in commodities, start ups, retail, and desire a blue chip dividend paying stocks like FTS, BCE, T, etc it reduces my choices. Also, I am only 25% invested in the market with the balance for then most part in fixed income.

  7. #16
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    So that brings me to two questions:

    1st, how far do you go in your research before to feel confident about buying into a company?

    Some but I don't kill myself over it. To be honest, the most profitable and stable companies (historically speaking) are easy to find. All the big ETFs and mutual funds own the same companies. The real trick is a) entry point into those companies and b) if at all possible, finding the "next generation" of profitable and stable stocks. The latter is very difficult to do.

    Most people don't play the latter game so they index invest - which long-term - works out very well for investors.

    2nd, how is that working out for you?
    So far, so good. Matching the broad market Canadian index for the most part, almost 7-years into the approach. No complaints.
    Hidden Content - Working on a $1 million portfolio and $30k per year from it.

  8. #17
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    Thanks for all the replies and advice!

    You gave me ideas and made me think. That's a great start. Rusty O Toole got me curious about technical analysis so I made some research about it but didn't find this to be my kind of stuff. I read a For Dummies book about it this week and wasn't hooked on the idea. Oh and I just bought the book he suggested. Hopefully that will be good

    Lonewoolf mentioned about establishing parameters for when to sell and I read lots of advice about this but to be honest, I'm not too sure where to go with that. 25%? 50%? more? hard to guess.

    I wond't comment on every single advice but most are useful! I find that reading people on this forum has been helpful in researching to.

    So far it seems like my favorite way to do things is to check beaten up companies.I find them easy to spot in the Tsx and I have the feeling it's a good time to enter when the price just took a huge drop. I'm building a list of ratio to look for in those companies reports and try to keep it simple but have enough to get an idea of the financial state of the business. If after a crash a company would improve on the financial level, that would be a good indicator for me. Opening this thread came when I started doubting I was collecting enough.

    For example, one I am following right now is Empire Company Limited. I'm checking cash flow, debts, current ratio, debt to equity, profit and a few others for the last few reports in the hope to see those numbers improve. I'm guessing there is no limit to how far you can check a company but there has to be a limit.

  9. #18
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    That sounds like the 'value approach' or classical security analysis. Every stock has 2 values, subjective and objective. An expert accountant, or security analyst, can analyse the company's assets and liabilities, profit and loss, income and expenses and put an objective value on the stock. If you want to know the subjective value it is published on the net every day, and it jumps around every day. If you find a sound company whose stock is selling for less than the objective value you have a good deal. These are a lot harder to find than when Graham started in 1934 or Buffett started in 1950.

  10. #19
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    For example, one I am following right now is Empire Company Limited. I'm checking cash flow, debts, current ratio, debt to equity, profit and a few others for the last few reports in the hope to see those numbers improve.
    The problem that when "those numbers improve" , stock price will also significantly "improve" , so it will become too expensive.... not only you,but millions of other investors , include institutions with full time researchers ...
    I'm trying to buy dividend champions on pull-backs, couple of bad Quarters, market dips...
    have it done with stocks like MCD, PG, PEP, JNJ .... and it's usually work....

  11. #20
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    Most of my significant investments are in ETFs. I research these for about 2 years before committing money into them (or advising people to buy them).

    Over those 2 years I read all the financial statements, management discussions of performance, and monitor their behaviour. I look for signs that the ETF is flawed in some way.


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