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At first I thought it would be a supplement but the conclusions ultimately go much further. The book is also more complete. So it will replace.
my experience +
https://en.wikipedia.org/wiki/Earnings_yield
https://www.investopedia.com/terms/e/ebitda.asp
Quantitative Value Investing in Europe: What works for achieving alpha (Vanstraceele, Philipp; du Toit, Tim)
Analyzing Valuation Measures: A Performance Horse-Race Over the Past 40 Years, Journal of Portfolio Management (Gray, Wesley R.; Vogel, Jack)
Quantitative Strategies for Achieving Alpha (Tortoriello, Richard)
and above all by this spring a new e-book from me which talks about it
I actually use these ETFs to follow the trend and make my top down decisions to buy stocks directly. This is the best way to go because ETFs are a blend of good and bad vintages. However, for beginners and/or those with little means, it is better to start with ETFs. So in this case we will base ourselves on the ETFs mentioned rather than on the stocks themselves.
ETFs are also useful for taking minority positions in other assets such as gold, bonds, real estate and specific markets such as emerging markets.
For the latter I replaced IEMS with EEM for liquidity reasons.
indeed the liquidity is comfortable (current ratio of 2)
EV/FCF is a distant cousin of P/E, better in the numerator and denominator, so with a value of 7 it is very interesting (anything below 10 is interesting)
same for EV/EBITDA, below 10 it's good
normally we take the inverse value EBITDA/EV in % (I have 23% for Otec)
anything above 10% is good
I use ETFs where I don't have direct stocks, i.e. gold, bonds, real estate and emerging markets.
ETFs are not complicated. You just have to stay focused on a few that are fairly liquid and not too expensive in terms of management fees.
The only real challenge is less their choice than the way to arrange them between them. In short, asset allocation.
I am currently writing a book that will be published this spring and which will discuss ETFs in particular.
In the meantime, you can already read this series of articles:
How to diversify your portfolio to protect yourself from market risks? (1/20)
and get inspired by my asset allocation:
Hi,
If you want to invest in the long term, I advise you to open a trading account with Postfinance.
Check out this link:
Here we talk a little about ETFs, even if stocks are our favorite subject.
To inform and train you, it depends... what do you want to know?
You're just right
No, the stock is not overvalued, quite the contrary.
Look what the EV formula tells you: there's a ton of cash and very little debt.
This is already a very good thing, but on its own it means nothing, you have to compare it to a fundamental (like FCF or EBIT/DA, as you would do for the price).
For stability as mentioned I look at EPS. You can also look at net profit. But I prefer EPS because if the company increases its profit by 10% and at the same time it increases its shares by 20%….
for EBIT your reasoning is correct
you're starting to get there 😉
happy holidays
It depends on what you want to do with it. It's like asking me whether it's better to buy beef tenderloin or rib steak.
EBIT and EBITDA are good for comparing valuations
EPS is good for seeing the evolution and comparing to the dividend.
Okay, I see. Again, don't mix apples and pears. Revenue = turnover, it's in Income statement.
What Yahoo calls "total revenue" (I don't know why, it just confuses things), is actually short term debt (short term debt / notes payable)
Then another peculiarity: Yahoo reports an apparently incomplete figure for long term debt. It includes Long-term loans payable, but it is missing Lease obligations (as in FT). I am not an accountant, but I can understand that a lease contract is considered a long-term commitment, so I assume FT is correct.
See details here:
https://www.kaijinet.com/jpexpress/Default.aspx?f=company&cf=financial_statement&cc=1736
for valuation take P/S or P/FCF and P/B
PER or dividend yield only if you are targeting big caps, but I advise against it at the moment, everything is too expensive
current ratio and payout ratio are not indicators of valuation but of quality.
For now you don't need a premium service. Stick to the basic numbers.
Gold: I watered down my wine, but I only have 5%.
cryptocurrencies: I don't understand. So I don't touch. And we don't have enough perspective on this...
If I just interpret "short term debt" and according to investopedia, it is "current liabilities" in the balance sheet.
No. short term debt is Notes payable/short-term debt + Notes payable/short-term debt
current liabilities are all the liabilities, so much more
"Total Revenue", this term is given in two places, once in the "Balance Sheet" under "Liabilities and stockholders' equity -> Liabilities -> Current Liabilities" and in the "Income Statement".
I think I can understand the one in the results as turnover, but in the liabilities, I don't see what it corresponds to and I can't find an explanation, do you have a link, another reference (book) or a simple explanation?I don't know where you see that. Total revenue is in income statement.
Regarding the ratio, I didn't understand when you said that you have to take half if you use "total debt / total equity" and not "total liabilities / total equity". If I understand correctly, it would be "total liabilities / total equity <= 2" and "total debt / total equity <= 1" (or does the half correspond to 0.5?).
Again, because total liabilities is much larger than total debt. So if you choose the first one, you can use as benchmark 2. If you use the second one, rather 0.8. I prefer the second one, but again, it's just a benchmark. This ratio doesn't mean anything on its own.
EV=MC+Total Debt−C
Yes
MC=Market capitalization: this is the number of shares in circulation multiplied by the current value of the share
Yes
Total debt = sum of “short-term” and “long-term debt”, can I take the same value of “current liabilities”?
again no
C=Cash and cash equivalents; this just corresponds to “Total Cash” given in the “Balance Sheet”
Yes
It seems to me that the more I read, the more I ask you questions and the more I try to understand, the less sense all this makes... I suspect that it takes several years to succeed in understanding the subtleties, but I must admit that I think I am not attacking my approach from the right angle to learn how to invest in stocks directly and not follow a tracker.
That's normal. You overcomplicate, you theorize too much and you don't practice enough. I've told you this in the past. You have to stick to a few factual elements that you understand and are comfortable with, and then you have to get started. That's where you'll understand what's behind the theory. Concepts are good, they give you a basis, but they're only useful if you can apply them. You mustn't be afraid of making mistakes, you have to experiment, that's how it sinks in. By dint of looking too much for the ultimate detail, you lose sight of the essential. Which is essentially buying cheap, a stock that isn't a falling knife and that is of quality. So one or two valuation ratios, looking at the trend and following the evolution of earnings and FCF. Just do that and it's already much better than all those who buy ETFs.
When you have more practice and money, you can subscribe to a premium service and you will have figures that hold up better. On the contrary, at worst, if you do not want to take the head, well, you still have ETFs. To start, it is not so bad. It gives you diversification at a low price.
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