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| 50 of 1510 results found for - "Seymour@imagi-natives.com" | [Quote No.29281] Need Area: Money > Invest
"If a country's currency is rising so strongly that its exports are becoming too expensive then the country may try to lower their currency's value. One way is to lower their interest rates. Another is for the central bank to sell their own currency and buy their major trading partner's currency - i.e. U.S. dollars. It's a case of competitive devaluations designed to lower the cost of their exports in the major trading partner's currency and thereby increase exports to them - i.e. the U.S." - Seymour@imagi-natives.com
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| [Quote No.29273] Need Area: Money > Invest
"When assessing the state of the economy in particular employment conditions it is helpful to consider the trend in how much overtime is being offerred to indicate whether employment is likely to increase or decline in the near future. In Australia this is measured using the Overtime Utilisation Index. When the Overtime Utilisation index is above 50, it indicates that overtime is still being offered to employees." - Seymour@imagi-natives.com
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| [Quote No.22511] Need Area: Money > Invest
"Here's some good advice for investors and gardners...[Buy and] plant in winter [gloom], reap [and sell] in summer [boom]!" - Seymour@imagi-natives.com
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| [Quote No.22546] Need Area: Money > Invest
"It is helpful for investors and gardners to continually consider the coming winter's gloom all through the summer's boom and the coming summer's boom all through the winter's gloom." - seymour@imagi-natives.com
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| [Quote No.23267] Need Area: Money > Invest
"Always ensure you understand your investment risks and get a very good risk premium. [That is, the return in excess of the risk-free rate of return - usually the 10 year government bond interest rate - that an investment is expected to yield. An asset's risk premium is a form of compensation for investors who tolerate the extra risk - compared to that of a risk-free asset - in a given investment.] If you don't understand the risk fully and don't get a very good risk premium, don't even think of being involved with the risky investment." - Seymour@imagi-natives.com
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| [Quote No.23268] Need Area: Money > Invest
"BURSTING BUBBLES AND LEARNING FROM HISTORY:
Market booms and then their inevitable slumps are a fact of human life and the economic cycle. [i.e. Since 1913, the USA has had economic crashes in 1921, and the major one in 1929 (followed by The Great Depression lasting until the outbreak of WW II.) Post-war, there were recessions in 1953, 1957, 1969, 1975, 1981, 1990, 2001.] They should therefore always be included in assessing the risks of any investment decision. Relying on the reassuring quotes in the media, even from so-called experts, can be very hazardous to your wealth. To illustrate that let’s consider some famous quotes before, during and after the horrendous 1929 Share Market Crash.
[1927 – DJIA (Dow Jones Industrial Average) 180 approx – (after it had gone from 100 in 1924 to 180 in 1927 –an 80% increase in 3 years - about 20% compounding per year)]
‘We will not have any more crashes in our time.’
- John Maynard Keynes, British economist, who was to become one of the most influential of the 20th century
[January 12, 1928 – DJIA 200 approx]
‘I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future.’
- E. H. H. Simmons, President, New York Stock Exchange
[January 12, 1928 – DJIA 200 approx]
‘There will be no interruption of our permanent prosperity.’
- Myron E. Forbes, President, Pierce Arrow Motor Car Co.,
[December 4, 1928 – DJIA 290, went up about 55% in one year]
‘No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment...and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding.’
- Calvin Coolidge, President of the United States
[Sept. 5, 1929 - DJIA 350 approx, it had gone up nearly 100% in 2 years]
‘There may be a recession in stock prices, but not anything in the nature of a crash.’
- Irving Fisher, leading U.S. economist , New York Times,
[Oct. 17, 1929 - DJIA 370 approx]
‘Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.’
- Irving Fisher, Ph.D. in economics, manager of Yale University’s endowment funds
[Thursday, October 24, 1929 - DJIA 360 approx- DROPPING from 375 ]
‘This crash is not going to have much effect on business.’
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago
[Friday, October 25, 1929 - DJIA 360 approx]
‘There will be no repetition of the break of yesterday... I have no fear of another comparable decline.’
- Arthur W. Loasby (President of the Equitable Trust Company), quoted in the New York Times
[Friday, October 25, 1929 - DJIA 360 approx]
‘We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.’
- Goodbody and Company market-letter quoted in The New York Times
[Tuesday October 29th, 1929, - DJIA 300 approx- DROPPING from 355 - Wall Street witnessed a 13% decline –approx 50 point drop in the Dow Jones, an episode that became known in financial mythology as ‘Black Tuesday’ - 16.4 million shares were traded, a number that broke the record set five days earlier on Thursday October 24th]
[Wednesday, October 30, 1929 – DJIA 240 approx]
‘This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan [who was founder of the J.P. Morgan Bank which stopped a panic sell-off of stocks on Wall Street in 1907]... ‘ that any man who is bearish on America will go broke.’ .. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.’
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune
[Wednesday, October 30, 1929 – DJIA 240 approx]
‘Some pretty intelligent people are now buying stocks... Unless we are to have a panic -- which no one seriously believes, stocks have hit bottom.’
- R. W. McNeal, financial analyst
[Wednesday, October 30, 1929 – DJIA 240 approx]
‘Buying of sound, seasoned issues now will not be regretted’
- E. A. Pearce market letter quoted in the New York Herald Tribune
[Friday, November 1, 1929 – DJIA 250 approx ]
‘The decline is in paper values, not in tangible goods and services...America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin.’
- Stuart Chase (American economist and author), NY Herald Tribune
[Saturday, November 2, 1929 – DJIA 250 approx ]
‘Hysteria has now disappeared from Wall Street.’
- The Times of London
[Saturday, November 2, 1929 – DJIA 250 approx ]
‘The Wall Street crash doesn't mean that there will be any general or serious business depression... For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.’
- Business Week
[Saturday, November 2, 1929 – DJIA 250 approx ]
‘...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation...’
- Harvard Economic Society (HES)
[Sunday, November 10, 1929 – DJIA 260 approx ]
‘... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.’
- Harvard Economic Society (HES)
[Thursday, November 14, 1929 – DJIA 260 approx ]
‘The end of the decline of the Stock Market will probably not be long, only a few more days at most.’
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929. He was managing Yale University’s endowment funds
[Friday, November 15, 1929 – DJIA 260 approx ]
‘In most of the cities and towns of this country, this Wall Street panic will have no effect.’
- Paul Block (President of the Block newspaper chain), editorial
[Friday, November 15, 1929 – DJIA 260 approx ]
‘Financial storm definitely passed.’
- Bernard Baruch, American financier, stock market speculator, statesman, and presidential adviser - cablegram to Winston Churchill
[December 1929 -DJIA 265 approx]
‘I am convinced that through these measures we have reestablished confidence.’
- Herbert Hoover, President of the United States (1929-1933).
[December 31, 1929 - DJIA 265 approx ]
‘I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.’
- Andrew W. Mellon, U.S. Secretary of the Treasury
[December 31, 1929 - DJIA 265 approx ]
‘[1930 will be] a splendid employment year.’
- U.S. Dept. of Labor, New Year's Forecast
[early 1930 – DJIA 270 approx ]
‘For the immediate future, at least, the outlook (for stocks) is bright.’
- Irving Fisher, Ph.D. in Economics
[Jan 18, 1930 DJIA 280 approx ]
‘...there are indications that the severest phase of the recession is over...’
- Harvard Economic Society (HES)
[Feb 1930 - DJIA 275 approx]
‘There is nothing in the situation to be disturbed about.’
- Secretary of the Treasury Andrew Mellon
[Mar 16, 1930 - DJIA 275 approx]
‘The spring of 1930 marks the end of a period of grave concern...American business is steadily coming back to a normal level of prosperity.’
- Julius Barnes, head of Hoover's National Business Survey Conference
[Mar 29, 1930 - DJIA 270 approx]
‘... the outlook continues favorable...’
- Harvard Economic Society (HES)
[Apr 19, 1930 - DJIA 260 approx]
‘... the outlook is favorable...’
- Harvard Economic Society (HES)
[May 1, 1930 - DJIA 235 approx]
‘While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.’
- Herbert Hoover, President of the United States
[May 17, 1930 - DJIA 235 approx]
‘...by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent...’
- Harvard Economic Society (HES)
[June 1930 - DJIA 235 approx]
‘Gentleman, you have come sixty days too late. The depression is over.’
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery.
[June 28, 1930 - DJIA 230 approx]
‘... irregular and conflicting movements of business should soon give way to a sustained recovery...’
- Harvard Economic Society (HES)
[Aug 30, 1930 - DJIA 200 approx]
‘... the present depression has about spent its force...’
- Harvard Economic Society (HES)
[Nov 15, 1930 - DJIA 175 approx]
‘We are now near the end of the declining phase of the depression.’
- Harvard Economic Society (HES)
[Oct 31, 1931 - DJIA 100 approx – the same value as it was seen years before in 1924]
‘Stabilization at (present) levels is clearly possible.’
- Harvard Economic Society (HES)
[1933 - DJIA 65 approx]
‘All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S.’
- President F.D. Roosevelt –(It became illegal to own gold as an American citizen. The government was making sure no one was holding out on them. You had to trade your gold in for currency. This was FDR's way of keeping everyone honest--government excluded.)
" - Seymour@imagi-natives.com
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| [Quote No.23956] Need Area: Money > Invest
"The short-term trend is not a trustworthy friend, while the long-term trend is - as evidenced by the common experience of reversion to the long-term mean in many fields including markets, industries and companies." - Seymour@imagi-natives.com
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| [Quote No.23960] Need Area: Money > Invest
"Collect Eagles (sustainably profitable companies), when they are wounded (i.e. having temporary difficulties that the market over-reacts to) or when the weather is too poor for them to fly very high (i.e. the market is gloomy and negative about the economy and all companies – for example after a market bubble has burst and many people have lost large amounts of money - which suppresses demand and often means they can be bought well below their intrinsic value providing you with a great company at a great price)." - Seymour@imagi-natives.com
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| [Quote No.24046] Need Area: Money > Invest
"An interesting game to help an investor prioritise and clarify their valuing of companies, is for them to ask themselves out of their present choices if they had to choose only one stock for 20 years which one would they choose and why? (Warren Buffett has also stated that it would help people prioritise and clarify their valuing of companies if they were only allowed to chose 20 stocks in their lifetime. With only these few choices they would take much more careful consideration and wait for really good opportunities. Thereby making much better choices than they do now thinking they can swap and change whenever they like.)" - Seymour@imagi-natives.com
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| [Quote No.24106] Need Area: Money > Invest
"Always remember when considering bubble and overvalued markets, industries and companies and the liklihood of and actual falls:
-a 50 percent drop in the market's value requires a 100 percent rise just to get back to even;
-a 33 1/3 percent drop in the market's value requires a 50 percent rise just to get back to even;
-a 25 percent drop in the market's value requires a 33 1/3 percent rise just to get back to even;
-a 20 percent drop in the market's value requires a 25 percent rise just to get back to even;
-a 10 percent drop in the market's value requires a little more than an 11 percent rise just to get back to even." - seymour@imagi-natives.com
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| [Quote No.24126] Need Area: Money > Invest
"The market and the economy go through cycles just like gardens and therefore just as it is important for gardeners to know where they are in the seasons to know when to plant, etc so is it important for investors to know where the economy is in the economic seasons to know when it is a good time to buy, etc." - Seymour@imagi-natives.com
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| [Quote No.24127] Need Area: Money > Invest
"One way to come to grips with understanding booms and busts is to look at the market as though it is a garden. In good times with plenty of sun and water everything grows well but when times are not perfect, good soil, plant genetics (business model economic fundamentals), need for water, etc will determine which plants survive well and continue to provide good growth and therefore which plants should be grown for the best garden in the long-term." - Seymour@imagi-natives.com
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| [Quote No.24199] Need Area: Money > Invest
"An additional benefit of learning all you can about a particular business [or person for that matter] is that you invariably find that there is much more to it than meets the eye initially. You can’t help then but appreciate what they do much more. Not only does it help you value the company and its products and services but it also makes you more grateful for their efforts." - Seymour@imagi-natives.com
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| [Quote No.24265] Need Area: Money > Invest
"There are three ratios which indicate to potential investors how effectively management is using capital:
1-ROE (Return On Equity – which can be increased by borrowing. This can be helpful in good times, but the outlay to cover interest, etc on debt adds an extra burden in poor times when earnings are declining and for this reason conservative investors prefer companies that are highly profitable without the use of much debt.)
2-ROI (Return On Investment – which shows the return management has earned on long-term capital, which includes shareholders’ equity plus long-term debt)
3-ROA (Return On Assets – which shows the percentage management has earned on total assets)." - Seymour@imagi-natives.com
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| [Quote No.24267] Need Area: Money > Invest
"Dividend income is calculated as a percentage of the share price. If the price has doubled since you bought the share while dividend percentage has remained the same then you are effectively getting twice the initial dividend percentage on your original investment. The opposite is also true should the share halve in value, while kkeping the same dividend percentage." - Seymour@imagi-natives.com
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| [Quote No.24428] Need Area: Money > Invest
"Company annual reports are treasure maps that can lead you to gold mines and help you avoid land mines." - Seymour@imagi-natives.com
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| [Quote No.25029] Need Area: Money > Invest
" 'Keeping up with the Jones' is a behavioural reality for most humans. When your neighbour pulls up in the new car, you might wish you could afford one too! The stock market is no different. Why not get on board the latest hot stock while it's soaring into blue skies and its shareholders are smiling and financial planners are suggesting you do the same? You would not be human if you weren't tempted. However, value investors know that successful investing is about carefully calculating long-term probable returns and buying good, stable companies' shares when they are occasionally 'unloved' and inexpensive, rather than when they are the flavour of the month and therefore often overpriced [-even if they do continue to go up in the short-term, providing instant gratification and quick confirmation of the 'wisdom' of others' buying decisions]. Just keep your strict discipline to only buy when the prices show that you are getting a bargain and profiting at the time of purchase and, as share market records have shown, you will have lower risk and higher profits in the long run." - Seymour@imagi-natives.com
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| [Quote No.25870] Need Area: Money > Invest
"The two biggest problems for investors are greed and impatience. They result in seemingly rational people underestimating risk and investing foolishly. Remember 'if you invest in haste you will regret in leisure' and 'if it seems too good to be true it probably isn't'." - Seymour@imagi-natives.com
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| [Quote No.26997] Need Area: Money > Invest
"When considering boom and bust cycles, it is useful to remember that ‘The Roaring Twenties’ were followed by ‘The Great Depression’. This supports the view that most economies and markets revert to the mean eventually." - Seymour@imagi-natives.com
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| [Quote No.27202] Need Area: Money > Invest
"Learn to ignore short-term 'noise' and concentrate on long-term performance." - Seymour@imagi-natives.com
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| [Quote No.27223] Need Area: Money > Invest
"When a boom has been going on for some time it is wise to reduce your portfolio's exposure to a potential bust scenario. The first stocks to be considered for partial or full sale should be those likely to be most effected by a rise in interest rates. The reason for this is that a booming economy eventually creates inflation and this is usually addressed by the central bank raising interest rates to reduce demand. So carefully assess those investments in companies that have borrowed heavily because their ability to refinance those loans at equivalent interest rates will become progressively harder and the higher rates plus the reduced demand from their customers using borrowed funds will mean lower profits through either a reduction in sales volume or profit margins per unit sale or both. The next investments to consider selling are those companies that export because when interest rates rise the value of the currency rises too. This is because global fund managers seek to find the best interest rate for the funds under their management and therefore a rise in interest rates can often attract more overseas money. Their demand for the currency in order to invest it in the country drives up its price against other currencies that have lower interest rates and therefore are not as much in demand. As the currency rises the cost in overseas markets of the exporting companies goods either goes up in the foreign currencies or the exporting company has to reduce their profit margins to keep the same prices and sales volumes. Both result in falling profits and earnings for the company and therefore its justifiable price by price earnings [p/e] ratios. Prioritise the investments in these companies identified using these stress tests and reduce your exposure to these dangers by selling them bit by bit while the market still wants to buy them. If the market continues to boom well above its long term average growth rate it is then worth considering reducing the remaining investments. In this way you realise the capital gains from 'Maybe Money' into 'real - bankable, spendable money' before the eventual inevitable bust. After the bust the cash from the sales can be reinvested carefully to ride the boom upside again before repeating the whole sales process again before the next bust." - Seymour@imagi-natives.com
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| [Quote No.27401] Need Area: Money > Invest
"For long-term investors knowing the long-term average return can help them know when the market is becoming riskier - when it rises above the long-term average return, and when it is becoming safer - when it is falling below the long-term average return. This allows them to consider either lowering their share market investment allocation if the market is above the long-term average return or raising it if it is below. That is not to say that in the short-term the market may not rise considerably above or below this long-term average return. Only that over long periods, for example ten years or so, the market has a remarkable ability to return to the long-term average return. In the short-term there is always a plausible explanation for why it is either above or below the long-term average. This very plausibility, combined with a short-term focus, is what causes the market to move so far from the long-term return. Value [long-term] investors warn against believing the hype that always becomes common when the market deviates from the long-term average return, in both booms and busts, for example, 'It is different this time'. It is well to remember and keep repeating the truism, 'The more things change, the more they stay the same', in order to keep your perspective and disciplined investment strategy." - Seymour@imagi-natives.com
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| [Quote No.27588] Need Area: Money > Invest
"When you take investing more seriously you find that there are many reports about how the economy is going. Some of these indicators are leading indicators, meaning they suggest what will happen, others are co-incident indicators, meaning they occur at the same time and are useful for confirming what the leading indicators suggested, while still others are lagging indicators, meaning they tell you what happened to the economy in the past. Some of the leading, co-incident and lagging indicators for a country's economy and share market can be categorised into the following general areas and sequenced to help them make sense to the general public:
1- INFLATION as measured by, for example, as price rises move through the economy, commodity future price index, import price index, purchasing managers' index, producer price index, capacity utilization, unit labor costs, employment cost index, the Consumer Price Index [CPI]; (which influences)
2- INTEREST RATES and whether there is a tightening [rising] or loosening [falling] monetary [interest rate] bias either to control inflation or stimulate the economy; as measured by, for example, yield spreads, money supply figures;(which influences)
3- BUSINESS CONFIDENCE and expectations about future investment, employment and profits; as measured by, for example, bank loans for commercial and industrial companies, business starts, business failures, corporate profits, Industrial production index, inventory-sales ratios, margins, sales volumes, manufacturers' orders, non-manufacturing business activity index, productivity figures;(which influences)
4- EMPLOYMENT and if rising or falling; as measured by, for example, average weekly hours, help-wanted advertising index, unemployment figures;(which influences)
5- CONSUMER CONFIDENCE; as measured by, for example, average weekly earnings, personal bankruptcies, consumer credit, consumer credit delinquency, distribution of income and wealth, mortgage delinquency and foreclosure, personal income and saving - disposable income, poverty figures;(which influences)
6- RETAIL SALES; as measured by, for example, the performance of large retailing companies;(and)
7- REAL ESTATE; as measured by, for example, home sales for new and existing houses, housing affordability index, housing starts, building approvals; (which in turn influences inflation and the whole cycle of indicators 1-7 again)." - Seymour@imagi-natives.com
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| [Quote No.27645] Need Area: Money > Invest
"As stock market investing legend Warren Buffett says, 'Price is what you pay. Value is what you get.'
There is an almost continuous disconnect between the price of a company and its underlying value with it either being too high or too low. Its share price is driven higher by greed and speculation or driven lower by fear and forced selling. Being able to objectively calculate a company's value allows you to wait patiently and happily for the good companies you would like to own to be offerred for sale at a low price when they are undervalued and then sell them at a high price when they become overvalued." - Seymour@imagi-natives.com
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| [Quote No.27667] Need Area: Money > Invest
"A value investor seeks to buy assets for less than what they’re worth, in a way buying one dollar for eighty cents. In finance language, value investors look to buy assets when they are priced at a discount to their intrinsic value. This ensures that there is a margin of safety for inaccuracies with the facts and assumptions used to determine the intrinsic value calculation and to enhance returns. The methodology works because just as the market becomes overly optimistic about a stock and therefore overvalues and overpays for it, there are times when the opposite happens and unjustified pessimism undervalues the stock and drives its price below its intrinsic price allowing the patient value investor to buy it at his or her target discount to their calculated fair price for it." - Seymour@imagi-natives.com
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| [Quote No.27727] Need Area: Money > Invest
"There are two separate types of professional investors:- those that follow the crowd and those that don't. The crowd followers include those that study technical charts to try to judge the money flow by price and volume changes that form specific patterns and then get in early enough to ride the ground-swell of other crowd and price followers. They are sometimes called momentum investors. The non-crowd followers do not invest by watching what others do but rather by carefully assessing a company and its stock to determine at what price they feel the stock is a good buy in regard to the risks and rewards of owning the stock." - Seymour@imagi-natives.com
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| [Quote No.27818] Need Area: Money > Invest
"The time to buy is when things look darkest and can't get any worse [and therefore are about to get better (i.e. it is always darkest before the dawn)]. The time to sell is when things look brightest and can't get any better [and therefore are about to get worse]." - Seymour@imagi-natives.com
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| [Quote No.27819] Need Area: Money > Invest
"In the stock market, when it can’t get any better, it won’t, so sell. When it can’t get any worse, it won’t, so buy." - Seymour@imagi-natives.com
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| [Quote No.27967] Need Area: Money > Invest
"When most of the public is optimistically bullish, and therefore have bought shares, the market will fall as there are few others waiting to buy and thereby drive the prices higher. When most of the public is pessimistically bearish, and therefore have sold their shares, the market will rise on good news as there is a lot of cash waiting to buy and this demand can quickly drive the prices higher." - Seymour@imagi-natives.com
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| [Quote No.28024] Need Area: Money > Invest
"I have heard the difference between momentum buying and value buying described as the difference between 'Buying high and selling higher' and 'Buying low and selling high.' Therefore with momentum investing the issue becomes watching for price movement and then buying it hopefully before the crowd does and then getting out before the crowd does. With value investing, the issue becomes finding a sensible way to value companies and their stocks regardless of their current market prices and buying them when they are significantly below these and selling them when they are above them." - Seymour@imagi-natives.com
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| [Quote No.28025] Need Area: Money > Invest
"It is important to remember that increased earnings per share each year can be easily achieved when a company retains profits [rather than paying out all its profits as dividends] or raises more capital from shareholders thereby increasing its equity base. This is just the same as earning more from a bank account even though the interest rate doesn't increase, simply by reinvesting some of the interest or putting more money into the account each year. The critical issue is how well does the company use the retained earnings. If the retained earnings can be invested at the same or a better return on equity as before then the company is doing well [especially if the return is higher than bank interest rates]. The danger is when a company retains profits but then doesn't use them as well. So while the size of the company would increase due to the retained earnings the return on earnings and therefore the price to earnings ratio other investors would pay for the company's shares would fall. Successful value investing involves focusing investment in companies with high sustainable ROE [with low debt - so without the need for using significant debt leverage], and buying them when undervalued because their individual futures are temporarily depressed or the share market as a whole is slumping." - Seymour@imagi-natives.com
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| [Quote No.28059] Need Area: Money > Invest
"Value investors are wiser than they seem [because their predictions take longer to come true], while momemtum investors seem wiser than they are [because their predictions often appear right at first]." - Seymour@imagi-natives.com
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| [Quote No.28089] Need Area: Money > Invest
"To get an idea of which companies have competitive advantage in a sector here are some great questions to ask- 'If you could remove for ever just one other company as a competitor which would it be and why?' and 'If you had to invest in a company in this sector excluding your own, which would it be and why?'." - Seymour@imagi-natives.com
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| [Quote No.28090] Need Area: Money > Invest
"Another way to get a feel for competitive advantage and brand power which are both good qualities for companies you might want to invest in is to ask yourself and others when they think of a product which company comes to mind, why, do they ask for it by name and would they be happy to settle for another perhaps cheaper substitute or go to another shop to get it?" - Seymour@imagi-natives.com
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| [Quote No.28126] Need Area: Money > Invest
"When considering investing in bank shares consider these points about how they could at that time increase their profits: they could increase the rate they charge for loans further above what it costs them to borrow the funds [including depositors' funds] - which is called the 'net interest margin'; they can increase the volume of loans they make - both consumer lending (housing, credit cards, personal loans) and business lending (which can require them loosening their lending criteria at the risk of lowering asset quality and increasing bad debts down the line); and they can increase their bank charges possibly alienating and losing some of their customer base. They can also increase their loan book size by acquiring another financial institution and its loan portfolio or they can always cut costs, usually through increased technology and fewer staff. They can also expand into new areas like financial advice and wealth management. By considering these profit drivers, it is often possible to gauge what opportunities the different banks have to increase their earnings and whether the time is right to invest and with whom or whether it is better to wait." - Seymour@imagi-natives.com
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| [Quote No.28159] Need Area: Money > Invest
"Besides expecting the total share market to revert to its long term mean rate of return eventually to decide if as a whole it is undervalued and likely to boom or overvalued and likely to bust, there is the inverted risk adjusted interest rate and the market's average price to earnings ratio (pe). This is calculated by taking the risk-free rate of return for a bank deposit or government bond and adding 2 or 3 extra percentage points as a fair risk premium, because owning shares is riskier than a bank deposit, and then inverting that percentage and dividing the interest rate into what was previously the denominator, namely the 100. The number that you get is the roughly appropriate average pe that the market should be given the interest rate. If the market is higher it is overvalued and if lower it is undervalued. It is also important to consider whether interest rates are increasing or decreasing too and how this would effect the inverted risk adjusted interest rate. If interest rates are falling so businesses have lower costs of debt, when this rate is inverted it is possible to see that the appropriate pe ratio rises, which makes sense as people are happier to pay a higher pe because profits and earnings will soon be rising as costs fall and more people have more money to spend. Rising interest rates have the opposite effect of causing the pe to fall as soon there will be higher costs and less money being spent. For example if interest rates are 7 percent, add 3 percent as a risk premium to get 10 percent, invert and divide the 10 into 100 and the answer 10 is what the average market pe should be. If the interest rate is 3 percent, add 2 percent for a risk premium to get 5 percent, invert and divide 5 into 100 and you get 20 which would be the fair average pe for the market given the very low interest rate." - Seymour@imagi-natives.com
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| [Quote No.28177] Need Area: Money > Invest
"One strong argument against the Efficient Market Theory of stock prices, which states that a stock's price always reflects the current knowledge about a stock is when market panics [severe busts] occur. These result in buyers reducing their buying and margin holders and short sellers selling into this vacuum driving the price down further and faster. This is a time when the knowledgeable investor with superior understanding of the intrinsic value of a company's share through an intimate knowledge of its business economics and prospects, which don't usually change as quickly as the price, can buy at undervalued prices. After the panic the market regains its composure and rebids the shares up to and often above their intrinsic price making a very quick profit for the more knowledgeable investor who kept his or her head while all around others were losing theirs. The key to that success was that the successful buyer assessed the share price from their surerior knowledge of the business value rather than following the crowd and the share price trend. " - Seymour@imagi-natives.com
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| [Quote No.28335] Need Area: Money > Invest
"When someone offers to buy your business or shares on the market at a price that is fabulously above the value it is often worth considering selling it to them even though the business is still a wonderful business as this prime example from Australia shows:- In 1987, media magnate, Kerry Packer, sold to West Australian entrepreneur, Alan Bond, the Nine Television Network for $1.05 billion and bought it back three years later for $250 million." - Seymour@imagi-natives.com
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| [Quote No.28388] Need Area: Money > Invest
"Usually when inflation is rising dramatically at the end of a business cycle, and share prices begin to fall, you get a 'spin' cycle, where brokers and economists, seeing the writing on the wall for their jobs, try to talk the market up, without caring whose money they lose by their reckless, wishful predictions of business as usual. So beware this foolish talk and take great care, because the market always faces headwinds during these times due to interest rates rising to slow inflation, especially wage inflation expectations - namely people wanting more money for the same work to help them live at the same standard they enjoyed before the price of everything, especially commodities and energy rose dramatically which is a classic signal of an end to any booming business cycle. Next comes a period of slower growth, consolidation and even some contraction when the price of shares becomes more realistic and reasonable and value investors start buying great companies at great prices, laying the foundation for great future profits after the next business cycle boom starts." - Seymour@imagi-natives.com
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| [Quote No.28389] Need Area: Money > Invest
"The natural way with floats [IPOs - Initial Public offerings] is that they tend to be timed to benefit the sellers more than the buyers. So they sell shares in the company, while the business is doing well and the price of the shares will likely rise, at least in the short term, due to the market being notoriously short-term orientated and therefore only focused on recent good earnings despite the company's long term prospects and in this way the existing owners, investment bankers and brokers can sell their portion of shares and take bigger profits than they would at other more normal times. It is vital therefore that any float is very carefully evaluated and if there is any doubt, the wise investor should ignore it. While occasionally this will result in a missed opportunity, more often than not, it will save the investor a great deal of money and heartache." - Seymour@imagi-natives.com
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| [Quote No.28732] Need Area: Money > Invest
"Many investors - including Warren Buffett - consider ROE to be very important. Each company's ROE is created through the interaction of three other component ratios. Being aware of these helps an investor assess each investment. The components are succinctly expressed in the following formula: ROE = NPM x TAT x FLM. [where:
Return on equity (ROE): Measures the profitability of the company from the perspective of equity.
Net profit margin (NPM): Measures how much the company keeps from each dollar of sales.
Total asset turnover (TAT): A measure of the efficiency of the company in using its assets.
Financial leverage multiplier (FLM): Measures the degree to which the company is financed through debt. Since assets are equal to equity plus liabilities, the ratio of assets divided by equity equals 1.0 plus liabilities divided by equity. This means that if the financial leverage ratio is 1.0, the company has no liabilities and the further it is above 1.0 the greater the liabilities compared to the equity.]
As with any analysis of ratios, to get the maximum benefit from this formula [called the DuPont formula], the component ratios in the analysis need to be studied from two perspectives: -1
Current levels and perhaps their levels related to other similar businesses, and -2
Trends or sudden changes in the levels." - Seymour@Imagi-Natives.com
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| [Quote No.28772] Need Area: Money > Invest
"[If you ever wondered whether a share can be overpriced, or at least go down a lot, here are some large drops by some very large, well-known, well-respected, profitable companies in the Australian share market - calculated from their two year high price to their recent 2008 lows:]
Aristocrat Leisure Limited – DOWN -65.55%
Toll Holdings Limited – DOWN -60.74%
Harvey Norman Holdings Limited – DOWN -57.93%
Caltex Australia Limited – DOWN -56.77%
Macquarie Group Limited – DOWN -54.48%
Qantas Airways Limited – DOWN – 52.15%
Brambles Limited – DOWN -50.99%
ASX Limited – DOWN -50.44%
Fairfax Media Limited – DOWN -49.72%
AMP Limited – DOWN -51.66% " - Seymour@imagi-natives.com
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| [Quote No.28817] Need Area: Money > Invest
"Investing without sufficient theoretical knowledge and company research can be hazardous to your wealth." - Seymour@imagi-natives.com
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| [Quote No.28828] Need Area: Money > Invest
"When inflation [including the cost of energy/petrol] and the cost of money [interest rates] are high, expect all businesses to suffer [margins reduce and sales volume falls] due to lower demand and higher costs, both for materials and labour [especially with wage inflation]. Unfortunately the solution is usually a recession, which allows an economy to get back to levels where economic growth is again possible. This is one of the reasons that central banks try hard to manage an economy's growth so that it never grows so quickly that it gets into a period of severe inflation because it is very painful to fix, including greater unemployment and drops in the value of financial markets - including people's homes and superannuation." - Seymour@imagi-natives.com
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| [Quote No.28829] Need Area: Money > Invest
"When the market crashes many investors become fearful of more losses driven by panic and crisis - the 'Let's just get the hell out of here!' attitude and they 'throw the baby out with the bathwater.' Intelligent value investors, with their heightened ability to value companies and to 'keep their heads when others are losing theirs', often find that great companies are being sold too cheaply at these times, and buy them for a song. This is why value investing can be so profitable, but it is not for the faint-hearted or the inexperienced as many companies really aren't worth even what they are being sold for and will fall further and perhaps never recover." - Seymour@imagi-natives.com
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| [Quote No.28912] Need Area: Money > Invest
"In theory there is no difference between theory and reality. In reality, there is - especially in investing, as so much of successful investing is about how well you can learn to handle your thoughts and emotions about an unknowable future, with real financial consequences." - Seymour@imagi-natives.com
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| [Quote No.28939] Need Area: Money > Invest
"Share prices tend to over-react both on the way up and on the way down. In a bull market, shares that look expensive can keep rising, higher than anyone ever thought they could go. In a bear market, shares that look cheap today can keep falling further than anyone ever thought they could go. Obviously buying them at their lowest and selling them at their highest would be ideal. Realistically though, the most rational thing to do is to buy them when they are undervalued and sell them when they aren't, bit by bit. While you will miss some profit, it is surprising just how well this works." - Seymour@imagi-natives.com
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| [Quote No.28940] Need Area: Money > Invest
"If you have ever been interested in investing in fixed-income securities, they come in varying maturies. The common maturities are [in years] 1, 2, 3, 4, 5, 7, 10, 15, 20, 25, 30. This is called the interest rate curve or 'along the curve' as the interest rates offered usually start low and rise the longer or further along 'the curve' the maturity date is. When you hear the phrase that the curve has inverted it means that short term rates are higher than long term rates. This usually means that inflation is high, the central bank has raised short-term rates to slow the economy and that a recession may be on the way. Many share investors study 'the curve' to try to gauge where they are in the economic cycle and get a feel for what to expect from the share market." - Seymour@imagi-natives.com
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| [Quote No.28967] Need Area: Money > Invest
"In a rising - boom - market, the information most investors watch is the Income - Expense/Performance Statement [to monitor the earnings and free cash flow generated]. In a falling - bust - market, the factor that most investors watch is the Assets-Liabilities/Position Statement [to monitor the debt that has to be paid]. Intelligent value investors have learnt to be aware of both, at all times." - Seymour@imagi-natives.com
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| [Quote No.28989] Need Area: Money > Invest
"When trying to understand the connection between the availability of credit [interest rates and money supply, wages and definitions of creditworthiness] and asset prices consider this: - Consumers always demand things, but they don't always have the money to bid-up prices. Withhold money, and prices fall - add money and prices inflate. [Therefore monetary policy and the credit cycle is intimately connected to market prices and the business cycle.]" - Seymour@imagi-natives.com
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