Tuesday, April 28, 2009

Make me an offer I can't refuse!

When we’re talking about investing, what are we actually looking for? The concept is actually very simple. We’re basically looking for a company that fulfills the following:

A company that earns the most stable and highest earnings over the longest period of time, selling at a cheap price.

(You can replace ‘earnings’ by ‘dividends’ for those who are looking more towards income)

While the concept is easy, the execution is certainly not. For example, what is meant by cheap? Am I talking about the cheapness of the price with reference to the past prices, or am I talking about price with reference to intrinsic value? Talking about intrinsic value, how do I calculate it? Based on PE, discounted dividends, discounted cashflow? What about the discount rate and the period of discounting?

It opens up a can of worms just by analyzing the simple statement above. It’s the same when analyzing a company too – you thought it is a simple affair till you read more.

I think I need to do valuation of the stocks that I want to own, and the price that would make them attractive. It’s been a long time since I started doing so. So, everyday, I’ll just go the market and see if it throws up some real good bargains at me. Make me an offer I can’t refuse!


Createwealth8888 said...

GLC linked companies are making you an offer and some more got Superman walking out of Temasek Tower to rescue if necessary. Still refuse? *sigh*

la papillion said...

Hi bro8888,

Ya loh, offer not good enough! haha

dream said...

Let me try. How about this:

Daily doses of premium whiskey, sake, martini, games at the arcade during weekends, unlimited supply of spiderman bag (comes in all colors, not just brown) and multiple get-togethers with superfriends to try out the most interesting food.

la papillion said...


Sounds great :) Less on the alchohol bit, haha :)Don't want to be a drunkard, cannot fight crime as batman anymore!