Basics: Industry Consolidation Curve

According to the article "The consolidation curve, Deans,Kroeger, Zeisel Dec.2002, Harvard Business Review" each industry goes through this cycle. A full cycle takes approx. 25 years. If you know where your industry stands you can optimaze your investment strategy e.g. growth v.s. value etc.

Basics: Industry Consolidation Curve

According to the article "The consolidation curve, Deans,Kroeger, Zeisel Dec.2002, Harvard Business Review" each industry goes through this cycle. A full cycle takes approx. 25 years. If you know where your industry stands you can optimaze your investment strategy e.g. growth v.s. value etc.

Sell FCX?

Beta of the FCX is 2.07(yahoo finance). Firms with high betas are cyclic firms. GDP growth is published yesterday. This years 1Q growth is 1.3% which is less than the analyst estimations. This rate is the almost the same GDP growth rate 4 years ago.
Technical analysis also shows a downtrend. I think I need to build a strategy to profit from market up and downs. e.g. If there is a down trend sell at the top and buy the same position from down again. As you can see from the chart I could earn much money if I would apply this strategy.



UPDATE 03.05.2007: This stock is going upwards now. I think that was a short term down trend. I made a small research. I think this sector is still strong and fundamentals of the sector is not changed. this stock has still upwards potential. This down trend was a good opportunity to buy more FCX shares.

Sell FCX?

Beta of the FCX is 2.07(yahoo finance). Firms with high betas are cyclic firms. GDP growth is published yesterday. This years 1Q growth is 1.3% which is less than the analyst estimations. This rate is the almost the same GDP growth rate 4 years ago.
Technical analysis also shows a downtrend. I think I need to build a strategy to profit from market up and downs. e.g. If there is a down trend sell at the top and buy the same position from down again. As you can see from the chart I could earn much money if I would apply this strategy.



UPDATE 03.05.2007: This stock is going upwards now. I think that was a short term down trend. I made a small research. I think this sector is still strong and fundamentals of the sector is not changed. this stock has still upwards potential. This down trend was a good opportunity to buy more FCX shares.

More Moly Stocks

I found more moly stocks using the same technique. I see that,except blue perl mining, all moly stock will have down trend. I will wait and buy when a reversal occurs. Tenajon is my favourite moly stock.

More Moly Stocks

I found more moly stocks using the same technique. I see that,except blue perl mining, all moly stock will have down trend. I will wait and buy when a reversal occurs. Tenajon is my favourite moly stock.

Great Stocks Often have Great Peers

I read this ZACKS commentary article about 'Great Stocks Often have Great Peers'. The article in summary telling that if you find a great stock, analyze it characteristics and look at its peers in the same industry. This screen is actually a stock screen which is called modelling. I can confirm this. For example I was trying to find out famious stock picker Marcus Fricks stock picking strategy. His suggestions such as Blue Perl Mining, Forsys have c.a. 1000% return. I analyzed the industry dynamics and other stock in the industry. I found some. You can try to do the same.

I identified Moly Mines by using this technique.Current price is 3€ and daily change is 3%. According to technical MACD analysis it can go down but i have 7€ target price.

Great Stocks Often have Great Peers

I read this ZACKS commentary article about 'Great Stocks Often have Great Peers'. The article in summary telling that if you find a great stock, analyze it characteristics and look at its peers in the same industry. This screen is actually a stock screen which is called modelling. I can confirm this. For example I was trying to find out famious stock picker Marcus Fricks stock picking strategy. His suggestions such as Blue Perl Mining, Forsys have c.a. 1000% return. I analyzed the industry dynamics and other stock in the industry. I found some. You can try to do the same.

I identified Moly Mines by using this technique.Current price is 3€ and daily change is 3%. According to technical MACD analysis it can go down but i have 7€ target price.

Investing for Beginners

This guy made nice videos for beginners. I think he also wrote a book about investing.

Investing for Beginners

This guy made nice videos for beginners. I think he also wrote a book about investing.

Luckily I bought the Bauer Stock again!

There were no reason to sell the Bauer stock. I was right. I lost some money because of this unnecesary transaction. But i learned something and covered my losses.

Luckily I bought the Bauer Stock again!

There were no reason to sell the Bauer stock. I was right. I lost some money because of this unnecesary transaction. But i learned something and covered my losses.

I bought BAUER AG again

I overreacted to the change. I bought the BAUER again again. Its price has increased after I bought it.

I bought BAUER AG again

I overreacted to the change. I bought the BAUER again again. Its price has increased after I bought it.

MY FIRST LOSS BAUER AG

I made my first loss with BAUER AG (WKN 516810). I had to make more economic reasoning to understand why the markets are going down. I think the markets will go up again but I already sold my BAUER AG Stocks.

MY FIRST LOSS BAUER AG

I made my first loss with BAUER AG (WKN 516810). I had to make more economic reasoning to understand why the markets are going down. I think the markets will go up again but I already sold my BAUER AG Stocks.

when to sell a stock?

It is as much important as to know when to sell a stock as to buy. There are the following 3 CANSLIM methods that you can flow when selling a stock.

1. Always sell when to stock falls 8% of its cost
2. In a market downtrend, reduce your holdings
3. Take profits when the stock is 20%-25% up.
   

when to sell a stock?

It is as much important as to know when to sell a stock as to buy. There are the following 3 CANSLIM methods that you can flow when selling a stock.

1. Always sell when to stock falls 8% of its cost
2. In a market downtrend, reduce your holdings
3. Take profits when the stock is 20%-25% up.
   

CANSLIM investing

I am currently reading a book about CANSLIM investing. This method is good for beginnners.
I found another usefull checklist for the beginners at the investors.com website which I also found in the CANSLIM investing book. You can also watch the CANSLIM investing video.

1. Consider buying stocks with each of the last three years' earnings up 25%+, return on equity of 17%+ and recent earnings and sales accelerating.

2. Recent quarterly earnings and sales should be up 25% or more.

3. Avoid cheap stocks. Buy higher quality stocks selling $15 a share and higher.

11. Buy mostly in the top six broad industry sectors in IBD’s New High List.

12. Select stocks with increasing institutional sponsorship in recent quarters.

13. Current quarterly after-tax profit margins should be improving, near their peak and among the best in the stock's industry

14. Don’t buy because of dividends or P-E ratios.

15. Pick companies with a superior new product or service.

16. Invest mainly in entrepreneurial New America companies. Pay close attention to those with an IPO in the past 8 years.

17. Check into companies buying back 5% to 10% of their stock and those with new management.

18. Don’t try to bottom guess or buy on the way down. Never argue with the market. Forget your pride and ego.

19. Find out if the market currently favors big-cap or small-cap stocks.

20. Do a post-analysis of all your buys and sells. Post on charts where you bought and sold each stock. Evaluate and develop rules to correct your major past mistakes.

CANSLIM investing

I am currently reading a book about CANSLIM investing. This method is good for beginnners.
I found another usefull checklist for the beginners at the investors.com website which I also found in the CANSLIM investing book. You can also watch the CANSLIM investing video.

1. Consider buying stocks with each of the last three years' earnings up 25%+, return on equity of 17%+ and recent earnings and sales accelerating.

2. Recent quarterly earnings and sales should be up 25% or more.

3. Avoid cheap stocks. Buy higher quality stocks selling $15 a share and higher.

11. Buy mostly in the top six broad industry sectors in IBD’s New High List.

12. Select stocks with increasing institutional sponsorship in recent quarters.

13. Current quarterly after-tax profit margins should be improving, near their peak and among the best in the stock's industry

14. Don’t buy because of dividends or P-E ratios.

15. Pick companies with a superior new product or service.

16. Invest mainly in entrepreneurial New America companies. Pay close attention to those with an IPO in the past 8 years.

17. Check into companies buying back 5% to 10% of their stock and those with new management.

18. Don’t try to bottom guess or buy on the way down. Never argue with the market. Forget your pride and ego.

19. Find out if the market currently favors big-cap or small-cap stocks.

20. Do a post-analysis of all your buys and sells. Post on charts where you bought and sold each stock. Evaluate and develop rules to correct your major past mistakes.

Investor's Checklist: Rules for successful stock investing

I am reading The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning...By Pat Dorsey at the moment. I found the following checklist on the page 11.

1. Have a personal discipline, do not listen crowds. It is therefore crucial to have solid well-grounded investment philosopy.
2. Do not buy a stock unless you understand their business.
3. Look for companies with compatitive advantage.
4. Do not buy a stock without a margin of safety.
5. Buy and hold stocks for the long term.
6. Know when to sell. For example sell when it exceeds its instrinsic value.
   

Investor's Checklist: Rules for successful stock investing

I am reading The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning...By Pat Dorsey at the moment. I found the following checklist on the page 11.

1. Have a personal discipline, do not listen crowds. It is therefore crucial to have solid well-grounded investment philosopy.
2. Do not buy a stock unless you understand their business.
3. Look for companies with compatitive advantage.
4. Do not buy a stock without a margin of safety.
5. Buy and hold stocks for the long term.
6. Know when to sell. For example sell when it exceeds its instrinsic value.
   

Basics: S.W.O.T. Analysis

SWOT analysis is a powerful technique to analyse the strengths, weakness, opportunities, and threats of a company. Therefore it is also an important tool for the equity analysis and for the research documents. But which questons can we ask to analyze each 4 items easly? Here are some questions that you can ask.

STRENGTHS
1. Does the company have a high level of competence?
2. Does the company have competitive skill?
3. Is the company ahead on the experience curve?
4. Does the company have adequate financial resources?
5. Does the company have a good reputation with buyers?
6. Is the company an acknowledged market leader?
7. Does the company have well-conceived functional area strategies?
8. Does the company have access to economies of scale?
9. Is the company somewhat insulated from strong competitive pressures?
10. Does the company have proprietary technology?
11. Does the company have better advertising campaigns than the competition?
12. Is the company good at creating new products?
13. Does the company have strong management?
14. Does the company have superior technological/technical skills?
15. Does the company have cost/pricing advantages?
WEAKNESS
1. Does the company have no clear strategic direction?
2. Are the company facilities obsolete?
3. Is the company lacking managerial depth and talent?
4. Is the company missing some key skills or competencies?
5. Does the company have a poor track record in implementing strategy?
6. Is the company plagued with internal operating problems?
7. Is the company falling behind on Research & Development.
8. Does the company have a narrow product line.
9. Does the company have a weak market image.
10. Does the company have below average marketing skills.
11. Is the company unable to finance needed strategy changes.
12. Does the company have higher overall costs relative to our key competitors.
13. Does the company have subpar profitability.
OPPORTUNITIES
1. Is there additional customer groups that we could serve.
2. Is there new markets or market segments to enter.
3. Can the company expand our product/service line to meet customer needs.
4. Can the company diversify into related products.
5. Can the company control sourcing or supply activities (vertical integration.)
6. Are falling trade barriers opening foreign markets to the company.
7. Are rivals of the company becoming complacent.
8. Is the market growing faster than in the past.
9. Will Fewer regulatory requirements making doing business easier for the company.
THREATS
1. Are Low-cost foreign competitors entering the market.
2. Are sales of substitute products rising.
3. Is the market growing more slowly than expected.
4. Are there adverse shifts in foreign exchange rates and/or trade policies.
5. Are regulatory requirements becoming onerous.
6. Is the company vulnerable to changes in the business cycle or to recessions.
7. Are the company's customers and/or suppliers enjoying growing bargaining power.
8. Are buyers’ needs and tastes changing in directions that point away from our current expertise.
9. Are demographic changes having a negative impact on business.
10. Is It easy to enter this industry (very low barriers to entry).
11. Could Technology change this industry with little or no warning.


Sources:
- http://www.mindtools.com/pages/article/newTMC_05.htm
- THE CONSULTANT’S TOOLKIT, Mel Silberman, page 4

Basics: S.W.O.T. Analysis

SWOT analysis is a powerful technique to analyse the strengths, weakness, opportunities, and threats of a company. Therefore it is also an important tool for the equity analysis and for the research documents. But which questons can we ask to analyze each 4 items easly? Here are some questions that you can ask.

STRENGTHS
1. Does the company have a high level of competence?
2. Does the company have competitive skill?
3. Is the company ahead on the experience curve?
4. Does the company have adequate financial resources?
5. Does the company have a good reputation with buyers?
6. Is the company an acknowledged market leader?
7. Does the company have well-conceived functional area strategies?
8. Does the company have access to economies of scale?
9. Is the company somewhat insulated from strong competitive pressures?
10. Does the company have proprietary technology?
11. Does the company have better advertising campaigns than the competition?
12. Is the company good at creating new products?
13. Does the company have strong management?
14. Does the company have superior technological/technical skills?
15. Does the company have cost/pricing advantages?
WEAKNESS
1. Does the company have no clear strategic direction?
2. Are the company facilities obsolete?
3. Is the company lacking managerial depth and talent?
4. Is the company missing some key skills or competencies?
5. Does the company have a poor track record in implementing strategy?
6. Is the company plagued with internal operating problems?
7. Is the company falling behind on Research & Development.
8. Does the company have a narrow product line.
9. Does the company have a weak market image.
10. Does the company have below average marketing skills.
11. Is the company unable to finance needed strategy changes.
12. Does the company have higher overall costs relative to our key competitors.
13. Does the company have subpar profitability.
OPPORTUNITIES
1. Is there additional customer groups that we could serve.
2. Is there new markets or market segments to enter.
3. Can the company expand our product/service line to meet customer needs.
4. Can the company diversify into related products.
5. Can the company control sourcing or supply activities (vertical integration.)
6. Are falling trade barriers opening foreign markets to the company.
7. Are rivals of the company becoming complacent.
8. Is the market growing faster than in the past.
9. Will Fewer regulatory requirements making doing business easier for the company.
THREATS
1. Are Low-cost foreign competitors entering the market.
2. Are sales of substitute products rising.
3. Is the market growing more slowly than expected.
4. Are there adverse shifts in foreign exchange rates and/or trade policies.
5. Are regulatory requirements becoming onerous.
6. Is the company vulnerable to changes in the business cycle or to recessions.
7. Are the company's customers and/or suppliers enjoying growing bargaining power.
8. Are buyers’ needs and tastes changing in directions that point away from our current expertise.
9. Are demographic changes having a negative impact on business.
10. Is It easy to enter this industry (very low barriers to entry).
11. Could Technology change this industry with little or no warning.


Sources:
- http://www.mindtools.com/pages/article/newTMC_05.htm
- THE CONSULTANT’S TOOLKIT, Mel Silberman, page 4