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

Experience with the general investment society presentations

I decided to participate German CFA Society presetation. Head of M&A of one of the Frankfurt's bank was going to present the general trends in Automobile sector. The enterence cost 25 € but i decided to participate because i could build networks. It was a one hour presentation in the launch time. So nobody had time and it was not directly good opportunity for networking but I could get some info about the automobile industry. I heard in the presentation that Porsche wants to increase its steak in Volkswagen after the presentation I made a research and added VW to my test porfolio. Porsche increased its steak in VW to 30%. The stock is increase from 86€ to 117€ in one month. I thought that VW can learn many things from VW and bought (113€) VW after the transaction of Porsche is complete. I heard that according to german law 30% steak in a firm mean a takeover and porsche do not want to do this at the moment. I also read sell recomendations. Finance theory tells that sell recomandations are not often. So I want to sell my shares after 5 days I bought them. I sold the share with -11€ loss ( with additional -15€ transaction costs). But I am now happy to minimize my loss.

Experience with the general investment society presentations

I decided to participate German CFA Society presetation. Head of M&A of one of the Frankfurt's bank was going to present the general trends in Automobile sector. The enterence cost 25 € but i decided to participate because i could build networks. It was a one hour presentation in the launch time. So nobody had time and it was not directly good opportunity for networking but I could get some info about the automobile industry. I heard in the presentation that Porsche wants to increase its steak in Volkswagen after the presentation I made a research and added VW to my test porfolio. Porsche increased its steak in VW to 30%. The stock is increase from 86€ to 117€ in one month. I thought that VW can learn many things from VW and bought (113€) VW after the transaction of Porsche is complete. I heard that according to german law 30% steak in a firm mean a takeover and porsche do not want to do this at the moment. I also read sell recomendations. Finance theory tells that sell recomandations are not often. So I want to sell my shares after 5 days I bought them. I sold the share with -11€ loss ( with additional -15€ transaction costs). But I am now happy to minimize my loss.

My first test with the ETF

International equity investing and valuation is becuase of accounting differences and language bariers is difficult. But emerging markets are growth drivers of the world. I tough it could be a good idea to buy an emerging market index. I can remember from my studies that Exchange Traded Founds are optimal for this purpose. I read somewhere that management cost of the iShares are not much so I added iShares China 25 to my porfolio. The above image shows the performance of the index in one month. I think index funds are good for beginners who does not know anything about valuation etc... but can analyze the general trends.