What to Look For When Selecting a Stock

Equity research in a nutshell

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But the truth is that the multitude of factors that are available at any one point in time is highly susceptible to change: the term used on Wall Street for such cases is volatility.

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The Foundation

The Key Parameters

Phil Fisher, a long-term advocate of management quality, was famous for the depth of his research on companies in which he would invest.

The only exception to this rule is technology stocks since it’s extremely difficult to forecast their earnings and correlate their growth with any ratio whatsoever.

“A condition or circumstance that puts a company in a favorable or superior business position.”

Any company that is highly leveraged, will encounter solvency issues as the debts pile up. An increase in assets or a decrease in debt is a good sign showing the companies commitment to pay off its debts and commit the remaining profits to its shareholders.

Nobody knows for certain whether a company will beat the indices or whether the stock they select will beat the market. The DCF approach very simply tries to quantify a rather mysterious random walk component which is a “stock’s price”.

It shows the madness of crowds and their immediate responses in real-time or after hours depending on a chart’s settings and time frame.

Most of the problems when it comes to investing are centered around human psychology.

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