Investing money in stocks and shares is associated with risk. While engaging in stock market investing, the risk associated with investments can be calibrated to some extent by indulging in some in-depth study of fundamentals of stocks, one proposes to invest. Unlike most other asset classes, prices of shares are decided by open auction process which is conducted on computer screens. The fact that there are many participants willing to buy and sell at different prices indicate varying expectations of the stock in coming days or weeks or months or even years.
Though some investors buy them to earn dividends, over 95% of the investors buy them to benefit with increase in prices. Since rise in prices is often associated with higher profits earned by companies, people attempt to forecast the likely increase in profitability of companies. Several analysts keep working on the projections given by company and their own studies of economy, businesses of companies etc to arrive at a consensus estimate of likely profits and thereby likely price into near future. Once an assessment is made about a stock and its future price, people buy them if the current price is far below their estimated price.
Therefore, if the expectations come true and the company reports better profits as forecasted, the likelihood of prices appreciating increases. With vast majority of investors lacking the skills even to build a model that helps forecasting future profits and thereby prices, financial analysts take up this job and openly express their views. Assessing the effectiveness of these analysts on a long run is a difficult task leaving retail investors with the risk of going by the wrong advice of right analyst or bad advice from a hopeless analyst.
One way of improving chances of being right for stock market beginners, is to learn the basics of stock analysis oneself. It is not that difficult as one makes out to be. You don’t need deep insights of stock market strategies to determine the likely movement, unless you want to foresee the prices over very long term. The future of everyone is dependent on various factors. The fortunes of companies also hinge upon several factors on which the company will have little control. Yet, analysts take a few things for granted and base their judgments on factors that they consider predictable and are not prone to deviation from their planned trajectory. When things go awry, they blame the onset of factors that were assumed to follow a course but they did not.
Barring a high impact event that could change the entire course of a stock’s price, the changes happen over a period of time and careful analysis of the events does throw an opportunity for us to calibrate our estimates. Thanks to the legal requirement of quarterly announcement of results, investors often have steady stream of news flowing in on any company. All that we need to learn about stock market investing tips is to be able to interpret the warning signals or early signs of prosperity to initiate appropriate actions.
ViVeKam’s tools devised to help Investors make wise judgments:
Vivekam as a responsible financial investment advisor has set a process in place that helps us determine the fair values of stocks based on declared profits, the companies’ business value and the market’s willingness to price stocks at a given multiple to its status of earnings.
In order to evaluate one’s portfolio Vivekam considers the latest trailing twelve months period as a base to judge the next three months range of prices for stocks. Vivekam has been done the same exercise for the period 2000 – 2012 and were convinced about its model since 82% times the prices for all companies objectively evaluated moved within the predicted range. Backed by this finding, Vivekam compares the fair values of companies found to be growing with their market prices. Companies that appear to be trading at a good discount to their fair value are displayed as undervalued growth stocks. Historically, 87% of such undervalued growth stocks have appreciated by at least 10% in next three months. Encouraged by these findings, Vivekam has developed a process called SPOTS which short lists the companies reporting growth and are found to be undervalued on any given day. Investors will benefit by looking at the SPOTS-Current to identify the most undervalued growth stocks on the current day.
Vivekam shares most of its findings through their easy-to-use services. In SNAPSHOT, investors are told whether the stock is growing or not with values given for fair value, maximum possible and minimum possible values before the next quarter results are out. Earnings of the company’s last Trailing Twelve Months (TTM) periods are given in addition to business value, as computed by Vivekam. Suddenly the whole process of spotting the likely winners and top performing stocks become so easy for even a novice in investing. ViVeKam’s contribution does away one’s need to go through series of books and material to judge the best investment opportunity. In brief, following methodology will help an average investor become the most shrewd investor, while investing money in stocks.
- SPOTS-Current helps investors shortlist the companies that are underpriced despite recording growth in operations. SPOTS will help investors gain confidence on ability of this process over time in assessing the winners. Compared to Index, SPOTS clearly demonstrated the supremacy of process driven identification of likely winners.
- SNAPSHOT will give you next level drill down values for stocks picked by using SPOTS-Current. This service also offers insights into any stock one may have in the portfolio.
- SEA will demonstrate the way stock prices moved in the past Vs ViVeKam’s estimates. While you may find a few companies not complying, vast majority of them will be found to be following the range set by Vivekam.
- Portfolio services like PEAS, PORTFOLIO Scanner, PIE and PRICE will help investors learn about the likely range of their entire portfolio, individual strengths of weakness of stocks, the process to identify and weed out the bad stocks included and what ViVeKam’s processes could have helped one’s portfolio improve its performance.