Crowdfunding Strategy #26 Stocks fall. Find a good point to buy at a good price.

This time I would like to present a simple principle. Things to be careful about when considering stock prices in a simple, self-sufficient way (Just because more complicated doesn't mean more accurate in the world of Valuation) which got the idea from exchanging ideas with Dr. Andrew Stotz and thought it would be useful to us as follows.

1. Be careful of too much income. If there is an income estimate that says it will improve (does this sound familiar?), try to see where the income is coming from. and look at the past Can the company perform as expected? Is this too optimistic? Sometimes putting in an estimate of future income It is only to add an increased percentage. For example, estimating sales growth of 15% per year. This type of estimation is prone to high errors, leading to inaccurate valuations. You should see whether the market is saturated or not. Is there still an Unserved Market or not?
2. Be careful of expenses that seem too little. Sometimes we like seeing small expenses. But sometimes it's too little. Because the person making the estimate wants to make it look less. Sometimes I feel like I want to see a small amount of expenses. may come beyond reason Therefore, I would like to propose the 30-10-5 principle (Gross Profit – EBIT – Net Profit). This principle is taken from data that Dr. Andrew compiled pre-COVID-19 data for 18 years on more than 15,000 stocks, i.e. Gross Profit. is at 30%, EBIT is at 10% and Net Profit is at 5% of total revenue if we crosscheck with this principle. It will keep us from getting carried away with the numbers that people want to put in to make them look too good.
3. Be careful when calculating values. Beta In the CAPM (Capital Asset Pricing Model) model, because the Beta value in the CAPM model is a future value. Therefore it is difficult to calculate. and changes with time, but the Beta value that we have in hand or calculated from past data Therefore, it is difficult to know with certainty whether today's beta will reflect future beta values. Therefore, we propose to use a simple rule of thumb. By bringing in past dataGroup stocksThey are High Beta, Neutral Beta and Low Beta and when using CAPM to calculate, use values ​​of 25 for High Beta, 1.0 for Neutral Beta and 0.75 for Low Beta.

While there is no 100% accurate method for valuing stocks, applying principles for caution in valuing stocks is important. Used to make decisions and crosscheck the obtained information. It will help us plan our investment strategies better. It is not the result of listening to information from outside only. or looking too optimistic Hope everyone can benefit from these simple principles. for use in investment analysis Good luck to all of you. and success in investing See you again next time.