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How to research investments effectively
//A Thread//
Learn the language of Finance
If you look at a balance sheet or cash flow statement
You need to be able to understand the words you're reading
It can look like a different language sometimes
because it is
https://t.co/Ccg1I4Ah7Y is a great resource
Look at ALL statements:
There are three of them and my issue was that i only looked at one ☝🏾
So when you're researching investments
Always look at:
- The income statement
- The balance sheet
- The cash flow statement
Understand formulas and how to apply them
Here's a list of formulas you will need:
- PE Ratio
- PEG Ratio
- Margin of Safety
- Payout ratio
- EGR
Learning at least these terms will give you a better understanding of a company's intrinsic value
A Valuation Method
Here are two different methods you can use:
- Discounted Cash flow
- Dividend discount model
This was the hardest part for me.
Finding out that i needed this in first place then how to use it
//A Thread//
Learn the language of Finance
If you look at a balance sheet or cash flow statement
You need to be able to understand the words you're reading
It can look like a different language sometimes
because it is
https://t.co/Ccg1I4Ah7Y is a great resource
Look at ALL statements:
There are three of them and my issue was that i only looked at one ☝🏾
So when you're researching investments
Always look at:
- The income statement
- The balance sheet
- The cash flow statement
Understand formulas and how to apply them
Here's a list of formulas you will need:
- PE Ratio
- PEG Ratio
- Margin of Safety
- Payout ratio
- EGR
Learning at least these terms will give you a better understanding of a company's intrinsic value
A Valuation Method
Here are two different methods you can use:
- Discounted Cash flow
- Dividend discount model
This was the hardest part for me.
Finding out that i needed this in first place then how to use it