I have a great discussion with one of my analyst friend regarding my analysis of stocks. He found that my analysis is too simplistic. He mentioned that I do not take into account those ROE, CAGR, and some other fancy terms that I myself never heard of.
From my opinion, those terms is for those analyst who want their report to be more professional so that those reader will think that they are knowledgeable and trustworthy. When I analysis myself, I want it to make sense to myself and not complicated it with those terms. I need to know how much cash or assets and liabilities, how much they earn compare to their price and their previous track records. The most important thing is that I need to be comfortable with their business. I even told him that I myself prefer reading analyst from some of the bloggers than those analyst reports. At least it make more sense to me. Picking stocks is hard, why complicated it?
In the meantime, I am still looking for those terms that he mentioned. Hmm…probably non-existent as he make up himself… hehe
ROE and CAGR are real investment terms, and the definitions can easily be found by a google search. I do agree that the basics mentioned in this post are already enough for ordinary retail investors or traders to know. ROE and CAGR could only be useful for those fund managers and financiers of a business, like banks who are committing big funds in the stock or business for a long term.
ReplyDeleteHi Lee,
ReplyDeleteAfter reflecting it for the whole night, I think those ordinary retail investors or traders might be unknowingly applying those ROE or CAGR in their analysis. When they are looking at the earning records,income statement or the balance sheet, they are basically comparing those figures in there.
Maybe I have trouble with those complicated terms rather than the application of it.