I was told that the most important things you need to look at are the debt and revenues. How much the co is making and how much debt they have. But this seems so lacking considering there are so many other things that a co has. please if you can explain what those things are. Im new to this trading world and lack the terminology to comprehend. thanks!
what are some most important fundamentals to look at?
- Thread starter cashclay
- Start date
....You're asking the wrong questions -- these are more geared for the investing world, not trading world -- different variables to consider.
fundamentals don't work in zirp, just look at nflx and amzn
Debt--it depends where we are in the market cycle. A pickup in demand can save a debt laden company at the last minute. Those can be more spectacular plays on the upside. But they are the quickest and hardest hit going into a recession. Like they say--when the tide goes out you can see who's swimming naked
If you were trading oil stocks right now, looking for something to buy, I'd think you'd want to buy something that has the best chance of survival in its field. And a short would be something that has a good chance of bankruptcy
You can look at countries the same way.
Russian ruble still looks vulnerable vs Usd
I agree that you should look at revenues first. Earnings numbers are very easily can be manipulated while revenues are much harder for companies to tweak.
the quick ratio
Good to start thinking about these financial concepts as eventually you'll want to migrate away from the "noise" and "random" nature of trading. Geometric compounding over longer holding periods affords higher probability statistical outcomes with less work.
Some pioneers of fundamental metrics research:
1) James O'Shaunessy "Price to Book
Some Key Insights from What Works On Wall Street http://jimoshaughnessy.tumblr.com
2) Eugene Fama and John French factor models https://docs.google.com/document/d/1OmZ88C9QyL4ioa3N26AGwDYf7a7K8WD7hz1rbcHhYtU/edit?usp=sharing
3) William O'neil / Investors Business Daily proprietary relative strength / Earnings per share screens http://stockmarketinvestingtoday.com/how-to-screen-for-stocks-using-the-ibd/
Academic research on pricing metrics has been much more visible and prevalent over the past 15 - 20 years. With the advent of the internet, it has been much easier to access than when I started in the late 80's. IBD was a big help in my asset accrual in the 90's, although now I use index ETFs.
Measuring and comparing debt and revenue levels may be more important for "close to retirement / retired" investors holding large cap dividend stocks for "income" . The level of debt service is somewhat correlated to the ability of the company to be able to pay it's didvend and keep it's dividend growing vs. inflation.
If you are in the young investor demographic ( age 20 - 55 ) then your goal would most likely be the maximization of your asset growth ( which is best achieved with the use of small cap value or small mid sized growth stock universes vs. large / mega cap dividend growth stock universe )
Some pioneers of fundamental metrics research:
1) James O'Shaunessy "Price to Book
Some Key Insights from What Works On Wall Street http://jimoshaughnessy.tumblr.com
2) Eugene Fama and John French factor models https://docs.google.com/document/d/1OmZ88C9QyL4ioa3N26AGwDYf7a7K8WD7hz1rbcHhYtU/edit?usp=sharing
3) William O'neil / Investors Business Daily proprietary relative strength / Earnings per share screens http://stockmarketinvestingtoday.com/how-to-screen-for-stocks-using-the-ibd/
Academic research on pricing metrics has been much more visible and prevalent over the past 15 - 20 years. With the advent of the internet, it has been much easier to access than when I started in the late 80's. IBD was a big help in my asset accrual in the 90's, although now I use index ETFs.
Measuring and comparing debt and revenue levels may be more important for "close to retirement / retired" investors holding large cap dividend stocks for "income" . The level of debt service is somewhat correlated to the ability of the company to be able to pay it's didvend and keep it's dividend growing vs. inflation.
If you are in the young investor demographic ( age 20 - 55 ) then your goal would most likely be the maximization of your asset growth ( which is best achieved with the use of small cap value or small mid sized growth stock universes vs. large / mega cap dividend growth stock universe )
Last edited: