Monthly Archives: April 2011

MASTERCLASS Investment – Debt to Equity explained

Debt to Equity is one fundamental ratio to analyse a stock investment when searching for superior management, and can warn of potential risk. Debt to Equity is a measure of a company’s financial leverage calculated by dividing its total liabilities by stockholders’ … Continue reading

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Investment and Managing Risk

Like everything in life, there is a risk, that usually refers to something not happening as we want, usually worse, or less than expected (downside risk) but there can also positive risk, in that we are surprised at an outcome that is … Continue reading

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Fundamental Analysis of stocks – what is it?

Fundamental analysis in regard to the sharemarket is a method of assessing whether a company is a good investment using various sources such as financial statements, company announcements, disclosures and economic and industry reports. It involves an academic approach and considers the … Continue reading

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Why avoid companies with low ROE

Warren Buffet each year tells us in the annual report of Berkshire Hathaway, the type of companies he is looking for, one of which is “businesses earning good returns on equity while employing little or no debt.” Companies with LOW return on equity … Continue reading

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Company Debt can kill your investment – Colorado, Babcock, Transfield

Many companies on the Australian Stock Exchange have some debt, but when it is excessive, they are exposed to changes in business performance, industry and the economy. We will look at some examples to see what debt can do, if … Continue reading

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Stress Test your investments – Prof John Price

Professor Price also taught us to stress-test investments. In engineering, such as building a bridge, the structure is tested before put into full use. An example was the Sydney harbour bridge – 80 locomotives were driven onto the bridge, to … Continue reading

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