In this article, I will show you how to write an investment policy statement (IPS), specifically for the average do-it-yourself (DIY) retail investor. An IPS is a formal document that outlines one's objectives and investment strategy. Most investors should have an IPS because it helps them consolidate their investment strategies into a coherent plan, protecting […]
In this article, we'll discuss why Earnings Per Share (EPS) is flawed in stock analysis, particularly when representing a company's profitability, financial health, or value. While EPS is a frequently cited figure in stock valuation and undoubtedly one of the most discussed financial metrics in the stock realm, its prominence is rooted in its accessibility […]
In this article, I'll explore why most investors underperform the market, specifically the S&P 500 Index. Many investors, from novices to seasoned professionals, aspire to outpace this benchmark. However, only a handful consistently achieve this over the long term. We'll delve into the reasons behind this widespread underperformance and present the statistics and research that […]
In this article, I will show you how to create a successful investment plan in 5 steps. All serious investors should develop an investment plan to meet their long-term investing goals prior to deploying significant amounts of capital in any investable market. Becoming a successful investor requires establishing an investment plan and then sticking with […]
In this article, I will explain how the three financial statements are linked. This will be accomplished by providing an overview of the three financial statements and then navigating through an integrated financial statement model using a simple business model. The three financial statements are the cash flow statement, the income statement, and the balance […]
In this article, I will show you how to estimate the expected return of a stock investment. "Expected return" is an estimation of the long-term returns a stock is likely to generate if purchased at its current stock price. Often times, investors fail to estimate the return they'll be expecting on a stock investment, thereby […]
In this article, I will show you how to effectively read and analyze a cash flow statement. The cash flow statement tells investors and analysts how much cash is generated and used over a certain period, and is presented in quarterly (10-Q) and annual (10-K) reports. Every cash flow statement will list the value of […]
In this article, I will show you how to effectively read and analyze a balance sheet. This sheet is a snapshot of a company's financial position, and shows investors and analysts the worth of a company, also known as the "book" value. Typically, this sheet will be shared in quarterly (10-Q) and annual (10-K) reports, […]
In this article, I will show you how to effectively read and analyze an income statement. This statement summarizes all revenues and expenses over a particular period, and is presented in quarterly (10-Q) and annual (10-K) reports. The purpose of an income statement is to show a company's financial performance over a particular period, which […]