Pick Up Stocks Using Share Price Valuations


Investing secrets
Sound Research has been one of the most challenging tasks in the life of an investor. Ben Graham had famously underlined the fact that one needs to dive deep into the valuation of companies before putting a penny on the line of fire. Warren Buffet too has candidly revealed that valuation has been the underlying principle behind the success of his billion dollar empire.
 


The Problem
Information alone does not always lead to good Fundamental Research. As a matter of fact Research Analysts tend to get carried away with vast amounts of contradicting information. Good Investing is all about simple valuation models.
 
Different Approaches to Valuation
 
There are multiple ways by which the valuation of a share price can be determined.
  1. Discounted Cash flow method
  2. Relative Valuation Method
  3. Contingent claim valuation method.
Although the process to unravel the true value of a company is tricky, the open market to a large extent does justify the closest estimated value where fortunes can be made.
 
Keep it simple
The truth to Fundamental study of a share price is built on the principle that every asset has an intrinsic value. Investing can be simplified if it is based on the cash flow model, growth and the potential risk it involves. By calculating the estimated life of a company and deriving the cash flow during the life of the company one can zero in on the True Value. Markets do make mistakes, Professional Trading is about taking good advantage of these mistakes and converting them into Value Investing for the future.
 
 
 
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