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Table of Contents
- Stock
Fundamentalist
- Stock
Technician
- Contrarian
- Other News
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| Stock
Fundamentalist and his tools |
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This type of investor base his analysis and decisions primarily
on basic factors such as economic conditions supply and demand
earnings and dividends. They typically look for mispriced
securities or where future earnings and dividends differ which
may change the current price of the security. |
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P/E - The current market price of a share of stock,
divided by earnings per share for a 12 month period. If we
were to graph this ratio on a year to year basis we would be
able to see the high variations, which would suggest that
investors do not apply a standard multiple to earnings in order
to determine an appropriate value on earnings. |
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| Earnings - Every company differs in how they use there
earnings. a) Earnings may be split up into Dividends and further
Investment into the company. b) Earnings may be less than the
Dividends and Investments indicating that the company may have a
number of projects contributing less than expected capital to
the company or the company may have decided to pay a higher
dividend. Therefore, contributing less capital to it's
earnings. c) Earnings is greater than dividends and Investments,
because of the positive projects that the firms has.
Therefore, contributing extra cash in hand the company may
decided to repurchase treasury stock with this extra cash.
Earnings could be broken down further to show a permanent
component and a transitory component for better analysis of a
corporation. Earnings could be compared historically and
as well as with other companies in the same industry to show the
rate of growth. |
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Dividend Yield - Is the dividend dollar amount divided by
the closing stock price. Note some companies do not pay a
dividend which is used to further their growth, and dividends
amount can be changed by the company. This is used to compare
different companies as to how many dollars I need to obtain a
dividend as a percentage.
(Note
some companies would like to give out to share holders stock
dividends, cash dividends or possibly a stock split.)
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Correlation coefficient - This would indicate how closely
the returns on a company were associated with the returns on the
S&P 500.
This
measure can also be used to analyze portfolios comparing how do
two individual securities owned correlate. The range is
normally between -1 and 1.
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Beta Coefficient (ß) - Measures the relationship or
sensitivity of an asset's return to changes in the return on the
market portfolio. |
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| This can be used to compare to securities in relationship to the
market for better portfolio management. A beta of 1
mirrors the returns of the market index, greater than 1 are more
volatile, if less than 1 are less volatile than the market
index. |
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| Stock
Technician and his tools |
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technician tend to see what stocks have done historically while
a fundamentalist looks forward. The technician will look through
the historical stock closing price and begin to look for
specific patterns which they had previously studied before. |
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| MACD - Uses moving averages to show some trend
characteristics then it subtracts the faster moving average from
the slow moving average to show the oscillation between a
centered point.
Some
common patterns they look for:
 | Head and Shoulders; Top and Bottom |
| Cup with handle |
| Symmetrical Triangle |
| Ascending Triangle |
Here is a links that should help.
http://investorguide.com/talearning.html
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| Contrarian
investor |
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This type of investor tries to profit from overreactions in the
market place.
They tend to identify companies that have been on the NYSE
(strict standards) for a period of 5-7 years. Then they are
ranked by monthly return for the past 3 years. After the
research they buy the stocks with the lowest average
return. Then the position is held for the next three years till
the overreaction is corrected.
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| Other
News |
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Takeover, tender offer, bidder, target firm, merger, leverage buyout, management
buyout, white knight greenmail, repurchase offer pac-man defense, poison pill
defense, crown jewel defense |
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Treasury stock - When a corporation repurchases some of its own
outstanding stock in the market or through brokers. Treasury stock does
not receive dividends nor are entitled to vote. |
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Lawsuits |
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Insiders - Reporting of any company director, officer or stockholder who
owns 10% or more of a company stock is required.
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