Joined: 02/Sep/2006
Location: India
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Posts: 9319
Topic: Analysts' Reports: What to look for? Posted: 28/May/2008 at 1:15pm
Originally posted by deepinsight
Originally posted by basant
GENERAL
THOUGHT - With due regard to these guys I see no reason why we should believe
them. Each quarter they come out tweaking at the numbers and extrapolate the
current scenario into the future.
My comments should not be viewed in terms of what
Voltas would do but moseso in terms of
the pitfalls of relying on someone who is not betting his own money.
I find
it quite useful to read the reports as they have access to the managment
& their prevailing thoughts at the moment. I think Basantee's comment that
we should not extrapolate or take the detailed projections as truth is
relevant.
However,
many of the analysts (even from Enam) have made good calls on issues impacting
individual companies (they are not 100% right) - we still need to make our own calls.
Right, we
need to have independent thinking & be responsible for owning failure/success arising out of it without blaming others.
Originally posted by deepinsight
The
other thing is, we should anyway scan this report for the underlying thoughts
as the rest of the investment community is also getting fed the same diet.
While one should not become contrarian just
for the sake of it, but it pays in the long run to eat what's not the flavour of
the seasonbecause one gets to buy at depressed prices.
"As an investor, you need to buy a post office scale. When all the
reports on a stock or sector are light, it means 'buy'. Conversely, when the
weekly reports you receive on an industry add to several kilos then 'sell'! So,
after all, brokerage research does have a very useful function but not through
its content but weight.
And also....
Mimicking
the herd invites regression to the mean (merely
average performance) ---Charlie Munger
Originally posted by deepinsight
Our job as individual investors is to digest the reports and be
resolute in our own thoughts & investment thesis.
Absolutely
true.
Life can only be understood backwards—but it must be lived forwards
Joined: 29/Mar/2007
Location: India
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Posts: 4243
Posted: 28/May/2008 at 4:21pm
Brokerage report gives a nice snapshot about a company. You could try and get this info from the company website, business websites, management presentation etc - but reading about a company from a third party's perspective is always a good thing.
From an analyst report, I look at the following -
- Earnings estimates
- Past financial performance
- Pros & Cons of investing in the company
- The bigger macro picture (Eg: Organized retail sector is growing at 30% per annum, Rupee is expected to settle at Rs. 35 levels etc)
- Future initiatives taken by the company
- Segmental results (if the company is diversified)
Joined: 13/Feb/2008
Location: United Kingdom
Online Status: Offline
Posts: 626
Posted: 28/May/2008 at 5:01pm
I too go thru the research reports on most of my stocks( although most of my stocks aren't tracked by any broker). But I look them just to know about the business details and the future plans of the management. I simply ignore the price targets and the earnings estimates part..
=======================================
The more it changes, the more it’s the same thing.
Joined: 01/Jan/2006
Location: India
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Posts: 18403
Posted: 28/May/2008 at 5:33pm
To me the subjective (business model, management, scale of opportunity) is very important from where I try and deduce objectivity (earning numbers) on my own.
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