How To Really Succeed In The Stock Market

[adufutuvorug]

So I thought I would share the value investment process that I utilize for my stock valuations. I have been studying hedge fund analysis and Buffetology for quite a while, and I am constantly reforming my opinions. So far I have had reasonable success with both the portfolio I publish on here and the portfolios I have traded prior.

DISCLAIMER: I am discussing methods not individually how to do them. Google them. This is a long process that requires a lot of time. But, it will pay off in the long run provided you can master them.

There is no one way to valuate a company

Businesses are very complex components to evaluate. In many cases, they are subdivided into many subsidiaries and complexities, not only this but there is usually a fair bit of accounting trickery that can be done to ruin a value investors forecast.

In order to do this we are up against buildings of Wall Street Analysts and "quants" as well as billionaires who have been succeeding in the market for decades. These people for centuries have been looking for a "magic formula" to give them an edge. They still have yet to find one. So I doubt you will.

Before we actually get started I will explain why technical analysis along with so many other tools are not viable.
Who are the most successful people in the stock market? Answer: Value Investors, Quantitative Analysis

[Affemshomo]

Value investors do this by creating a Margin of Safety. The Difference between the current market capitalization and the actual value we find the company to be worth. Value investors also believe the value of the company is equal to the cash flow the business will generate for the rest of its' lifespan.

We aim to build models to try to accurately forecast the future of the business' earnings and free cash flow. When doing this we look to reduce risk by making conservative assumptions and finding a large margin of safety.

When I properly value a company it takes a week - month. I spend 100+ hours building my models and valuing the company. It is not a quick process. The stock market isn't a quick game though.

It is bipolar in nature in the short term, but in the long term it is a calculated process. Unfortunately I would not be able to thoroughly condense all of this research into one article so I would urge you to read my other post which will walk you through how you can learn value investing from scratch.