how do you do your fundamental analysis and get fair value?

This is a discussion on how do you do your fundamental analysis and get fair value? within the Economic & Fundamental Analysis forums, part of the Methods category; Originally Posted by chump the companies that make up the S & P 500 are for the most part multi's ...

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Old Jun 1, 2007, 9:48pm   #8
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Originally Posted by chump View Post
the companies that make up the S & P 500 are for the most part multi's and their foreign sales when translated back into $ point in only one direction
It's a trade based on the weakness of the dollar.There are some exceptions of currencies that have not gained in value against the dollar,but generally if you look at the major currencies you should see what I mean.
Hello there.

Yes, i see it. The weak dollar, would you say that is the most important factor? I only ever look at charts, i should put some other studies in really.

Thanks.
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Old Jun 2, 2007, 2:40am   #9
 
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Originally Posted by chump View Post
the companies that make up the S & P 500 are for the most part multi's and their foreign sales when translated back into $ point in only one direction
It's a trade based on the weakness of the dollar.There are some exceptions of currencies that have not gained in value against the dollar,but generally if you look at the major currencies you should see what I mean.
Another factor is these companies have little to no debt. A significant amount of the earnings have been used to repurchase company stock. This reduces supply as demand increases due to increased quality earnings. In 1999-2001, companies were issuing stock like wild people and building capacity beyond what the system needed. Normal supply/demand brought on the US recession and bear market - as it always does.
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Old Jun 2, 2007, 9:53am   #10
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"would you say that is the most important factor? " ..if I did I would be making an assumption.
Our friend above cites yet another contributing factor. Companies have chosen to buy back shares at a higher rate than typical instead of reinvesting profits in expansion. Been happening here in the UK as well although over the same period UK 'blues' have not had the advantages of currencies working for them in the same way.
You might also say that if the currency is weak and you don't believe your central bank will step in and support it ,they are actively accepting of the fact that your currency is going to lose it's purchasing power..under those circumstances you would look for an hedge against that wouldn't you and historically equities have been that hedge rather than gold and the multis of course give you exposure to to the faster growth that has been happening outside the US without the need to invest directly in such markets.
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Old Jun 3, 2007, 4:22pm   #11
 
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Originally Posted by pirx View Post
Hi Forexian,

may I ask, which valuation model do you use when evaluating the "fair value" for a stock?

I usually use the built-in evaluation models in AAII Stock Investor Pro, or I use the web site I provided in my previous post.
analysts often use more than one model on a single stock to calculate the fair value. Dividend and Free Cashflow discount are quite difficult to use, mainly due the large amount of input variables. The simplest models to apply are the price multiple models i.e. the P/E models, P/BV ... P/Sales etc. Google these terms.. u'll find alot of info there...
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Old Jun 23, 2007, 3:08pm   #12
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Originally Posted by chump View Post
the companies that make up the S & P 500 are for the most part multi's and their foreign sales when translated back into $ point in only one direction
It's a trade based on the weakness of the dollar.There are some exceptions of currencies that have not gained in value against the dollar,but generally if you look at the major currencies you should see what I mean.
Hi Chump.

What about countries that don't have a weak currency. What about ftse stock?

Thanks.
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Old Jul 12, 2007, 12:56pm   #13
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http://ddo.typepad.com/ddo/2006/11/warren_buffett_.html
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Old Jul 12, 2007, 10:39pm   #14
 
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Originally Posted by Paul71 View Post
Hi Chump.

What about countries that don't have a weak currency. What about ftse stock?

Thanks.
Because oil is priced in $ollars and £1=$2.03 means oil costs a lot less. Advantage as cheap fuel.

50% of UK companies based in US.

60-70% of UK trade with Europe so £ v € relationship more important.

For the UK not a big factor.

Main downside is UK companies who earn US $. Their earnings will be less.

Apply selection. Hanson may well fall I guess.
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