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SportsDino · 03-10-2009, 07:49 PM

I suggest if you cannot do the research that you should certainly not be involved in direct stock plays. You are not entitled to some magical 12% because you are an American. And diversity is not some mystical security blanket either, like they were preaching before EVERY stock went down.

If you feel there is going to be a recovery in general, buy an index of the group of companies you expect to recover. If you can trust a manager, buy their fund, but I've found many are either incompetent or have conflicted interests (and yes there are some good ones too, but you need to research them like hawks).

If you are interested in doing your own research, one trick I like is to break everything down to cash. If you can truly understand how cash flows into a company and how it flows out, then you understand at least one fundamental aspect of how that company works. It will lead you into investigating other important fundamental aspects, such as revenue and potential growth in sales, funding from equity versus debt, whether you will actually get a dividend and the likelyhood of it being cut/grown, and so on. It may sound easy, but this is actually very hard today with the sparse information and all the ways companies can mess with it to hide things. For instance, what some companies were boasting of a few years ago in reality turned out to be massive blocks of money tied up into leveraged derivatives... trying to understand their bragging about profitability became the basis of my initial monster shorts (granted I've been pissed off since I was but a wee kid in 1997 seeing outrageous noise in the news and trying to puzzle it out ever since).

Cash flow will also help to understand how companies will whether the current storm of credit crisis or whatever you want to call it. For instance, both Ford and GM have been beaten to hell and gone lately, but one is less than 10% of its year peak and the other is less than 25% of its year peak. One had already gone through the bad credit wringer and had done some house cleaning, the other had not, match em up! (Or short both the MFers just to be safe!)

03-10-2009, 07:49 PM	#76
SportsDino College Prospect Join Date: Oct 2001	I suggest if you cannot do the research that you should certainly not be involved in direct stock plays. You are not entitled to some magical 12% because you are an American. And diversity is not some mystical security blanket either, like they were preaching before EVERY stock went down. If you feel there is going to be a recovery in general, buy an index of the group of companies you expect to recover. If you can trust a manager, buy their fund, but I've found many are either incompetent or have conflicted interests (and yes there are some good ones too, but you need to research them like hawks). If you are interested in doing your own research, one trick I like is to break everything down to cash. If you can truly understand how cash flows into a company and how it flows out, then you understand at least one fundamental aspect of how that company works. It will lead you into investigating other important fundamental aspects, such as revenue and potential growth in sales, funding from equity versus debt, whether you will actually get a dividend and the likelyhood of it being cut/grown, and so on. It may sound easy, but this is actually very hard today with the sparse information and all the ways companies can mess with it to hide things. For instance, what some companies were boasting of a few years ago in reality turned out to be massive blocks of money tied up into leveraged derivatives... trying to understand their bragging about profitability became the basis of my initial monster shorts (granted I've been pissed off since I was but a wee kid in 1997 seeing outrageous noise in the news and trying to puzzle it out ever since). Cash flow will also help to understand how companies will whether the current storm of credit crisis or whatever you want to call it. For instance, both Ford and GM have been beaten to hell and gone lately, but one is less than 10% of its year peak and the other is less than 25% of its year peak. One had already gone through the bad credit wringer and had done some house cleaning, the other had not, match em up! (Or short both the MFers just to be safe!)