Hi, how do you determine a fair value of a stock? what is the formula to use? can list an example?

When you think it is fair then it is fair...

For me, I don't need and don't want to think too much, no need to talk about the different models as in DDM, DCF, the very old Munsen methodology, etc. Just use the Book Value.

how to check the book value?

I use a coin. I flip until I get the answer that I want.

Can use many methods to get the fair value.

For me, I try the KISS, keep it as simple method i.e P/E. Sort of lazy to learn more complicated methods. In the end, it is not the sole factor to sell you shares.

If I think BN could not win a 2/3 majority in GE, I might sell off the shares too.

Just one of the methods, certainly not the best you can get.

This post has been edited by SKY 1809: Nov 5 2010, 01:55 PM

then better go up hill & play "Big or Small" better

I expect the BN to win. I think the stock market will only crash if BN loses because this will be a shock. I don't think a less than 2/3 majority win will cause the stock market to fall. I don't think this result will shock the public a 2nd time. On the other hand, if BN wins 2/3 majority possibility the stock will climb higher.

dividend discount model? discounted cash flo model?

been long time since meh last used those methods

Sounds good too.

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Added on November 5, 2010, 2:05 pmYa, some of these methods , we just learned once and forget one unless you are sort of fund managers.

Even Analysts do not like to use these methods often.





This post has been edited by SKY 1809: Nov 5 2010, 02:05 PM

what is the book value for bjcorp?

Book Values do not work very well for Plantation and property stocks in the past.

The book value for agriculture lands and commercial lands differ a lot. And seldom people want to sell lands at plantation price though the book says it is only worth that much.

Bjcorp , Realized Net Asset Value is above rm 2, ( forgot the exact number )

This post has been edited by SKY 1809: Nov 5 2010, 02:14 PM

There are lots of methods to calculate the fair value. The simplest one is to use average PE.

However, merely using average PE is not enough. Need to look at the fundamentals of the company as well for profitable investment

Though, many glove stocks are fundamentally strong ones, they cannot run away from the problems of QE 2, where raw material prices are jumping up, and US $ is falling fast.

This post has been edited by SKY 1809: Nov 6 2010, 12:18 PM

any web to have chart for PE and book value?

Bjcorp still undervalue...
It should at RM2.. or above....
Believe...
VT will take 1-2week will bring BJcorp RM1.50++

bjcorp got high PE

PE is neither perfect too.

Most beginners would just use the historical PE ( published somewhere or info appeared in the trading system ) ) as the numbers to buy a certain stock. That is one school of thought. expecting constant future economic performances as if today.

The other school of thought would like to use the forward PE , meaning some kind of future earnings are used. Like to take into account of future good CPO prices at above rm 3,000/tonnes.

The price you pay for the stock actually counts the number of years the company would earn back that amount of money in the future.

Let say for PE of 5x, you do expect the company would earn back this money in 5 years , kinda shorter is better.

That is why another school thinks you should use the forward PE.

Logically it makes sense since we all hope the company we buy would make good profits in the future, not the other way round.

If there is a likely recession in the near future, stock price would start to sink first, Forward PE recognises that.

If you are still using the historical PE as a yardstick, you need to know where you stand in the future.

This post has been edited by SKY 1809: Nov 6 2010, 12:21 PM

I tried calculating using DCF model, and it's quite useless if you cannot make a good cashflow forecast for 5 years (garbage in = garbage out)

Also rite, most DCF look good now because of relatively low interest rates.

if u buy for long term..who cares?

as long as the price is in ur tolerance level, just grab it, if u play short term...i go genting play big and small...50%-50%, faster results..and high return lagi best~