Value Library

The following is an excerpt from the ABC Perspective - April 2005 - Pg. 12

I remember many years ago in primary school when it was drummed into our heads by our teachers to “stop, look and listen”. Although these words pertained to safe-proofing young children when crossing a street, I believe this term bears particular relevance to the stock market today.

Firstly, it seems to me that investors must look to the markets and individual stocks to ascertain what they may be telling us. You see, the stock market, I contend, speaks its own language with price volatility, chart patterns, trading volumes, etc. The market also tells us stories with dividend cuts or increases, stock splits, new financings and corporate executive/director appointments or resignations. Clearly it is up to us as investors to stop, look and listen to this information. Analyzing these announcements, I believe will enable us to make better-informed investment decisions.

As fundamental analysts we try to grab all tidbits of information in order to cobble together a portfolio of fundamentally undervalued stock picks. But this is easier said than done. It is, after all, a tedious task. Much of this valuable information must be gleaned from annual reports and financial statements, industry publications or brokerage reports. Next, it must be thoroughly analyzed such that we analysts can arrive at some financial conclusion. But, quite often, for whatever reason, we skip over a lot of the data/analysis in our haste to make a decision. This haste, however, can be quite costly with important investment decisions made on incomplete or spurious information.

The fact is: successful investing is a serious 24-7 analytical/investment management task. We must fully carry it out without cutting corners. The end result, in my opinion, leads to successful investment outperformance, significant personal accomplishment and constant peace of mind.