Beginning Investor Terms – Mutual Fund

Mutual funds pool together the capital of a large number of people, focusing on a specific investment strategy. This strategy is expressed in the prospectus that potential investors can read to help them decide which type of fund to invest in.

Beginning Investor Terms – Dividend

In the context of the stock market, a Dividend represents a cash payout of earnings usually to the common shareholders of a company. Companies are not required to distribute any earnings. So, because a company has high Earnings per Share (EPS) doesn’t mean there is any Dividend at all.

Beginning Investor Terms – Discounted Cash Flow (DCF)

Discounted Cash Flow is a way of estimating the current value of an investment in today’s dollars based on assumptions of future growth of cash flows discounted back to the present. This is a vital concept to understand for valuing long term investments, not just in stocks but Real estate, businesses, etc. Once you have determined the value for an investment you compare it to the current price to help you decide whether it is worth investing in. One can easily mislead oneself with the incorrect use of DCF.

Discounted Cash Flow (DCF) Spreadsheet for Mac

Strangely, it never it occurred to me that anyone would be interested in a Mac spreadsheet for valuating a company based on DCF. I created my own because I could not find one on the internet, so I incorrectly figured no one really used a Mac in this world, but me. Where as the entertainment business is a Mac dominated industry, finance seems to be PC dominated industry and for good reason. Microsoft sucks ( I am not being harsh) at porting Office for Mac. It stripped out some of the most useful features in the excel version for Mac and has no intention of adding them in the future.

Exploring Premium Services – Opportunistic Investor

Anyone considering investing money in a premium investing service remember should be mindful of two things. For a beginning investor the important item is whether or not a service fits your investment philosophy. In makes little sense to pay money for technical trading tips if you are fundamental investor. Second, and this is important for the small money investor, make sure the service is worth the money

Free Cash Flow – Beginning Value Investor Terms

This is the latest in my on going series of Beginning Investor Terms. Free Cash Flow (FCF) is a similar concept to Warren Buffett’s idea of “owner earnings.” It is an important concept in value investing largely because it is often a preferred bit of a financial data to Earnings.

Checking your data before you Invest – Valuation

If you are going to invest in a company you need to collect data about the financial workings of the company.For the Excel users on the PC platform I recommend Old School Value’s free spreadsheet for Net Net’s and his premium (read not free, although a good value) Discounted Cash Flow spreadsheet

Beware of Brokerage Costs

The more money you spend earning your money, the less you keep. This includes premium services, taxes, transaction costs, brokerage fees. Anything that keeps your dollars from compounding in the future. In general this concept is pretty easy to grasp but in particular small money and beginning investors need to know that there is a difference between paying $10/trade and $5/trade.

Beginning Investor Terms – Penny Stocks

Penny stocks are really any stock whose price per share is under a buck. The traditional wisdom is that Penny stocks are too be avoided at all costs. They are often volatile and illiquid, that is not traded in sufficient volume to enable easy entry into or out of a position in that equity.

Value Investors Club

Valuehuntr one of the blogs that we follow has been accepted in to the Value Investors club. That is pretty cool. The value Investor’s club was started by the genius investor and writer Joel Greenblatt.

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