Some investors try to analyze the stock market by using information gained from insider sources in a company. This type of analysis and investment is called insider training and it is illegal in most places.
Comparative Analysis of Stocks
In this method of analysis, investors compare different stocks, trying to figure out which stocks are yielding more profit and which stocks are most likely to offer profit in the future. The advantage of this type of analysis is that investors will figure out which of their stocks are truly performing and which are not. This could make it easier when deciding which stocks to buy and which to sell. However, comparative analysis that does not take into consideration overall market conditions can backfire, as it can give an imprecise view of the stock market portfolio in the context of the market.
Wednesday, June 25, 2008
Monday, June 16, 2008
Fundamental Analysis of Stocks
In this type of analysis, investors analyze stocks by investigating the financial statement of companies releasing stocks. There are many types of fundamental analysis, including the CANSLIM fundamental method, which analyzes stocks by looking at companies that offer heavy buying demand and good earnings growth.
Techniques Used In Analyzing Stocks
Stock analysis is complex and there are several techniques are used by investors and financial experts:
Monday, June 9, 2008
Indian banking sector outshines others in value creation
The start of the financial crisis in the United States took a heavy toll on banks worldwide last year, but some players proved to be more resilient than others, according to The Boston Consulting Group's sixth annual report on creating value in banking. The report, titled Managing Shareholder Value in Turbulent Times was released today.
Overall, the global banking sector's average total shareholder return (TSR) plummeted by 93 percent in 2007, to 1.7%, and was well below the 15.2 percent average TSR of all industries, according to the report. Globally, the sector's market capitalization increased by a mere 2.4% to $8.3 trillion-a stark change from 2006, when market cap grew by 31 percent. Since the end of 2007, shareholder returns in the banking industry, in general, have deteriorated rapidly: in less than three months, the sector's market cap has dropped by more than 15%, to $7 trillion from $8.3 trillion.
A Year with Two Halves:
Recent events, including the sudden collapse of Bear Stearns, have provided dramatic evidence that the deepening crisis is both profound and pervasive. Early signs of its impact, however, became increasingly visible last year. Indeed, the report-which analyzes a sample of banks representing more than 75 percent of total banking market capitalization-shows that 2007 was a year with two halves.
In the first half of 2007, the sector's market capitalization grew by 5.7 percent. In the second half, as the crisis became more widespread, banks lost $269 billion in market value.
A Huge Divide Between Developed and Emerging Markets: Indian emerged at the top:
A gaping performance divide separated ten major developed markets from the rest of the banking world. Banking TSRs in these developed markets fell to an average of about -13%, while the average TSR outside these markets was about 27 percent. Emerging markets, in particular, avoided much of the turmoil and provided a counterweight to the weak performance of Western and Japanese banks. "Even among the BRIC countries, Indian banking sector outshone every one else in 2007 in value creation", said Saurabh Tripathi, Partner and Director at The Boston Consulting Group, Mumbai. "This is despite the heaviest correction in Q1 of 2008".
The performance divide reordered the ranking of the world's biggest banks in Asia Pacific region. Three of the five largest banks, by market cap, were Chinese: ICBC, China Construction Bank, and Bank of China. By comparison, the three largest u.s. banks, which had dominated the ranking in previous years, lost ground. Four of the seven new entrants in the 30 largest banks were from BRIC countries. "Despite the highest value creation, we are far away from any bank form India being in the top 10 by market value", said Harsh Vardhan, Partner & Director, BCG, also speaking at the release of the report. SBI and ICiCI have the largest market cap from Indian banking and are ranked above 50 in the global pecking order.
Value creation in banking in India: Tale of the business model arbitrage:
Overall, Indian share market has been giving very high returns over last few years. Banking and non banking financial services (NBFS) gave consistent returns beating the market across all time horizons over last 5 years. Axis Bank and Bol were the toppers among banks in consistent value creation over all 3 horizons (1, 3 and 5 years). Among NBFS, Reliance Capital and Shriram Transport were consistent toppers. Different segments within banking and NBFS fared differently. "NBFS segment has given higher returns across all time frames compared to banking. This depicts the enormous opportunities that the changing nature of demand in India are throwing up and new players are emerging to take advantage of the opportunities", said Saurabh Tripathi.
Within banking, the difference in the valuation multiples between public sector and private sector has grown three times over last 5 years. "We term this as a business model discount. Both old private banks and public sector banks suffer from it", added Harsh Vardhan. While PSU banks retain over two-third of banking assets, they have only one-third of value today and this may erode even faster in days to come. While, PSU banks can not have same multiples as private banks, appropriate changes in business model, HR practices, technology usage, and a few other initiatives can increase the multiple to jndustry average levels.
This can unleash about Rs 200,000 crores of value - over half of which will go to the government. It can ease the capital constraint issues that government faces in PSU bank growth."The PSU banks need to augment their performance measurement vocabulary to introduce value creation metrics", added Saurabh Tripathi. The key challenge to private sector banks in value creation will be to continue the fantastic performance. They will need to figure out the most capital efficient profitable growth opportunities to continue to create share holder value form these high levels of multiples. On the other hand the old private sector banks are just a huge opportunity waiting to be ignited.
Overall, the global banking sector's average total shareholder return (TSR) plummeted by 93 percent in 2007, to 1.7%, and was well below the 15.2 percent average TSR of all industries, according to the report. Globally, the sector's market capitalization increased by a mere 2.4% to $8.3 trillion-a stark change from 2006, when market cap grew by 31 percent. Since the end of 2007, shareholder returns in the banking industry, in general, have deteriorated rapidly: in less than three months, the sector's market cap has dropped by more than 15%, to $7 trillion from $8.3 trillion.
A Year with Two Halves:
Recent events, including the sudden collapse of Bear Stearns, have provided dramatic evidence that the deepening crisis is both profound and pervasive. Early signs of its impact, however, became increasingly visible last year. Indeed, the report-which analyzes a sample of banks representing more than 75 percent of total banking market capitalization-shows that 2007 was a year with two halves.
In the first half of 2007, the sector's market capitalization grew by 5.7 percent. In the second half, as the crisis became more widespread, banks lost $269 billion in market value.
A Huge Divide Between Developed and Emerging Markets: Indian emerged at the top:
A gaping performance divide separated ten major developed markets from the rest of the banking world. Banking TSRs in these developed markets fell to an average of about -13%, while the average TSR outside these markets was about 27 percent. Emerging markets, in particular, avoided much of the turmoil and provided a counterweight to the weak performance of Western and Japanese banks. "Even among the BRIC countries, Indian banking sector outshone every one else in 2007 in value creation", said Saurabh Tripathi, Partner and Director at The Boston Consulting Group, Mumbai. "This is despite the heaviest correction in Q1 of 2008".
The performance divide reordered the ranking of the world's biggest banks in Asia Pacific region. Three of the five largest banks, by market cap, were Chinese: ICBC, China Construction Bank, and Bank of China. By comparison, the three largest u.s. banks, which had dominated the ranking in previous years, lost ground. Four of the seven new entrants in the 30 largest banks were from BRIC countries. "Despite the highest value creation, we are far away from any bank form India being in the top 10 by market value", said Harsh Vardhan, Partner & Director, BCG, also speaking at the release of the report. SBI and ICiCI have the largest market cap from Indian banking and are ranked above 50 in the global pecking order.
Value creation in banking in India: Tale of the business model arbitrage:
Overall, Indian share market has been giving very high returns over last few years. Banking and non banking financial services (NBFS) gave consistent returns beating the market across all time horizons over last 5 years. Axis Bank and Bol were the toppers among banks in consistent value creation over all 3 horizons (1, 3 and 5 years). Among NBFS, Reliance Capital and Shriram Transport were consistent toppers. Different segments within banking and NBFS fared differently. "NBFS segment has given higher returns across all time frames compared to banking. This depicts the enormous opportunities that the changing nature of demand in India are throwing up and new players are emerging to take advantage of the opportunities", said Saurabh Tripathi.
Within banking, the difference in the valuation multiples between public sector and private sector has grown three times over last 5 years. "We term this as a business model discount. Both old private banks and public sector banks suffer from it", added Harsh Vardhan. While PSU banks retain over two-third of banking assets, they have only one-third of value today and this may erode even faster in days to come. While, PSU banks can not have same multiples as private banks, appropriate changes in business model, HR practices, technology usage, and a few other initiatives can increase the multiple to jndustry average levels.
This can unleash about Rs 200,000 crores of value - over half of which will go to the government. It can ease the capital constraint issues that government faces in PSU bank growth."The PSU banks need to augment their performance measurement vocabulary to introduce value creation metrics", added Saurabh Tripathi. The key challenge to private sector banks in value creation will be to continue the fantastic performance. They will need to figure out the most capital efficient profitable growth opportunities to continue to create share holder value form these high levels of multiples. On the other hand the old private sector banks are just a huge opportunity waiting to be ignited.
Monday, June 2, 2008
How To Do A Stock Analysis
Regular stock market analysis can ensure that you make the most of your money and minimize your risks. While some investors use fundamental analysis while others use stock market technical analysis or stock technical analysis to evaluate their stocks. This article informs you on:
* What are the techniques used in analyzing stocks?
* What is SA checklist?
* How software can be used in stock analysis?
Stock analysis is crucial when deciding to buy investments and when evaluating your investment strategies. Regular stock market analysis can ensure that you make the most of your money and minimize your risks. While some investors use fundamental analysis while others use stock market technical analysis or stock technical analysis to evaluate their stocks. It is advised to stay alert and evaluate your investments regularly. You can use today's stock analysis software .Similarly you can choose use online stock analysis programs, or you can simply rely on old method of newspapers and news to analyze the stock market. Whatever you do, keeping an eye on the market and on your portfolio can help ensure that you act in time to maximize profits and lessen losses.
Techniques Used In Analyzing Stocks
Stock analysis is complex and there are several techniques are used by investors and financial experts:
Fundamental Analysis of Stocks
In this type of analysis, investors analyze stocks by investigating the financial statement of companies releasing stocks. There are many types of fundamental analysis, including the CANSLIM fundamental method, which analyzes stocks by looking at companies that offer heavy buying demand and good earnings growth.
Technical Analysis of Stocks In the Stock Market
In this type of analysis, investors study price action on the stock market by the use of quantitative techniques and charts. The purpose of this type of analysis is to forecast overall price trends. A company's financial statements are less important in this type of analysis. Investors using technical analysis often use the advance-decline line, a tool that determines the difference between the number of stocks dropping in price and the number of stocks rising in price. Investors can create a net advance by subtracting total number of dropping prices from total number of advancing prices. Over time, the total creates the advance-decline line. This line often parallels the movements of the Dow Jones index, but financial experts have noted that when there is a discrepancy between the Dow Jones and the advance-decline line, that is a good indication of a changing direction in the market.
Index Method
In this type of analysis, investors value their portfolios by trying to create diverse investment strategies. The investment portfolio is weighted by market capitalization. In this type of analysis, investors try to find ways to minimize taxes, maximize the general trend of the stock market, and makes diverse investments. Analysis aims to find the most diverse portfolio strategy possible
* What are the techniques used in analyzing stocks?
* What is SA checklist?
* How software can be used in stock analysis?
Stock analysis is crucial when deciding to buy investments and when evaluating your investment strategies. Regular stock market analysis can ensure that you make the most of your money and minimize your risks. While some investors use fundamental analysis while others use stock market technical analysis or stock technical analysis to evaluate their stocks. It is advised to stay alert and evaluate your investments regularly. You can use today's stock analysis software .Similarly you can choose use online stock analysis programs, or you can simply rely on old method of newspapers and news to analyze the stock market. Whatever you do, keeping an eye on the market and on your portfolio can help ensure that you act in time to maximize profits and lessen losses.
Techniques Used In Analyzing Stocks
Stock analysis is complex and there are several techniques are used by investors and financial experts:
Fundamental Analysis of Stocks
In this type of analysis, investors analyze stocks by investigating the financial statement of companies releasing stocks. There are many types of fundamental analysis, including the CANSLIM fundamental method, which analyzes stocks by looking at companies that offer heavy buying demand and good earnings growth.
Technical Analysis of Stocks In the Stock Market
In this type of analysis, investors study price action on the stock market by the use of quantitative techniques and charts. The purpose of this type of analysis is to forecast overall price trends. A company's financial statements are less important in this type of analysis. Investors using technical analysis often use the advance-decline line, a tool that determines the difference between the number of stocks dropping in price and the number of stocks rising in price. Investors can create a net advance by subtracting total number of dropping prices from total number of advancing prices. Over time, the total creates the advance-decline line. This line often parallels the movements of the Dow Jones index, but financial experts have noted that when there is a discrepancy between the Dow Jones and the advance-decline line, that is a good indication of a changing direction in the market.
Index Method
In this type of analysis, investors value their portfolios by trying to create diverse investment strategies. The investment portfolio is weighted by market capitalization. In this type of analysis, investors try to find ways to minimize taxes, maximize the general trend of the stock market, and makes diverse investments. Analysis aims to find the most diverse portfolio strategy possible
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