Fantastic advice.
if you see any flaws please let me know... chahine
well im working on issue 2 right now and its going to be on financial models want to read about them ull have to join.. for i don't want to post here messages that are too huge..... longstockcentral-subscribe@yahoogroups.com or private msg me your first name last name and email address and ill add u. ill post on a monthly basis over here what is the monthly content is going to be about... HAPPY 4th Jully u all chahine
Sounds good. We look forward to it.
If any of u looked into QDEL lately u will know that the company stumbled a lot. The reason is simple the management has been innefficient in revealing to shareholders the litigation that they have been involved in and a lot of invester have been dropping this stock. At the next climp of descent amount sell it if u bought it. Chahine
Welcome to the second issue of LongStockCentral Dear Readers, Well for the first issue received a lot of positive feedback from indivuduals who are soon joining longstockcentral. One comment that i had las week that i taught was important to everyone was to concentrate on the basic. That I agree and decided to go back to my own basics to strenghten the real values of investing. This month Im going to just introduce Financial Analysis and the different important aspect of it and every month we will focus in details of them. Financial analysis can have many shapes and strategies. I think to be a good financial analyst and make sound investments an individual should have a good understanding of the following combination of skills. -able to analyse the broad picture. -analyise financial statement -and able to look beyond the business and the competition. -have made couple of investing errors and plan to make more to continue to improve. -have knowledge of different investing strategies so that can see opportunities that are not seen necessary in financial statements. This month i will try to open one crucial issue that i think can make you double or loose all situation which is the analysis of Business Models. Why are business Models so important? What are business Models? how to analyze a Business Model for sure are some question that come to your mind and i will try to address them. First look toward the definition and explanation of what a business model is. A business model can be defined as a method of how a company, business or individual generates revenue or income. A business models are concepts that have been used in the past in the present and most definitely in the future to visualize how a businesss works. The purpose of a model is not to just see how it works but also to see how the business is viable, how it can be improved if any hope is visible. In my opinion related to financial analysis its one of the most important tool to filter out businesses that are just there to take space and waste time verses companies that worth the time and energy to scrutinize its financial statements for better and good investment. On a business basis, business models are very dynamic of nature for they do not have a set structure and they change over the course of the business to improve or fail. After a large amount of research and analysis of different models i came up to some important elements to look at to test if the business model is reliable or not. -The purpose of the model -develop a conceptual approach and visualization of the business -look at the different components that affect the business -i have seen that the simple the business and componenet interaction is the more successful businesses u will find. -flexibility for the model is crucial to allow "the model "to be altered to allow growth. -because of the dynamic nature of the business models you are required to review these models on a regular basis to see the improvement or failure of the model and if its failing are there anything the management can do to fix it? if so how long will it take? will it effect the short and long term credibility of the company?and the main question are you willing to put the time and money for the company to turn around from a failing business model to a more successfull one? -in financial analysis the crucial and most importnat aspect is to invest in companies that have simple models but are successfull. Let me give you couple of examples that are still can be used today. Cocal Cola - A unique beverage company that im sure everyone around the world knows and will know. Gillette - A shaving apparatus company that has dominated the market for the last decade or so at least even though its competitors are trying to eat its market share. because of its initial solid model it has been able to set its standard around the world of quality, standard and price that a lot of other companies are able to challenge but not maximize out off. Sirius or XM radio - both are the only satellite radio companies there model is unique for the only sense that entry price to that market sector is very expensive and they entered in a time span where entertainment and technology has become a crucial part of our lives. Do you think that they have a strong enough to be and continue to be successfull in this demanding market. I can't tell you that but i can tell you is that the more you look into business models the more proficient you are going to become in finding hidden jewels. Who knows maybe this will help you discover the next coca cola, gillette, or many others. The information I wanted to project this month has already been taken care of now let me share some business models that i have come across and im sure so have you without knowing it. Few of them are very trivial but i think its still important to mention them just for argument sake. -Research Project -Hobby -Self-Employed -Low Competence Venture -Charity -Hostage Venture -Small Business -short life Venture -Hard entry barriers -competence-based"troubled" -competence-based"success" -High-potential venture -Tech-based -Model Venture. Let me explain each of them briefly The first 5 im going to explain are business models that will not generate a lot of return because they are not necessarily considered to have the elements required to be a business but as always exception do make the rules. Research Project is in my opinion is not really a business model, consumes resources with no end in sight. Since nothing has been produced yet, there is nothing to keep and it isn't a business. It is driven by the quest for innovation. but this could also technically be one business model if we think in terms that every innovating company needs and R&D department to continue develop new products such as 3COM or JOHNSON & JOHNSON ect... Hobby is my opinion is also not really a business model because it this idea u have no set money making process and you don't want to have one and you also don't want a money making process. Self-Employment usually are opportunities and are for individuals with strong persistence. The frequency and product longevity depend on the competence of the individual or individuals managing and leading the project. Low Competence venture is probably the one that I think a lot of the dot coms are or can be categorized because the idea is weak or the management is weak. The business idea is just hard to maintain maybe because of cost, or because the niche being so competitive it becomes impossible if not a suicide to enter in this venture. Charity is one model that no explanation is required except the fact that helping is in the heart of every single one of us at some level of affording it or not. The next 3 business models can be considered and superimposed on small businesses where they have elements to be a business but may not necessarily generate value. Hostage venture is a business model that cannot grow because they are dependent of monopolistic acts or employees or customers which restricts there margins and resources. An example that comes to my mind is the Internet Explorer product line which is included in the microsoft operating system packages compared to Netscape Navigator who is struggling to compete and gets its position in the market. Small Business is a model that generates a good income for the size but because of the size the exit opportunities are very small. The product has or could have high level of competition in which each companies individual innovation allows the growth to achieve the thrived success. The last in this category is the Fad Venture modelor short life ventures which is a model that may not survive a long time but and may last longer depending on the return rate which varies a lot. The last 6 business model types are more the group with the highest chances of success in having a good cash flow at the same time having a constant growth. The first category is the Hard Entry Barrier models which simply says that the entry in the specific line of business is protected by intelectual properties. The barriers could be long term financial depts or could be as simple as the wrong choice of entry to business in timing. Even though this sounds so negative i consider sirius to be in this category because the entry barriers to the satellite radio industry is very much which include cost on initial investments. However this has a double cut, if the company is in early it will generate and have an autonomy but if its a company entering behind an autonomy depending on how the management and the different business decisions are made can influence the success of a company in the short and long run. As competence-based "troubled" is a company with amazing management with the necessary skills and knowledge to make a company successful but the product is a product that is looking for a market and usually this kind of model is doomed to failure or a very lenghty process until it places a strong hold on the market. The competence-based "success" as you probably guessed from the one above this model is going to generate a better return in most cases for the only reason that the product is excellent and was development during the proper demand analysis, and quality of the management which thrive toward the success of the company. Tech-Based are one common business models now a days with the dotcom boom in the 90's and then the continually increasing demand in tech based products like computers, tech services, cell phones, nanotech and so much more that this model adapted or combined to other models has become as common as chocolate chip cookies. Is it to blame i would say that tech has many benefits in doing business for it decreases time to do business and improves return on investments. SO why hesitate. The Model venture is a model that i would consider to be one that we are the most interested at because its the one that generates money for us shareholders. This model is encouraged for the reasons that this model supports refinements in expertise, they are self- observing, self-reinforcing which means that the company keeps on assessing itself by performance and feedbacks or other means to make sure that its performance is optimal and because this model promotes this behaviours it helps and encourages a lot of businesses to go toward this model. Making our life easier. So that is this months newsletter. The only request i have to all of you is to pass on this newsletter to any friends, family, coworkers or individual that might be interested by the type of information i provide. The can join at longstockcentral-subscribe@yahoogroups.com. Ill appreciate it a lot. Chahine ************************************************ This is private research and the decision to buy is solely yours with no reliability on our part. Feel free to pass it on to your friends and family to join us. longstockcentral-subscribe@yahoogroups.com ************************************************
Good points.
thnx chahine
Welcome to the third issue of LongStockCentral Dear Readers, Alright as of last month we talked about business models and this month we are going to talk about financial statements. Why are they so important? Which ones to look? Financial statements are important because they are extensively used first by internal users like management who perform company performance evaluations or competitive analysis, but also by external users such as potential investors like you and me or bankers, or lenders . It could be also used by current or future employees to ask some simple questions like is the company strong enough financially to meet my payroll needs in the future. The beauty of financial analysis is that it does not depend only in finance itself but on how well you can take different subject and analyze and combine them with the financial statement. Some common subjects include economics, marketing, accounting, and strategies but also includes phycology or even subjects you would never imagine being part of finance. In the modern capitalist system that we are in, most governments by my knowledge require publicly-traded companies to issue a set of documents each year referred to as financial statements or financial reports. These documents consist most often of the "balance sheet", "income statement", and "statement of retained earnings", and the "statement of cash flows", in addition to supplementary notes and management discussion. In the United States, publicly-traded companies are required to prepare based on generally accepted accounting principles (GAAP). Each statement presents financial data relating to a company's current financial health, business results for the previous period, and other indicators that are used by prospective investors, lenders, banks and managers themselves to consider purchasing the company's stock. To entice new investors, most American companies assemble their financial statements on fine paper with pleasing graphics and photos, attempting to capture the excitement and culture of the organization in a "marketing brochure" of sorts. Financial statements must be carefully inspected and certified by independent auditors to avoid misleading information and fraudulent financial presentation, as required by law. However not all gimmicks are found and so many more are deemed to be created over time. But before we talk about other financial issues lets talk more in detail about GAAP and its structures. Eventhough we are all talking GAAP has this accounting system or that i think it is important to have some general knowledge of how the whole GAAP system and structure works. Generally accepted accounting principles (GAAP) are the accounting rules used to prepare financial statements for publicly traded companies and many private companies in the United States. In the United States, as well as other countries practicing English common law system, the government does not set accounting standards, in the belief that the private sector has better knowledge and resources. The GAAP is not written in law, although the Securities and Exchange Commission (SEC) requires that it should be followed in financial reporting by publicly traded companies. GAAP has four basic principles. -The historical cost principle which requires companies to account and report based on acquisition costs rather than fair market value for most assets and liabilities. -The revenue recognition principle is the second principle which requires to record when revenue is realized or realizable and earned, not when cash is received. The way of accounting is called accrual basis accounting. -The third principle is the matching principle. Expenses have to be matched with revenues as long as it is reasonable doing so. -The last principle is called the full disclosure principle. Amount and kinds of information disclosed should be decided based on trade-off analysis as larger amount of information costs more to prepare and use it. Information disclosed should be enough to make judgement while keeping costs reasonable. But do all businesses operate under the full disclosure principle i should say that i doubt it. Here as i found are list of the organizations which influence developing GAAP in the United States. Some of them include : -Securities and Exchange Commission (SEC) -American Institute of Certified Public Accountants (AICPA) -Financial Accounting Standards Board (FASB) -Governmental Accounting Standards Board (GASB) -Other influential organizations GAAP is composed of various documents. Accounting Principles Board (APB) dissolved in 1973 and the FASB took over the responsibility setting up the standards. I'll not go into the accounting detail of GAAP because it is beyond my scope of knowledge. GAAP provides a broad interpretation of principles this is not to its favor yet GAAP cannot do much about it since it requires a certain leverl of interpretation flexibility to accomodate the different business models and business needs. This however has a negative side which it is used by immoral and untethical managers bend the rules and regulation to show the negative information seem unimportant and the important information even more important. If you like accounting and want to major in it their are some certification that im sure you can do in your local university or you can take certificatations listed below : Accredited Business Accountant (ABA) Accredited in Business Valuation (ABV) Accredited Tax Advisor (ATA) Accredited Tax Preparer (ATP) Automated Examination Specialist (AES) Brainbench -Cert Times -Certified Bank Auditor (CBA) -Certified Bookkeeper (CB) -Certified Financial Examiner (CFE) -Certified Financial Planner (CFP) -Certified Financial Services Auditor (CFSA) -Certified Forensic Accountant (CrFA) -Certified Fraud Examiner (CFE) -Certified Government Financial Manager (CGFM) -Certified Healthcare Financial Professional (CHFP) -Certified in Financial Management (CFM) -Certified Information Systems Auditor (CISA) -Certified Information Technology Professional (CITP) -Certified Internal Auditor (CIA) -Certified Management Accountant (CMA) -Certified Professional Environmental Auditor (CPEA) -Certified Public Accountant (CPA) State Boards of Accountancy -Certified Public Finance Officer (CPFO) -Certified Quality Auditor (CQA) -Certified Valuation Analyst (CVA) -Enrolled Agent (EA) -Personal Financial Specialist (PFS) I know these are a lot I bet a lot more that you guessed yourself. I myself was astonished for i knew only 6 or 7 of them existed and was surprised the existence of the rest. If you want to look into any of these go to http://www.taxsites.com/certification.html and the whole list is available with the main sites with a lot more detailed explanations. Just for the curious, we are going to talk about balance sheets next month. The importance, the uses and so much more information that I'm sure you will enjoy. So that is this months newsletter. A bit short because it is initially set the tone for the next couple of months. The only request i have to all of you is to pass on this newsletter to any friends,family, coworkers or individual that might be interested by the type of information i provide. The can join at longstockcentral-subscribe@yahoogroups.com. I'll appreciate it a lot. Chahine ************************************************ This is private research and the decision to buy is solely yours with no reliability on our part. Feel free to pass it on to your friends and family to join us. longstockcentral-subscribe@yahoogroups.com ************************************************ And off-course if you are not happy of our services and information we provide you can send an email to longstockcentral-unsubscribe@yahoogroups.com ************************************************ As off your comments ideas and taughts are welcome at longstockcentral-owner@yahoogroups.com i always like the opinion of my readers and if you want to exchange adds with me this is the address to use. ************************************************ Chahine
Good work Chahine.
I agree! Nice job! :lol: Keep up the good work!
thnx just a little sneak peak for next month ill talk about balance sheets ;) chahine