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Private Equity Secrets for Top Stock Picks

21 may 2008 - Markets - Editor

Investment Analysis, Sensitivity Analysis, Trend Analysis form a triple whammy. They teach the basics in business schools. Some stock market Gurus are gifted with insights. The sources of the methods do not matter. The results show you how to invest.

Anyone can learn to make top stock picks. That is the problem. The stock market works on misinformation. Some depend on rumors. A few make money from facts. Private equity keeps stock picks under cover. It does not pay for everyone to know.

The precise words can vary between top investors. The aims of their questions are generally the same. Private equity investment appraisals follow a pattern. You will be grilled should you come up with a business idea. Why not do the same for stocks that seek your money?

  • What is your best estimate of my annual returns if I buy today?
  • How low could profits fall in a worst case scenario?
  • Have projections of earnings been accurate in the past?
  • Which method is used to value assets
  • What is the ratio between projected Gross Margin and all fixed expenses?

This list is indicative. That is why due diligence prior to mergers and acquisitions takes armies of accountants many months. Do your savings deserve any less?

Talk of stock trading is simply misleading. A stock market index does not concern a professional investor. Evasive statements by a CEO should send out danger signals. Buy and sell stocks solely on formal business appraisal. Review your notes about stock trades every quarter. Aim to hone your stock investing skills by the quarter. Make advisors accountable. This is the Gospel of the Stock Market Survivor. Yes, it applies to us as well.

Tags:

private equity, stock picks, business schools, analysis, profits

 



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