9 ways that sound affects our health, wellbeing and productivity

Awesome!

Trading as part of the spiritual practice

I was reading something very classic and inspiring on the Fool. The following contents is partially quoted from the website.

2 must have traits to be successful

Timeline

Investing in stocks requires a minimum five-year time horizon. It can be hard to be a long-term investor in a short-term world — which brings us to the second secret ingredient for investing greatness.

Temperament

Successful investors have the ability to remain calm and levelheaded when everyone around them is freaking out. That mindset makes the difference between investors who consistently outperform the market and investors who get lucky for a while. When a group of business-school students asked Buffett why so few have been able to replicate his investing success, his reply was simple: “The reason gets down to temperament.”

But how? The article goes on and give us some advice on how to keep a cool head.

Looks like I did Okay in my first day down at the imaginary trading floor! Keep up!

Picking my first stock

I couldn’t recall the last time I look forwarded to Monday as much.

Monday is coming and the money start rolling! After register for an app called StockWars, I am ready to buy in my first virtual stock.

I decided to started with the area that I have most familiar with: insurance industry. Although many successful insurance companies are not public companies (in fact, a lot are private/mutual companies), there are a number of possible picks. With a focus on Property/Casualty side, I have my eyes on Traveler (TRV).

Ratios rattle: Price to Book, DSO and Turns

Price to Book is probably the less value ratio, with many companies nowadays do not need a lot of land and factories to make a very high-margin product. But here’s how we can do the ratio nevertheless:

EV/SE = ((Shares Out x Price) + Debt-Cash) / Shareholders’ equity

As a rule of thumb, some value investors will shun any companies that trade above 2 times book value or more.

DSO: Days Sales Outstanding is a measure how many days worth of sales the current accounts receivable (A/R) represents.

A company with a lower amount of days worth of sales outstanding is getting its cash back quicker and hopefully putting it immediately to use, getting an edge on the competition.

Step 1: Calculate Accounts Receivables Turnover

A/R Turnover = Sales for period / Average A/R for period

Working, working, working Capital!

The Working Capital, as is commonly known as “the capital that actually gets to work” (James, 2014), is simply the current assets minus current liabilities.

It’s the best way to judge how much a company has in liquid assets to build its business, fund its growth, and produce shareholder value.

We can divide Working Capital by the market capitalization (outstanding shares * share price – long-term debt – preferred shares). If the ratios is greater than 50% then the company is in great shape. However for some retailers it is better to take inventories from working cap before doing the ratio.

Ratio Rattles: Current Ratio and Quick Ratio

Let’s look at two very easy ratios to detect the short term liquidity of the company: Current Ratio and Quick Ratio.

Current Ratio = Current Assets / Current Liabilities

As a general rule of thumb from The Morley Fool:

As a general rule, a current ratio of 1.5 or greater can meet near-term operating needs sufficiently. A higher current ratio can suggest that a company is hoarding assets instead of using them to grow the business — not the worst thing in the world, but it’s something that could affect long-term returns.

The information should be used again its competitors.

Since companies can manipulate and often bloat the inventory book value, I can use a second ratio:

Quick Ratio = (Current Assets – Inventories) / Current Liabilities

Most people look for a quick ratio greater than 1.0 to be sure there is enough cash on hand to pay bills and keep going.

Balance Sheet: A review of the B/S

Most of the information in this post is from:

http://www.fool.com/investing/beginning/how-to-value-stocks-how-to-read-a-balance-sheet.aspx

The balance sheet is a record of a company’s assets and liabilities — in short, what it’s already got or expects to get soon, and what it owes to others.

Shareholder value ultimately comes from liquid assets — assets that can easily be converted into cash. The amount of liquid assets a company can amass ultimately determines its value. Better yet, if a company generates more liquid assets than it needs to fund its operations, it can give the excess back to shareholders in the form of dividends or share buybacks.

There are two ways to measure liquid assets. The first is terminal value — how much the company would return to shareholders if, at some future point, it closed down all its operations and turned everything into cash. The second is tangible shareholder value — the returns on invested capital generated by the company’s operations.

Most investors spend too much time obsessing over a company’s earnings, and too little time studying the balance sheet and its cousin, the statement of cash flows. The balance sheet can tell you whether a company’s got enough money to keep funding growth, or whether it’ll have to take on debt or issue bonds or additional stock to sustain itself. Does a company have too much of its money tied up in inventory? Is the company collecting money from its customers reasonably quickly? The balance sheet knows all.