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Taking Stock in IGM, Review:

In August I published a four-part series on IGM Financial (IGM) where I took readers through the process of conducting an in-depth fundamental analysis of the qualitative and quantitative factors I use in my stock analyses.

In this series I focused on how to conduct a situational analysis, collecting numbers, definition & interpretation of numbers & determining a valuation for a stock using a DCF format.

With the increase in comments and emails from new investors I thought it might be a good time to review a few of the central themes and ideas from this series to help simplify the process and create a “check list” of items you want to remember when you’re working through the learning phase of conducting a stock analysis.

Here are a few helpful tips to keep in mind when going through the process of a stock analysis:

  • Pick a stock and business model you can easily understand
  • Don’t get discouraged if you encounter barriers in your research
  • Be adaptive & resourceful
  • Be creative – think outside of the box whether right or wrong this can often lead to important insights
  • Focus on the Situational Analysis first
  • Be specific in your research
  • Keep things simple
  • Take the time needed to read over financial statements or learn
  • Understand the numbers
  • Consider taking an introductory accounting/business course at your community college or read an introductory accounting textbook at your library
  • Focus on understanding the specific elements of your analysis and then worry about putting them together into the bigger picture
  • Take the time to develop your confidence
  • Know yourself and your limitations
  • If at first you don’t succeed…try, try again!

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{ 4 comments… add one }
  • Ethan Bloch November 18, 2008, 4:27 am

    Great list. I would say the most important of all is “Know yourself and your limitations”… this is by far the hardest one for someone to realize on their own.

    Human beings seem to thoroughly enjoy overestimating themselves. And when it comes to personal finances this overestimation can be extremely damaging to your wealth and health.

    Know yourself and your limitations!



  • Nurseb911 November 18, 2008, 7:29 am

    Thanks Ethan. I would agree with the most important, but also put right up there with it “picking a stock and business model you can easily understand”. As I alluded to in my previous post I think that many investors neglect to understand the business model of a company and focus instead on factors such as EPS growth, dividends or stock price.
    That’s part of knowing your limitations as well if you choose to invest in a business or sector that you don’t understand properly.

  • Paolo November 18, 2008, 12:09 pm

    Just came across your blog today (via TMW) and must say it’s one of the best written financial blogs out there (esp. for Canadians). I’m adding you to my favourites and will be part of my daily reading. Keep up the good work.

  • Nurseb911 November 18, 2008, 12:43 pm

    Welcome to the site Paolo and thanks for the positive feedback.

    I don’t publish daily (usually each Monday) but feel free to browse the New Investor Index and Top Posts sections (as well as the search box) to read up on content you find relevant or interesting.

    I’m always open to ideas and if there’s a topic of interest you might have that hasn’t been addressed feel free to contact me via my contact page.

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