Stock ProfitsGetting to the Core--New Fundamentals for a New Age
Jul 2004, Hardback, 288 pages
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Traditional methods of analyzing and picking stocks aren't enough anymore -- as millions of investors have discovered to their shock and dismay. The key reason: companies now systematically distort the operating results that investors depend upon for accurate analysis. In Stock Profits: Getting to the Core, Michael C. Thomsett offers a new approach to fundamental analysis that reveals exactly what's real -- and what isn't. Clearly and simply, Thomsett shows how to strip away misleading data that distorts a company's true 'core earnings,' growth curves, and business realities. Then, drawing on that information, he walks you through every step of a winning analysis: trend discovery, interpretation, and confirmation. You'll learn powerful new ways to manage market risk by assessing a stock's fundamental volatility. Next, Thomsett shows how to apply all five elements of success in today's market: investigation, regulation, communication, planning and discipline. Whether you're already using fundamental analysis, technical analysis, or a dartboard, Stock Profits can help you achieve higher, more consistent returns.
I. THE TECHNIQUES.
1. Core Earnings Calculations: A Revised Approach.
Applying the Core Earnings Idea.
The Emergence of the Core Earnings Idea.
A Premise for Stock Selection: Accuracy in the Financials.
Examples of Core Earnings Adjustments.
Long-Term Direction in Corporate Valuation.
Accounting Problems and Stock Selection.
Fundamental Versus Technical Approaches.
2. Trend Discovery: Finding the Elements of Emerging Change.
The Trends that Affect Long-Term Value.
Balancing PE and Market Perceptions: Looking to the Future.
Distinctions: Investment Value and Current Market Value.
Applying PE Tests.
A Four-Part Approach to Analysis.
3. Trend Interpretation: Deciding What It Means.
Sales Trends: Identifying Core Revenue.
Sales by Operating Unit or Product.
Sales Interpretation with Changed Segment Mix.
Net Earnings Trends.
PE Ratio and Core PE Ratio.
4. Confirmation: A Powerful Analytical Technique.
The Dow Theory: Trends and Confirmation.
Confirmation as a Means for Identifying Primary Trends.
Confirmation to Test the Reliability of the Numbers.
Translating Confirming Indicators to Stock Selection Criteria.
Confirmation Applied to Market Price Trends.
5. Fundamental Volatility.
Expanding the Definition of Risk.
Redefining Market Risk.
Guidelines for Treatment of Exceptions.
Fundamentals as the Basis of Market Risk.
Positive and Negative Aspects of Fundamental Volatility.
Using Volatility to Pick Stocks.
II. THE TOOLS.
6. Investigation: Verifying the Financials.
The Question of Trust: Motives at the Corporate Level.
Healthy Suspicions: How Much Trust Can You Place in the Report?
The Revealing Nature of Investigation.
Trends as the Test of Accuracy: Investigative Techniques.
7. The Core Earnings Workbook: Finding the Numbers.
8. The Trend: Workbook: Breaking the Code.
9. Looking Ahead: The Core Roadmap.
The Concept of Corporate Governance.
Symptoms of Governance Quality: Investor Relations.
New Standards for Corporate Reporting.
Coordinating Governance with Core Earnings-Based Reporting.
Risk Tolerance Defined in Terms of Volatility.
Transferring Risk Management into Action.
Applying the Scientific Method.
Working for Reform: A Concluding Action List.
MICHAEL C. THOMSETT has written more than 55 books, including Getting Started in Options, Fifth Edition (over 200,000 copies sold). His books also include Mastering Fundamental Analysis, Mastering Technical Analysis, Mastering Online Investing, The Mathematics of Investing, and J. K. Lasser's Buy, Sell, or Hold. His Investment and Securities Dictionary was named Outstanding Academic Book by Choice Magazine.