Friday, January 23, 2009

Calculate How Much is Worth buying a stock !

I have just come up with a system that can calculate how much a stock is worth and therefore what is the suitable purchase price. It is based on the concept describe in this old post : when to buy at what price ?

In short, it is using past history record to project future price. Then depends on your target return rate, today's worth can be calculated.

EPS and PE are 2 critical data needed to use that system. In case you don't know where to get these data, refer to one of my old post here : where to get EPS, PE data

some of the old posts can also be used as examples or case studies : IOICorp, KNM

For those who are more curious to ask why more than just using the system, an old post explain slightly why use EPS and PE in stock valuation ?

I haven't published this system yet and only using it on my own now. But if you are interested, you can also use it from here ...

I am thinking to publish it once an anonymous browser can sign up as an user in order to use it ....


Anonymous said...

cool! Good Job!

Benjamin Lee said...

How do we handle the situation when previous earnings does not mean future earnings?

Michael Tsen said...

actually previous earning NEVER guarantee future earnings, it only provides us

1. a proof of management capability
2. through both good and bad times

from there we can apply our best known knowledge if the current management and the business can continue to grow. for example its ok to slow down growth in the next 2-3 years if your calculation period is for the next 10 years. Like wise one should not be too excited when one year earning shoot sky high.