As a stockbroker, you should focus on managing risk by evaluating different investments and making informed decisions based on this evaluation. This is done using many analytical tools such as discounted cash flow analysis, financial statement analysis, and various technical indicators.
As a value investor, you study assets to separate those worth purchasing from those that aren’t according to precise criteria identified through fundamental analysis.
As a value investor, you have to focus on buying companies that are currently undervalued by the market. This is because they are trading below their intrinsic values due to temporary reasons, which have caused analysts and investors alike to lose confidence in these businesses even though they have great prospects for growth in the future.
1. What is the company’s main line of business?2. How much money does it take to start this company?3. What are the potential risks of a changing political environment, fluctuating currency values and interest rates, inflation, etc.?4. Does this company have a market that it serves which has long-term growth prospects?
5. Who are its competitors in that market?6. Do they offer similar products or services at different prices (low-cost leader)? Or do they offer very different/unique ones (differentiated)? Are they able to sustain their competitive advantage and lower costs over time (economies of scale)?7.How much debt does the company have? Does it seem reasonable given its cash flow, asset base, and earnings power?