Recommend Reading: “Fire Your Stock Analyst!” by Harry Domash

I find this book shall be kept beside fundamentalist at all time.

I first read this book 3 years ago. At that time, I was in the midst on refining my fundamental analysis skill. This book has provided me a good start by giving me step by step guide on how to go about. In particular, this book demonstrates an 11-step process for complete fundamental analysis. Namely:

1. Analyzing analyst data: Not on their buy/sell recommendation but their thorough research on the company and industry as a whole

2. Valuation: To identify a company’s implied growth

3. Establishing target prices: By using Earning Per Share (EPS) and Price Earning Ratio (PE)

4. Industry Analysis: To carry out thorough study on industry generalization, concentration and competition

5. Business plan analysis: Through brand identification, barrier of entry, distribution model, assess to distribution, product life cycle, revenue stream, productivity, number of customers, product/market diversification, acquisition, etc.

6. Management quality: To study the resume of the management

7. Financial: To carry out financial analysis. The book shows a number of important analyses to detect financial tricks

8. Profitability analysis: Main purpose is to evaluate management quality

9. Detecting red flag: Through some ratio calculation

10. Ownership: To evaluate the shareholding condition of a company’s key persons

11. Price chart: To support on the right time to enter and exit as market sentiment plays in short term

I would say this is a very technical book. Readers with basic understanding on financial calculation and account knowledge will find this book very logical.

Happy reading.