One Up On Wall Street: Chapter 12

Hello friends, in today’s article, we see chapter 12 of one up on wall street book. this chapter helps you to know more about the company by asking simple questions. One up on wall street book chapter 12 helps you to find out the best questions you have to ask the company and broker.

Previous Chapter 11

 

Getting the fact: One up on wall street chapter 12

In this chapter, you get more information about the stock by asking the following questions. if you want to know more about the company ask the following point. (One Up On Wall Street)

1. If you have a full-service broker, ask them some good questions:(One Up On Wall Street)

• How you classify this stock as a cyclical, slow grower, fast grower. in this situation most of the time they fast, grower, because they are giving you advice about the stock.(One Up On Wall Street: Chapter 12)
• then again ask about Recently growth in earning. What is the P/E ratio from a historical level?
• If they tell you to buy now this time, then ask why now buying is good? And this company before buying is why not good? What happens suddenly in the company?
• What is the company business and which business comes with maximum profit and how much spending on the growth of the company? (One Up On Wall Street)
• How finance the company by doing issuing equity or taking maximum dept?
• in this company any insider buying or not and give the analyst report of your analyst, I am study first and then come again ask you some good questions.
• You have seen the price and earing report charts report of five years. And also ask the dividends of the company if the company is giving the dividends, then ask how much time pay the regular dividends and any growth in dividends in history to today. (One Up On Wall Street)
• In the company is there any institutional ownership or not, if the answer is yes then check how much ownership is there in the company. if the institutional ownership is more then is a good sign for the company.
• How many times your analyst follow this stock.

2. Call Investor relations: (One Up On Wall Street)

• You can ask some questions directly to the company by using call investor relation. Then ask some question they are as follows
• Plan of the company for debt reducing, and what is about that recently launch the drug, if they are a pharmaceutical company or that product. (One Up On Wall Street)
• what is the effect on earnings? and how much sales of that recently launched the product in this year?
• In this year how much company is opening a new outlet? and also how much percentage the market share increases?
• The company is operating at the full capacity of the plant. yes or no.
• Properties in the balance sheet that market price value are how much?
• If you don’t have any above stuff question, then ask simple two questions 1) What are the positive of the company this year and 2) What is the negative of the company this year. (One Up On Wall Street)

3. Visit the company’s headquarters:(One Up On Wall Street)

• Visiting company headquarter ask these questions, they are following
• Any fund manager or analyst come in this headquarter. If come in two or three year then, this is a good sign for us, because this company is not followed by any fund manager or analyst.
• If the companies headquarter is situated in like that place is not easy to like everyone to go and see.
• The good earning and cheap headquarter is a good sign for us.(One Up On Wall Street)
• If the company headquarter is used expensive furniture and expensive things in headquarter, then this company is not using the right place of money, so this company loses earnings in the future. So peter Lynch gives some examples is Pepboys and crown cork and shield.

4. Attend annual meetings:(One Up On Wall Street)

• you can attend the annual meeting of the company, and talk to executives about the company.
• Peter Lynch meets the company executive of XYZ company and ask about that company. Then after that Peter Lynch search the proxy statement of the company and they got the result is that the stock and stock option of the company is about $100 million. (One Up On Wall Street)
• And this company’s P/E ratio is high. So if the author wants to increase his income double, then the executives of the company’s net worth also become $200 million.
• So becoming this is unrealistic, so peter lynch never buys that stock, and sometime after the stock is going down.
• If you think some executives do not become that rich then most of the time you are right.

5. Visit stores, buy and or taste product:

• You can visit the store and ask some questions like that.
• Ask questions to users of products like, Why you buy this product? and how much time is gone by using this product? and also can you recommend this product to other people. (One Up On Wall Street)
• If one or two people give a bad review of that product, then is this no big deal.
• So author gives the Apple company example, is that The Apple company is failing in mid-time but this time also in Peter Lynch office order the 7 to 8 macintosh computer and his wife also order macintosh, but the author doesn’t realize this stock and they lose the Apple company. (One Up On Wall Street)
• This company can become the turnaround company, and you know the price of Apple Company in today’s day.
• And The author also found the Crysler company that also fail for some time but this company become a turnaround by a person name is Lee Iacocca.
• Then Peter Lynch calls Lee Iacocca and asks about the plan of the company regarding this situation and they love the plan and they think the plan also is going to execute. then they buy the Crysler company and this company becomes the turnaround. (One Up On Wall Street)

Read more on the previous chapter

Read Annual Report:

• Screw the initial colorful pages and come to the annual report, and ask this question about the annual report to you, they are as follows

1. Cash and marketable securities: you can see how much increase by comparing to the previous year. If increase then this is a good sign.
2. Long-term debt: In this year and compare with previous year debt. if this debt is minimum than the previous year, if yes then good sign.
3. (Cash + market securities) > Long term debt: If this is happening then is a good sign by comparing 10 years of the balance sheet.
4. NOSO: If the Number Of Share Outstanding is decreased then the company does the share buyback, so this is a good sign. That is not mean is that buying buyback any time. you can check for a previous year’s buyback to share.
5. Net cash per share= [ ( cash + market securities) – long term debt]/NOSO

By asking and seeing the above stuff you get more information about the company.

Read More: Next Chapter 13

 

Read more book summary

1) The Intelligent Investor

2) Common Stocks and Uncommon Profits

3) Security Analysis