Thursday June 5, 2014s
The ACCT 3314 class has an assignment involving financial analysis of a public company. Here are a few thoughts on the assignment, and assgnments and college in general.
1. CPAs or anyone else become experts by amassing knowledge in specific areas. It is not too soon to begin doing that with an industry or company. Pick one you are interested in and continue to write on it while you are in college.
2. Learn about that company and its competitors in the process.
3. Most of the students are only beginning to learn about the world of finance, globalization, and such. This is another reason I recommend reading the Wall Street Journal daily, it is only a buck a week. You should also scan some of the links I have like finance.yahoo and marketwatch every morning.
4. Another factor to consider in evaluating your company, where are we in the overall picture or cycle? The market has been on a tear for five years.
The ribbons of color are moving averages. Notice how far the Dow is above the red 200 month Moving Average. The time to buy was when it was the furthest below not above the MA.
Harry Markowitz won the Nobel Price in Economics for his concept of the Efficient Frontier. HIs Efficient FRontier attempted to maximize return for risk. Where would you say we are on his Risk Frontier now?
5. Warren Buffet likes to invest in companies with substantial cash flow and those that have a 'moat around them.' By that he means it would be difficult to replicate their business model. Dairy Queen, one of his companies, has extensive locations in places MCD is not likely to go, such as small Texas Towns. Does your firm have such a feature?
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