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January 2007



What I Analyze

January 22, 2007 – Comments (13)

The first thing I look at when researching a company is the cash flow statement. Cash flow from operating activities is the cash the business produces, so I always want this number to be steady, positive, and hopefully improving, but as long as its positive and steady it gives me confidence to do more research. Cash flow from operating activities should be low or negative. This is the cash a company gets from issuing debt, selling stock, borrowing from the bank, etc., so it's best if it's negative. Cash produced from the business should be fueling growth, and checking the correlation with financing activities is the best way to do that. This is what I look at with small-caps especially, if a small company can fuel its own growth, I'm interested immensely. The cash flow statement is the most important statement but gets the least amount of attention -- always make sure to check it. If the company is reporting great earnings growth but is borrowing from the bank to fuel that growth, it's not that great of a company.   [more]



A Revisit to the 2006 Sell-off

January 13, 2007 – Comments (2)

I thought I'd look to see when the S&P 500 hit its peak before the sell-off (it has since recovered and is higher than that point, it has been for some time). It hit the peak on 5/9/06, and its low was on 7/15/06.  [more]

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