Expected value is a great way to measure whether a bet is potentially profitable.
It does this by using a simple decision matrix that weighs up the upside and downside of two options.
In fact it was so useful, one mathematician used Expected Value (EV) to guarantee multiple lottery jackpot wins.
However, despite its usefulness many sports bettors are unaware of this formula.
So tod... ››› more
Investing is all about making money with the cash you put to work in shares. When weighing up a new investment opportunity, you want to know how hard your money is going to work for you.
One way to do this is to look at return on equity. You can then use the percentage you get from this calculation to compare with other investment prospects, allowing you to make a more informed decision.
So ... ››› more
The main goal of investing in shares is to buy at one price and sell at a much higher price. The lower the buying price, the higher your chance of making bigger profits.
So how can you unearth shares that are trading at bargain prices?
Read on to find out…
The ins and outs of a company’s book value
A company’s book value comes under a number of different terms, such as net ass... ››› more
When you trade forex, you'll probably use a forex trading platform of some sort.
When you place trades, you'll be able to check how they're performing. And once you close a position you'll be able to see how much you've made or lost.
But to give yourself a solid grounding and to add to your understanding of forex trading, it's good to know how to do it yourself.
Read on to find out…
... ››› more
When you put your money to work on the stock market, you take on risk.
There's the chance the company you buy shares in won't perform and its share price will fall.
But for this risk, there's the chance the shares you buy will rise in value over time. This means profits for you.
So if you want to check how your portfolio is performing, how can you check your returns?
Read on to find o... ››› more
The F-Score is a series of financial tests that Professor Joseph Piotroski, an accounting professor at Chicago University, created.
Professor Piotroski came up with the F-Score to improve a commonly used investment strategy to find cheap shares. This involves honing in on companies that have low price to book ratios.
So how can you calculate the F-Score?
Read on to find out…
The b... ››› more
In spite of stringent accounting standards, some companies still flaunt and bend the rules. And if a company's going to do this, chances are it will with its profits.
If you spot a company manipulating profits before you invest, you can avoid an inevitable share price tumble. Or you could even short the share in question.
So how can you check?
You can use the M-Score.
Read on to find o... ››› more
If you rely on dividend payments for income or reinvest your dividends to help grow your investment, you want to check if they're safe.
Whether a company's going to continue to pay dividends into the future is an important aspect of your investment strategy.
So how can you check the safety of your dividend payments?
One well-used method is checking a company's dividend cover.
Read on t... ››› more
I bet it's not easy for you to pick a great stock. In almost every case, you have already priced good and bad news about the company into the stock's share price. But every once in a while the market misprices a stock.
So how do you find these hidden gems?
The one number you need to have to find bargain stocks
A company's price to earnings ratio, or P/E, is one of the mos... ››› more
When researching companies to invest in, it can sometimes be difficult to see exactly how a company is doing financially. After all, you don't want to invest in a company with brewing financial issues.
So what's the best way to check out a company's finances? The Altman Z Score is perfect for the task.
Read on to uncover just how you can use the Altman Z Score to weigh up a company before yo... ››› more
Trying to ensure that you have enough money in your retirement pot can be an arduous task.
You don't want to get to a year before retirement to find out you have a large shortfall in your savings.
And that's where the ‘annuity factor' comes in. This can help you work out how much you should be putting away a month to achieve your retirement goals.
Read on to find out what to do…
... ››› more
You're looking to invest in a new share. You've done your research and you're pretty sure you're onto something good. There's nothing certain with investments, but there are a few things you can do to make sure you're on the right track. And calculating a company's return on capital employed (ROCE) is one of them. Let's take a closer look…
What is ROCE?
When you calculate ROCE, it shows you ... ››› more
One figure you're going to be very concerned about when you look at a company's account is profit. After all, a company's profit will help determine its share price growth and its dividends. And if a company isn't making enough money, it's not going to last very long. So where should you start with a company's profit? Let's take a closer look at what gross profit it…
Where do you find informa... ››› more
Corporate bonds are no different from any other type of investment you make. You need to do a bit of research to ensure you're making a sound investment decision. So what sort of checks should you conduct on a corporate bond? And how can you check whether a company can afford to pay back your money? Let's take a closer look…
Corporate bond check #1: The business of the company
Before you ... ››› more
If you're trying to work out whether a company's worthy of your investment or not, look at the cash. It's easy to look at profits and ignore cash. But a number of accounting issues affect profits. And good profits don't equal lots of cash in a business. So you need to look at a company's cash flow. Read on to find out how best to do this…
You need to concentrate on free cash flow
Cash flo... ››› more
There are several ways to value companies. A couple of the most common ways are using the price earnings (PE) ratio and the price earnings growth (PEG) ratio. But these ratios have a major drawback. They focus on the earnings of a company. And for some companies, this may not be the best way to evaluate them. Instead you can use the price to book ratio. Let's take a closer look…
Earnings a... ››› more
Deciding which stocks to invest in isn't an easy quest. Whether you're investing for dividends or capital growth, you don't want to overpay for the shares you buy. One way you can look at how cheap or expensive a stock is, is to look at the stock's price earnings ratio or PE ratio for short. Let's take a closer look at how to calculate this and how to interpret it…
How to calculate the PE rati... ››› more
If you're looking to invest for income, you'll want to buy shares that pay out decent dividends. Once you've found shares that pay out good dividends, you'll want to know the likelihood of the company continuing to pay this out. But how can you do that? By calculating the company's dividend cover. Read on to find out how you can do this…
How to calculate dividend cover
Simply put, the div... ››› more
Setting your long-term financial goals and putting your money to work is only the start of achieving your financial goals. So periodically, say once a year, you need to check you're on track. You don't want to get ten years down the line only to discover that your investments have been underperforming by a long shot. Read on to uncover how you can check your investments are performing…
The im... ››› more
Share buybacks reduce the number of a company's shares in circulation. By reducing the number of shares, the company technically increases the value of the shares left in the market. And by taking this step, the company boosts earnings per share (EPS). Some investors are sceptical of share buybacks because EPS usually forms the basis of directors' bonuses. So how can you tell if it's for the good ... ››› more
Disclaimer Note that FSP Invest, a division of Fleet Street Publications (Pty) Ltd, is a research house and not a registered broker, financial advisor or financial service provider. Our editors and customer services teams also do not give personal investment advice. The advice in this website is general advice only and may not be appropriate to your particular investment objectives, financial situation or particular needs, so before investing or if in any doubt about your personal situation, you should seek professional advice from a stockbroker or independent financial adviser authorised by the Financial Services Board.
We research our recommendations and articles thoroughly, but disclaim all liability for any inaccuracies or omissions found in this publication.
Remember: Never invest more than you can afford to spare and that the value of any investment, and the income derived from it, can go down as well as up. The past is not necessarily a guide to future performance.
Editors or contributors may have an interest in investments commented on in this newsletter. However they have signed restraints to prevent the abuse of their position as contributors to this publication.