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_jerkku
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I'm currently a student, finishing my M.Sc. in computational science and engineering. Recently I became enthralled with the stock market, I realized I'm really into following financial reports and studying graphs and pondering over investment strategies- so much so, that I'm thinking about... More
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  • My Investments - Finland, Germany And The U.S.

    I recently signed up on Seeking Alpha and although some of the stocks I've invested in aren't listed on this service, I prefer it over several other market analysis and news outlets out there.

    I'm located in the Nordic countries, so obviously most of the financial news I'm subjected to comes from that region. However, as I've stated in my previous blog post, I'm looking to invest outside of the eurozone, which is where Seeking Alpha comes into play.

    Last year I found what I thought to be a grossly undervalued company with great potential to make some impressive earnings, although I didn't realize this until after I created a mock portfolio and watched it soar 60%. At the time my pick was made completely at random. This year I had the capital to invest and I decided to pick my investments after some studying of market currents and annual reports.

    My first buy was into a Finnish business intelligence company called Affecto. A year ago it was trading roughly at 2,85 €/ share. It's currently trading at 3,85 at the Helsinki stock exchange. I wouldn't say 2,85 was really undervalued because the further away you get from larger stock exchanges in Europe the more volatile the markets become, and most Finnish stocks were trading at a discount due to the effects of the financial crisis.

    Affecto trades on the Helsinki stock exchange, so here is a link to the relevant information regarding it: www.bloomberg.com/quote/AFE1V:FH#

    It's a Finnish small-cap company, and operates in the Nordics and Baltics. I think it has a solid balance sheet and it has paid out dividends in a financial climate in the Nordics where many companies haven't. This year they're hoping to make about the same amount in revenues as last year, which is very good news indeed. I was hoping, however, for some growth, but I'd like to think that if they don't grow in 2013, then they should in 2014 or else I'm unsure of whether or not it's ever going to happen.

    I like business intelligence because I think the Nordics have huge public sectors shelling out money to all kinds of BI service providers and business software. I believe they will continue to do this in an increasing fashion, right up until when they run out of money. Competition is fierce as a result.

    I'm hoping for the stock to rise up to the 5€/ share region within the next two years because this company is in my opinion on the fringe of becoming a value investment. They have a nice amount of cash and for the past three years they've increased their dividend by 0.05 €/ share each year from 0.06 €/ share to 0.11 €/ share to 0.16 €/ share. For 2014 I'm hoping for either the same dividend yield as 2013 or a slight increase.

    I think I will be unloading my stock in this company before the Finnish state runs out of money. The economy in the rest of Europe may be looking up, but that isn't necessarily the case in the Nordics, especially in Finland. 60% of Affecto's business happens outside of Finland, and as soon as the Baltics get themselves up from the wreckage of the financial crisis, they may provide a saving grace if the company declines in it's native country. According to Balance Value Control (a Finnish financial reporting entity) 46 % of stocks traded on the Helsinki stock exchange are less riskier than Affecto. This analysis is based solely on the changes in the stock price and not in the company's financial position.

    This is Balace Consulting's site: (It's in Finnish, but I thought that since I mentioned it I might as well provide a link to it)

    www.balanceconsulting.fi/tuotteet/balance_value_control

    Currently, Affecto's ROE is about 11.8 with a P/E of 11.66 (according to Bloomberg). With a P/B of 1.29 I think it's undervalued compared to their ability to make contracts with the public sector in countries other than Finland.

    I want to keep more of my money outside of the Nordics, preferably outside of the Eurozone altogether. My next investment was made keeping this in mind.

    I like semiconductors. I believe they will only play an increasing part in the future of all technological progress (duh), but currently all everyone seems to be focusing on is the industry's capability to provide processors and components for the tablet, mobile and PC markets. I think semiconductors will be used increasingly not only for personal items, but in the medical industry and just about every gadget that hasn't yet been invented but that has been imagined will exist in the future by sci-fi novelists.

    That being said, I studied up on many semiconductor companies, and initially I wanted to invest into companies that don't produce "bulk" for tablets and whatnot, but focus on cutting edge optical lithography and the like.

    Then I changed my mind. I'll invest heavily on the cutting edge stuff after I've grown some capital.

    I like German engineering, I think they're pretty solid on that account and so I found Dialog Semiconductor: www.bloomberg.com/quote/DLG:GR

    It's currently one of the fastest growing semiconductor companies in Europe, and I wanted to see where it takes me. It's pretty expensive P/E- wise, but I think that's due to the fact that it's still growing. They haven't paid out dividends as of yet, but I'm sure it's a company that I want to own a part of when they eventually do.

    After buying into Dialog Semiconductor I realized I'm a tech- investor. I'd been reading a lot of articles on Seeking Alpha, and I was contemplating on either IBM or INTC.

    Long story short, I wound up investing in INTC, because I like semiconductors and they've always been a player in that market. Like I said, in my opinion everyone is too focused on semiconductors relying solely on tablet, mobile and PC markets and don't really focus on where the industry is going to be at in the future.

    My current portfolio consists of:

    42.10 % of Affecto

    15.63 % of Dialog Semiconductor

    42.27 % of Intel, INTC

    Other things I'm looking into are China's heavy industry and hidden jewels in Singapore or the Philippines.

    Disclosure: I am long INTC.

    Additional disclosure: I am long in DLG:GR, Dialog Semiconductor and AFE1V:FH, Affecto.I am not recommending you invest or take any action based on anything you read, or think you read in this blog post. I am stating my opinion. These are not recommendations to invest in anything, I am simply stating what I invested in and why.

    Sep 03 1:39 PM | Link | Comment!
  • Where I'm Coming From And My Investment Strategy

    Exactly one year ago I realized that I have absolutely no savings, I live hand-to-mouth and, although my prospects aren't bleak, economically my situation should improve. I opened up a mock stock portfolio online, just to see how much money I could make if I had any decent amount of capital.

    About that same time I decided to understand how the stock market works and what kind of people succeed in the stock market. I read two books: one was about the basics of the stock market and the other about what the basic mindset should be when operating in the stock market.

    My mock portfolio yielded a 60% increase in value- excluding dividend yield- in a six month time-period. Although I picked the stock completely at random, I realized that I could drastically improve my own situation at the stock market by studying up on my investments. I proceeded to read a number of annual reports of a handful of companies I was interested in and I also re-read one of the aforementioned books, just in case I had missed something crucial.

    I'm happy to say that I am now ready to invest. The companies I'm looking at aren't available at Seeking Alpha, they're located in another country,and Seeking Alpha couldn't find them when I tried to mark them for follow-up.

    If anyone is actually reading this and are interested in the stocks I'm looking at, I'll be happy to update this post with that information. I can upload some charts I've made and some of the key figures I'm looking at in the annual reports.

    Although one of the books I read tried to hammer across the point that I should invest in stock with great dividend yields, I realized my own personality is currently more suited to finding stock with growth potential and selling at a profit. Therefore my strategy is to look for small or medium sized businesses which I consider under-valued. I'm interested in buying shares of relatively small, obscure companies that aren't on everyone's radar.

    The first thing I'll look at is the P/E- figure. I'm looking for companies with a low P/E- figure combined with high ROE, which, I suppose, is what a lot of other people do too. Additionally I'll look at the P/B- figure, which I want to be as low as possible.

    I'll also chart the share price's 200, 34 and 13 day rolling averages in order to determine when it's a good time to enter the market. I've decided what price I'm willing to pay for any given share after I've done my homework on it based on the charted data and the annual figures over the past 2 to 5 years. I want to enter the market in October and leave before May, but only if the share price is under my predetermined level. If it's more than I'm willing to pay for it, I won't buy it.

    In case my investment drops by more than 14 %, I'll get out and look for something better.

    Of course I won't make my decisions based solely on the technical analysis and the figures in the annual report. I need to feel good about the stock I'm buying and that's where the company's image comes into play. As I previously mentioned, my mock portfolio consisted of a company picked completely at random. That company had a great year and the stock rose an impressive 60 %. Additionally, the figures they reported were everything I'm currently looking for, so I had decided on buying their shares in the upcoming October.

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    I signed up on Seeking Alpha because I'm interested in investing outside of the eurozone. Thinks aren't looking good for Europe, and I firmly believe that after next spring the only thing I'd buy into in Europe is bear funds.

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    I was googling Monte Carlo methods in finance, which led me to youtube and some lectures on the subject. From there I stumbled on StockTradingMaster's channel and saw his video about the honey badger market, which I found entertaining and informative.

    I believe in giving credit where credit is due, so thank you Lance Jepsen for telling me about Seeking Alpha.

    http://seekingalpha.com/author/lance-jepsen?source=search_general&s=lance-jepsen

    Aug 08 10:37 AM | Link | Comment!
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