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2024-10-18
Nvidia's 1-for-10 stock split attracted market attention by making the stock more accessible to a broader range of investors. A stock split is a way to restructure a company's shares, adjusting the price per share while altering the total number of shares without changing the company's total market capitalization. Stock splits can be either forward or reverse. Forward splits reduce the share price, increase liquidity, and attract more investors, and reverse splits works vice versa. Although a stock split does not affect the company's intrinsic value, it can influence market psychology and investor behavior.
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Enron was an energy company once hailed as the most innovative company in the U.S. However, as its business expanded, Enron began using "mark-to-market" accounting and set up Special Purpose Entities (SPEs) to hide debt and manipulate its financial statements. This manipulation made the company's financial health appear strong, causing its stock price to soar, while in reality, it faced serious financial difficulties. In 2001, Enron's financial practices came under scrutiny, leading to its bankruptcy. In the aftermath of the Enron scandal, the U.S. passed the Sarbanes-Oxley Act to strengthen financial regulation and revised accounting standards.
# Investment Analysis
# USA
A narrow-based security index refers to an index dominated by a small number of constituent stocks, leading to a higher concentration. According to the U.S. Commodity Futures Trading Commission (CFTC), an index is considered narrow-based if it meets any of the following criteria: it has fewer than 9 constituent stocks, a single stock accounts for more than 30%, or the top 5 stocks together exceed 60% of the total index weight. In contrast, a broad-based index has a larger number of constituents and covers a wider market scope. Recently, due to the rise in TSMC's stock price, the Taiwan Stock Exchange Weighted Index (TAIEX) has been reclassified as a narrow-based index, drawing significant market attention.
ROA and ROE are indicators, as they help assess a company’s long-term investment value. ROA (Return on Assets) reflects how efficiently a company uses its assets, showing how well the business converts assets into profits over a specific period. ROE (Return on Equity) measures a company’s ability to generate returns for shareholders, indicating how efficiently the company uses shareholders' capital to make profits. Both ROA and ROE are useful for comparing companies within the same industry, revealing management capability and long-term trend shifts.
# Investment Strategy
# Fundamental Analysis
The Statement of Cash Flows is one of the three main financial statements in a company's financial reports, providing insight into the actual cash movement within a company. This report helps investors assess the company's cash flow and financial stability by showing the inflows and outflows of cash. The cash flow statement is divided into three main sections: operating cash flow, investing cash flow, and financing cash flow. These figures help investors understand how a company manages its operations, investments, and financing activities.
The balance sheet, also known as the statement of financial position, is a key tool for understanding a company's financial health. Its basic formula is "Assets = Liabilities + Equity," which helps investors understand where a company's funding comes from and how it is utilized. This article also introduce assets, liabilities, and equity categories and samples in detail respectively.
The Price to Earnings Ratio (P/E) is a key tool used by investors to evaluate a stock’s value. This article introduces the basic concept of the P/E ratio, its calculation, and its application in investment decisions. The P/E ratio reflects the market’s expectations of a company’s growth and provides a sense of how long it might take for an investor to recover their investment through earnings. It is useful for comparing a company’s valuation against its peers. This article also uses Nan Ya PCB Corporation as a case study, showing how PE ratio fluctuates with market expectations.
This article explores the definition, calculation, and significance of Earnings Per Share (EPS), as well as its application in investment decisions. EPS is a key metric that helps investors compare the profitability of companies of different sizes. The article highlights the importance of using EPS in both horizontal (comparing across companies) and vertical (comparing a company over time) analyses, as well as the impact of changes in the number of shares on EPS.
The income statement is a crucial tool for investors to assess a company's financial health and future potential. It provides insight into the company's profitability and financial status. The income statement reveals a company's operating revenue, operating costs, and net profit over a specific period. By analyzing the income statement, investors can quickly understand the company's revenue sources, gross profit, and operating profit. Additionally, by examining non-operating income and expenses, investors can gauge how earnings outside the core business impact the company's net profit.
2023-09-05
Trading volume represents the actual outcomes of transactions and is considered more accurate trading information compared to order book data. It is widely believed in the market that there is a correlation between volume and price, as trading volume indicates the beginning of positioning by both the bulls and bears. Additionally, due to high trading volumes, the original private information will attract attention, thereby accelerating its dissemination in the market.
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