Value Investing Considerations - Value traps are stocks that appear cheap based on metrics like the PE ratio, but are cheap for a reason [1][3] - Investor emotions, such as negative market sentiment or overreaction to missed earnings, can temporarily undervalue a good business [2] - Declining business fundamentals, eroding competitive position, or lack of industry growth can make a stock a value trap [4] Due Diligence - To avoid value traps, investors must investigate a business's fundamentals beyond valuation metrics [4][5] - Key fundamentals to examine include financial strength, profitability, growth prospects, and industry dynamics [5] - Red flags in these areas may justify a low valuation [5] Tools and Resources - Guru Focus's warning signs tool can help quickly identify potential value traps [6]

Financial Ratios & Analysis - Financial ratios standardize metrics from financial statements to assess business quality and compare company performance to its history and competitors [1][2] - Four key components of a business to focus on are financial strength, profitability, growth, and value [2][3] Financial Strength - Assessing financial strength involves examining debt management through leverage ratios and liquidity levels using ratios like quick or current ratio [4][5] - Guru Focus's stock summary page provides financial strength metrics for comparison against company history and industry competitors [5] Profitability - Profitability is assessed through margins (gross, operating, and net) and returns (return on assets, return on equity, and return on invested capital) [5][6][7] - Guru Focus's stock summary page provides profitability metrics [7] Growth & Valuation - Growth is evaluated by looking at historical and projected future growth rates [7][8] - Valuation involves comparing stock price to underlying business aspects using tools like price-to-earnings, price-to-sales, and price-to-book ratios, as well as GF Value [8][9] Investment Considerations - Investors should understand the difference between an underpriced stock and a stock that's cheap for a good reason [10]

Financial Statements Overview - Financial statements are essential for long-term investors to analyze a company's investment potential [3] - The three primary financial statements are the income statement, cash flow statement, and balance sheet [4] - These reports provide a snapshot of a business's operations and raw data for investment assessment [4] Income Statement (Profit and Loss Statement) - The income statement reveals a company's revenues, expenses, and profits over a period [5] - It provides insights into profitability and operational efficiency [5] - Key metrics include revenue growth, gross margins, and net income [5] Cash Flow Statement - The cash flow statement tracks how a company generates and uses cash [6] - It helps investors assess liquidity, indicating whether a company can meet its obligations [7] - Key metrics include operating cash flow and free cash flow [7] Balance Sheet - The balance sheet records a single snapshot in time, showing what a company owns versus what it owes [8] - It helps determine the financial strength of a company [8] - Key metrics include total assets, total liabilities, and shareholders' equity [8] Financial Ratios & Analysis - Investors use financial ratios to analyze a company's operations [2] - Guru Focus provides charts to visualize money flow in and out of a company for each financial statement [6]

Investment Analysis Framework - The industry suggests using a quick analytical litmus test to determine if a company warrants investment consideration [1] - Fundamental strength analysis can be efficiently conducted using the GF score [1] - Relative standing against competitors and margin maintenance ability can be assessed via the moat score on Guru Focus [2] - Industry overview tools on Guru Focus can help determine if a business operates in a supportive industry for growth [2][3] - Stocks that meet all three criteria warrant further investigation [3] Further Investigation - Major financial statements reported by publicly traded companies are important for deeper analysis [4] - Key financial metrics and ratios are used to analyze financial reports [4] - Common traps that can trip up investors should be avoided [4] - Developing a deeper level of understanding is crucial for long-term investors [4]

In Module 2.1 of Investing 101, we introduce the three core financial statements — the income statement, balance sheet, and cash flow statement. You’ll learn what each reveals about a company’s performance, why they matter to long-term investors, and how they work together to paint a complete picture of a business’s financial health. Keep learning at GuruFocus.com/GuruUniversity ...

Stock Classification - Market capitalization is a common way to classify stocks, representing the total monetary value of a company's outstanding shares [2][3] - Large-cap stocks, with market capitalization greater than $10 billion, tend to be stable with lower volatility and high dividend yields [4] - Small-cap stocks, with market capitalization under $2 billion, have potential for rapid expansion but carry more risk [5] - Mid-cap stocks offer a balance between stability and growth opportunities [6] Investment Styles - Value stocks trade at a price below their intrinsic value, offering potential opportunities [8] - Growth stocks are expected to have rapid intrinsic value growth, justifying their current market price [9][10] - Dividend stocks are from established companies that distribute profits as dividends, providing a steady income stream [10][11] Investment Vehicles - Mutual funds are portfolios managed by professionals, offering diversification but with management fees [12][13][14] - ETFs (Exchange-Traded Funds) are static baskets of stocks, providing diversification without active management fees [14][15]

Basics of Stocks - Stocks, also known as shares, represent ownership in a company, providing partial claims to its assets and earnings [1][2] - Companies issue shares to raise capital, often through an IPO (Initial Public Offering), which lists the company's shares on the stock market [2] - Stock prices are determined by supply and demand, with investor demand largely based on the expected future performance of the company [3] Investment Principles - An investment is anything expected to gain value or generate income over time, with stocks achieving this through capital appreciation and dividends [5][6] - Capital appreciation occurs as a company grows in value, increasing the value of its shares; dividends involve companies distributing excess profits to shareholders [7][8] - Reinvesting returns generates further returns, creating a compounding effect that significantly increases wealth accumulation over time [12] Investing vs Saving - Investing allows for returns that can outpace inflation, building wealth over time, unlike saving which may lose value due to inflation [11][12] - Compounding is a powerful effect where investment returns generate their own returns, leading to substantial growth over time [12][13] - Starting to invest early is crucial, as it allows more time for money to compound and grow [15]

Hi, I'm Will and welcome to Investing 101 with Guru Focus. I'm here to help guide you throughout this course. If you're new to the world of investing, it's easy to feel overwhelmed.But you're far from alone there, which is exactly why we put this course together. Here at Guru Focus, we believe in empowering people to take control of their own financial future. Hopefully by the end you'll have the foundational knowledge needed to cut through all the noise out there and utilize powerful tools to make your own ...

Get more out of GuruFocus in just 30 minutes! Join our weekly YouTube Live session for a guided walkthrough of the platform—perfect for new users, trial members, and longtime subscribers who want to sharpen their workflow. When: Every other Wednesday at 1:00PM CDT Where: YouTube Live Duration: 30 minutes + live Q&A What we’ll cover (live demo): Navigating the platform Using the All-in-One Screener for idea discovery Valuation tools Guru Trades & Insider Trends Portfolio tools, watchlists, and price alerts P ...

Investment Strategies & Tools - GuruFocus shares how users can leverage its features to identify promising investment opportunities [1] - The discussion includes insights on current market valuations [1] - GuruFocus introduces GuruAI, a new feature for investment analysis [1] - Stock Alerts, another new feature, is highlighted [1] - Brokerage Portfolios feature is in progress [1] - GuruFocus compares DCF (Discounted Cash Flow) and GF Value methods [1] - Screeners and My Rankings tools are demonstrated [1] - GF Value Rank and Backtesting functionalities are explained [1] - Various valuation methods are discussed [1] Market Analysis & Specific Stocks - The meeting addresses the impact of the Presidential Election on the market [1] - The reasons behind the decline in gold prices are explored [1] - Specific stocks like SMCI (Super Micro Computer), SPS Commerce, ASML, CELH (Celsius Holdings), PLTR (Palantir Technologies), and EVVTY are analyzed [1] - Warning signs and alerts for SMCI are discussed [1] - The application of Joel Greenblatt's Magic Formula is demonstrated [1] - GuruFocus analyzes Warren Buffett's asset allocation strategy [1] - The most broadly held portfolio among gurus is examined [1] - Strategies for investing in an overvalued market are presented [1] - An aggregated portfolio of gurus is reviewed [1]