Introduction:
The principles discussed in last month’s articles on chart patterns, the overview and the head and shoulders, underlie reversal chart patterns in general. They apply to this article’s topic as well: the double-top reversal pattern.
Perhaps the most common mistake when identifying patterns is neglecting to consider the preceding trend. This is akin to neglecting the context. To emphasize an important point made in the overview article:
“Chart patterns are divided into two main groups: reversal patterns which occur at the end of a trend, or continuation patterns which reside within the trend. It logically follows then that a prerequisite to any chart pattern is the existence of a prior trend.”
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Tags: chart pattern, churn, consolidation, distribution, double top, neckline, resistance, reversal, S&P500, support, technical analysis, volatility
Technical Analysis | Sargon Zia | 
August 31, 2010 11:35 pm | 
Comments (1)
Myron J. Gordon 1920 - 2010
Introduction:
In part-2 of this series we applied the concept of the present value of all future cash flows in the form of the dividend discount model. A variation of this is called the Gordon Growth Model 1 which deals with the infinite summation problem more directly.
The Gordon Growth Model (GGM):
The summation in the present value model is an infinite geometric series. It can be mathematically transformed 2 into what is known as the Gordon Growth Model, or GGM for short. Although cash flow can be represented by several measures, let’s use dividends for illustration purposes.
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Tags: cash flow, discount rate, dividend discount model, Gordon Growth Model, intrinsic value, payout ratio, PE ratio, present value, required rate of return, ROE, S&P500
Fundamental Analysis | Sargon Zia | August 19, 2010 6:23 pm | Comments (1)
A frequently asked question in discussion groups relates to how to study for the CFA. Having taken all three levels, I would like to share my perspective.
I enjoy learning, and I don’t mind taking the time I need to understand the material. A bowl of gourmet ice cream is to be enjoyed before it melts, but slowly enough to avoid brain freeze.
When I study for the CFA exam, my objectives are to: Read more »
Introduction:
In part-1 of this series, we discussed the concept that a stock’s intrinsic value is the present value of its cash flows. Here in part-2 we will introduce the general form of the present value model, and discuss the dividend discount model in more detail.
The present value model discounts all future cash flows to determine a stock’s present value, V0, which is its intrinsic value at t=0. Discounting all future cash flows necessitates using the infinity sign (∞) in the summation. The foundational formula for the present value model is: Read more »
Tags: cash flow, discount rate, dividend discount model, fundamental analysis, Gordon Growth Model, intrinsic value, John Burr Williams, multistage model, payout ratio, present value, required rate of return, terminal value
Fundamental Analysis | Sargon Zia | August 1, 2010 9:15 am | Comments (1)
