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Value investing, superior returns, peace of mind, consistent performance, no leverage,
no lock-up on your money –
all in one package.

Compounded Interest

It’s not timing the market but rather time in the market that counts in achieving superior long-term per-formance. Compounding of interest really works magic if you select your investments properly and give them time to grow for you. Using the compound interest calculator below you can see how much your current portfolio could be worth at different scenarios. For most people such exercise is an eye-opener.

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Market Focus

The current liquidity crises that started in August 2007 is a result of deflation of the liquidity bubble pumped up over the past several years. There are three major factors which caused this:

1.	lax monetary policy (introduced to soften consequences of the tech bubble burst starting in 2000 and the 9/11/2001 terrorist attack) conductive to growth in credit,
2.	proliferation of credit securitization aided by oversupply of credit insurance in the form of credit default swaps (at the middle of 2005 total notional value of CDS was USD 35 trillion, with amount of insurance on some debt several times exceeding amount of the debt) issued by a multitude of hedge funds, which led to an explosive growth in lesser-quality credit issuance, and
3.	accumulation of huge foreign exchange reserves by central banks of net exporting countries to stem appreciation of their currencies which led to further growth in liquidity both in their domestic and international markets (in 25 years from 1980 to 2005, FX reserves increased by almost 14-fould, from USD 202 bln to USD 2,800 bln).

It took years for the liquidity/credit bubble to inflate, weeks for it to burst, and will take many more months for consequences of it to dissipate. The immediate effect of the bubble burst was an increase in interest rates, especially for lower-grade credit. We view this as a long-overdue reversion to economically-justified levels.

We see a prolonged period of the global financial markets transition to a more sound footing, as only one of the tree factors which led to their disbalances is no longer there. The other two (lax monetary policy and FX reserves) still need to be removed. But doing this is politically very risky and could not be done without jeopardizing the shaky equilibrium we are in at the moment.

An obvious question is what to do in the current market situation. Nobody knows what will happen in the future. However, the history teaches us time and time again that choosing good value investments and staying invested in the market is the best investment strategy.

As true value investors, we believe that value of a company, unless it is to be liquidated immediately, depends primarily on its future performance. We use financial statements as an indispensable source of information for forecasting. However, as the company does not operate in isolation, we also make macroeconomic forecasts, which is impossible without correct assessment of the current market situation.

Golden Rules of Investing in Stocks
*	Buy good quality undervalued companies.
*	Plan to hold on to your investments for at least 3-5 years, unless an extreme overvaluation or unforeseen negative developments prompt you to sell a stock sooner.
*	Be aware that you can lose money in the stock market and be prepared to accept and withstand a loss: equity investing is risky and is not for everybody.
*	Stay invested at all times, don’t try to time the market: it’s practically impossible.
*	Don’t short the market or individual stocks and don’t use leverage: these methods increase the level of risk you take immeasurably and results could be devastating.
*	Follow developments of companies whose shares you own, much more so then their stock prices.
*	Keep your cool, stay emotionally detached from the market, and enjoy life: don’t let the daily market gyrations determine your mood.

Premium Independent Stock Research Service

iStockResearch provides independent, objective and free research on stocks. For determining target prices for stocks we use our proprietary stock valuation model. It is based on the discounted cash flow method and incorporates elements of other stock valuation methods. Our model is unique and provides a possibility for objective and insightful analysis and valuation of companies and their shares of common stock. However, stock valuation is not a precise science, as it is based on assumptions about future developments. Therefore, we conduct an in-depth analysis of a company and its true current situation and future prospects before we interpret results of the valuation provided by the model and establish a target price for the company’s stock.

One of our stock valuation models is available for you to use on this site. You can use this model for on-line valuation of stocks: just enter required values and press “Calculate”. “Original values” in the table are those of a fictitious company and used for illustration purposes only.

Our price targets for stocks are based on our estimation of their intrinsic value and on an assumption that stock prices sooner or later will converge with their intrinsic values. We are not in a business of predicting when stocks will move up or down, or market timing, as we believe that markets by their nature are largely unpredictable. Instead, we believe that a true value of a company (or any asset for that matter) sooner or later will be recognized by the market, notwithstanding the direction in which the broader market moves (up or down).

Currently, we cover stocks included in the following stock market indices:

- Dow Jones Industrial Average (DJIA)

- Standard and Poor’s 500 Index (S&P 500)

- Standard and Poor’s MidCap 400 Index

- NASDAQ-100 Index

- S&P/TSX Composite (Canada)

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