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Discount model part 2: Cash flow

In part one of the discount model series, the different discount model types and the calculation of the discount model are discussed. Part two of the discount model article series is aimed at the cash flow discount model (or discounted cash flow model). In this article the reason why the cash flow is used in the discount model, what the different types of cash flows are and the shortcomings of the discounted cash flow models.

 

Why nature and the economy are similar

The economy and biology are strangely connected. In both the economy and biology similar events occur that have similar causes. In this article, I will name some causes and effects. Within the plant- and animal life, there are periods of growth and decline, just as in the economy. But that is just a comparison on a very high level. What can we learn from the science of biology?

 

Discount model part 1: Basics

In the next four articles I will discuss the discount model and the various variances: the cashflow discount model, the dividend discount model and the profit discount model. In this article, the idea behind the discount model, the one and two stage discount model, and the calculation of the discount models are explained. In the following articles I will discuss each of the three variances.

 

Buy, sell or hold

Investment analysts always love to give an advice about shares. Most of the time they use the words buy, sell or hold to give a short statement about their advice. These opinions are easy to understand and can be counted to get an overall advice (and to determine the buy-to-sell advice ratio).

 

Average true range (ATR)

In an earlier article about the ADX indicator, I promised to post an article about the Average True Range (ATR). I will discuss the ATR indicator in the article you are reading right now. I will write about the signals the ATR sends and the calculation of the ATR. When using a technical analysis method, I personally always want to know how to interpret the signals and how to avoid misusing the technical analysis method. This will also be part of this article.

 

Investment strategy: unpicking stocks

There are two main types investment strategies that are being used by most of the investors. These investment strategies are index following and stock picking. An investor chooses one of these strategies and applies them to its investing portfolio. Although there are two strategies, the outcome of each strategy depends not only on the strategy, but also on the choices someone makes.

 

The Average Directional Index indicator (ADX)

To continue the article series about the objective technical analysis, I will discuss the Average directional index (or ADX) in this article. Earlier, I have written articles about the moving average, the moving average convergence/divergence indicator and the relative strength index, which all are objective technical analysis methods. Just like the other objective technical indicator, the average directional indicator is used to measure trends of a share.

 

Relative strength index: signals and usability

After the moving average and the moving average convergence/divergence, the RSI will be the third technical indicator on which I spend an article. The RSI, or Relative Strength Index, is one of the most used technical indicators. The RSI is, just like the moving average and MACD, an objective, mathematical technical analysis method.

 
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