*Listen to me. I'll explain this as simple as possible. Okay? First, you must BUY now. That's all. lol..[?] okay seriously, you should consider comparing stocks' DPR (dividend/price ratio) vs RFRR (Risk free rate of return) or simply the average bank deposit rate + 1% spread.
Dividend/Price Ratio should NEVER be allowed to go above RFR ratio. (otherwise it's undervalued) Example: Let's say a stock price is 1000. The dividend forecast is around 100. That makes the DPR = 100/1000=10%. while the current risk free rate of return (RFRR) is only at 8% You see the DPR is higher than the current RFRR. So, the stock price MAY adjust itself to have 8% DPR, means the stock price' fair value would be around 100/8% = 1250. So the stock may advance around 25% from 1000 (to 1250) usually until the dividend is paid. Let's say for other stock, the dividend forecast is only 10. That makes the DPR = 10/1000=1%, this means the stock price is way too high compared to its dividend. So the stock price MAY plunge to 10/8%= 125 at worst, usually soon after the dividend is paid. Case 1: BUMI. On June 2008, BUMI price was 8000. The announced <http://economy.okezone.com/index.php/ReadStory/2008/06/12/21/118016/bumi-bagi-dividen-usd317-jt>dividend was 111, and RFRR is, let's say, 8%. The simple calculation would be 111/8% = 13xx. That'd be the fair value of BUMI. Case 2: INCO. On Nov 1, 2007, INCO announced <http://www.antara.co.id/en/arc/2007/11/1/pt-inco-tbk-approves-an-interim-2007-dividend-of-09787-per-share/>that it'd pay a dividend of $1 or around IDR 9000. INCO was 100k/share. The RFRR is 8%, so INCO had a chance to rise to 9000/8% = 112k before the dividend is finally paid. But the nickel price was already plunged at that time, so the next dividend forecast fell, and so did the price. The latest dividend cmiiw was around $0.2, that makes current fair value of INCO is around 25xx. I made you confused, didn't I..? [?] this post makes me less 'mysterious' lol wth.. I guess you'd love to have a night class with Elaine.. [?] j/k.. Elaine * 2009/1/4 Richard S <richard...@gmail.com> > Para Suhu2x yg saya hormati.. saya sebagai newbi punya pertanyan > fundamental mohon bimbingannya .. > Bagai mana cari tau harga wajar sebuah saham, apakah dia uda terlalu mahal > untuk di beli ato sudah mura dan boleh di beli? > Thanks in advance, Richard. > > >
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