How do you guys value players?
I was just wondering as I hear a lot of people comparing a certain player to another but if the player they are comparing it to are undervalued or overvalued then it won't work. I just try to work out potential but it's very subjective.
Formula I've mentioned before;
IF current price < ((((expected div yield + expected future price) - commission) - expected opportunity cost) - target roi)
AND within risk tolerance
ELSE 'no buy'
But its not like I sit and apply actual numbers... Its just a subjective, semi-conscious calculation that happens in thought... Based on experience of the market.
If someone is £1 and I think (be it in a day or a month etc) they will make 6p divs + 10p cap ap... And I can't spot someone at same risk level who offers better value at that time... Then id buy... Because il have made 14p after commission at roi of greater than 10% (which is roughly my minimum barrier to make a trade worthwhile)
That's a great way of looking at it. Thanks for sharing.