One of the few things I like to do that very few people know about is read up on investment tips or learn how the stock market works and even read up on famous investors to see how they invest in stock in hopes that maybe one day I'll follow in their foots steps... or follow in their account books to be quite frank.
After reading About Warren Buffet, I actually watched a couple of videos on youtube about him. As you can tell watching video interviews is a billion times more fun and mentally stimulating than reading text. So here are a few videos of his views on how to choose stock or how he would choose a stock to buy.
After further video searching I actually found a video where a guy actually broke down Warren Buffet's Investment strategy or what he considers when buying a stock into an easy to understand formula.
If for some reason you can't see the video (like your in the office and you got no headphones) but you wanna know the formula so you can make tons of money (If the formula does work) it's :
Value= Net Earnings+Dividends
Price= Price-to-book (meaning the price of total shares or how much it would cost if you were to buy the whole company)
And the reason behind it or at least what I got from the video is that the more net earnings (or retained earnings) a company keeps the more the company would expand thus the value of the stock will expand while dividends means more money in your pocket to invest in more stocks.
I really hope this information helps you in some really awesome way.
What can this formula be used for? Good question and this is merely my opinion (you can tell me yours in the comment box below)
I think you can use it obviously when your looking for a good stock to invest in that would have good returns in the future.
Secondly, I'd say when you are analyzing Mutual Funds or Unit Trusts (as they would be call it here in Malaysia) and see which Mutual Fund or Unit Trusts have the best return. Never let the pretty bank person convince you blindly. Always ask what stock the Unit Trust is investing in then go home. If they don't know (which whenever I ask they tend not to know and give me general answers) you can always google it. If you can't find the answer... well the risk is up to you :)
Thirdly, If your a stock broker and you trying to find the best deals for your clients. Well it's pretty obvious this might help you give good advice.
So that's my take on the formula. Remember if you make tons of money with this formula, don't forget to buy me a drink :P If you got great advice too, do let me know. I wanna learn :)