Dan Danford

CFP
Personal Finance, Investing, Small Business
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“With over three decades of experience in the financial industry, Dan Danford is fully committed to his clients' investment success, rather than earning sales commissions or lavish prizes. He started as a bank trust officer in 1983.”
Firm:

Family Investment Center

Job Title:

Principal/CEO

Biography:

Dan Danford is a gifted communicator. He has written hundreds of articles and several books. He has taught classes for high school, college, and community groups. He speaks often and served as commentator for a local ABC affiliate television station.

Dan founded Family Investment Center in 1998. In total, he’s been a successful senior officer in five different banking or investment firms since 1984. He earned a Master’s degree in Personal Finance from Kansas State University and an MBA from Northwest Missouri State University. Today, Family Investment Center manages well over $100 million for clients in a dozen states.

Dan is quoted extensively about investing. He’s written for or been quoted in the Wall Street Journal, New York Times, Chicago Tribune, Kiplinger’s, U.S. News & World Report and dozens of other newspapers, magazines, and media outlets.

Dan has served in numerous leadership positions for civic and professional boards including the Missouri Western State University Board of Governors and as treasurer of the St. Joseph Area Chamber of Commerce. He was Chairman of the Friends of the Free Clinic, a support group for the Social Welfare Board in St. Joseph.

Dan has been president of the Missouri Western State University Alumni Association and was honored in 2003 with the Missouri Western State College Distinguished Alumni Service Award.

Education:

MS, Personal Finance, KSU
MBA, NWMSU
BS, Marketing, MWSU

Assets Under Management:

$165 million

Fee Structure:

Fee-Only

CRD Number:

3067053

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  • Dan Danford / Family Investment Center
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    Investing, Stocks
Why do analysts decide on a target price for a stock that is lower than its current price?
93% of people found this answer helpful

An analyst’s “target price” is his/her best estimate of a stock’s future price. Since the stock market is an auction where buyers and sellers transact business, the analyst is trying to determine a solid estimate of future price based on company financials, industry trends, and economic factors.

Analyzing stock prices is not an exact science. Ten different analysts will arrive at ten different target prices depending on each one’s weighting of various factors. For traded stocks, they should each be starting with the same set of public financial data, but that entails a hundred or thousand data points for each stock. Plus, each analyst will apply their own process, experience, and judgment to that data.

Additionally, at least part of a stock’s value lies in future (estimated) data. Financial records necessarily look backwards, but the value to a new buyer lies in the company’s prospects. Will sales grow faster or slower in the future? Are margins in the industry rising or shrinking? Does the company have any product innovations in the pipeline? How about their competitors?

So, setting a target price is a judgment call. An informed analyst weighs all the past and future data with their own personal knowledge of the company and industry. From this, they set a target that they expect sometime in the future. Buyers or sellers can then use this target for their own decision-making about the stock.

Let’s say that a certain analyst sets a target for ABC stock at $25 per share. The stock is trading today for $20 per share. If you think this analyst is credible, then you might choose to buy ABC because you could make $5 per share (a whopping 25%) when the share price hits that target (again, timing of that price change is an estimate, too). Or if you question this analyst’s credibility, you can search to see what other analysts estimate for ABC before deciding.

An analyst sets the future target price with little regard to the price today. So, they might set a target price for ABC at $15. If you find that analysis credible, you’d probably decide to wait before buying (until the price falls to $15 or less) or sell if you already own it. Again, this is just one person’s judgment about the future price. You can use the information however you choose.

Importantly, really importantly, no one knows what will happen next with stock prices or any company. The fact that someone is an analyst following a stock does not make them right. They are simply an informed party doing their best to understand the company and landscape. Even the best analysts will be wrong sometimes.

As an investor, you are the final decision-maker. Learn as much as you can, choose credible people or companies for information, and exercise your own judgement when buying or selling. There are a million moving parts and it is impossible to predict the future.

2 weeks ago
    Career / Compensation, Lifestage Based Planning, Starting Out
What books should an aspiring financial advisor read?
69% of people found this answer helpful
August 2017
    Investing, Stocks
Why should I invest in private stock with no dividends?
67% of people found this answer helpful
July 2017
    Investing, Bonds / Fixed Income
Why do municipal bond funds all seem to lose money for the customers?
67% of people found this answer helpful
August 2017
    Asset Allocation, Stocks, Starting Out
What are the pros and cons of stocks that pay dividends?
67% of people found this answer helpful
August 2017