myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Sunday, 14 March 2010

Stock Market Tip and Investing Advice

Posted on March 14 2010

Stock market investing advice

Beginner stock market investing advice is far popular already in the internet. The individual investor will find it hard to make money in stocks. Almost many individuals are ready to invest in stocks right now. Yet to make lots of money means you need to study and studying takes motivation, which is very hard if all you want to do is impatiently throw your money into stocks.

If you hate to study then here are some stock investing tips.

Throw out the rulebook as there are no set rules for investing and there are no guarantees of success.

The best analysts are those who make informed decisions because they have detailed reasons for buying a stock and for selling.

Determine how much risk you could take as this depends on your goals, so have your goals formulated first.

Price is not often times the same as value and check a companies’ net worth, which is profit AFTER taxes.

Stock market tip

You have worked so hard and saved a lot of money. This time you want those savings to work for you and earn you even more money. The stock market is one of the easiest and best ways to do it, provided of course you know what you are doing.

Listed below are ten stock market tips for beginners that if followed will lead you to success.

1) Make sure to determine your goal. Once you know to define your goal, then you can create a trading strategy for achieving that goal.

2) Mutual funds are not for everyone. As advised, take the time to learn how to pick good stocks so you can easily make double even triple-digit gains rather easily.

3) No single stock trading strategy will work in all markets. You must have a store of at least three trading strategies.

4) If possible, avoid short selling. Short selling is not a good advice as it is a strategy used to create wealth when stocks are falling. It is extremely risky and your broker is in control.

5) Find a low cost broker and do your own investing. Those full service brokers charge hundreds of dollars to place one single trade. Online discount broker can do the same thing for $5 or even less.

6) Practice paper trading your stocks and strategies. “Paper Trading” simply means that you find the stocks to invest in and pretend you are buying them

7) Have an exit strategy. The stock market can be tough for beginners. Try to make a plan before buying and stick with it.

Go over your trades yearly. Try to figure out why the losers lost and you should learn from it so you don’t make the same mistakes next year.

9) Try to at least master technical analysis. It is good to be able to predict the direction of any stock or index with fairly accurate results.

10) Learn how to pick winning stocks. Use a stock picking service if possible. You can find these all over the Internet.

Stock investing tip

In general, when investing in a stock it is easy to become distracted and lose focus. Maybe your stock picks have been going down recently and you are afraid of losing any more money. Maybe you have found another stock that you are interested in buying, but you need to sell your other stock first. Maybe you don’t like the ups and downs associated with investing in an individual stock.

Stock invesment software

There are various stock investment software options on the market today. By investing in the good stock picks which they generate, you can make a great deal of your money in short-term. I would like to recommend going for penny stock specific stock investment software. Some programs only target those cheap stocks because of the high profit potential associated with them. Because of these stocks have cheaper prices, penny stocks are a great deal more potentially profitable overall.

Good stock pick

So many investors and stock beginners today want to know how to find good stock picks for their portfolio. They are always finding for that next hot stick tip that they can make a killing off in the next 30 days of investing. The most common problem with most investors is that they take on a very short term outlook. This is the same of a number of business owners. In both business and stock investing, it’s only a small minority who ever make a significant amount of money. Why is this?

Instead of being committed to a strategy and sticking to it long term, the vast majority become so focused on finding that ‘get rich quick’ scheme they will jump from one stock to the next, and ultimately make very little money at all.

http://thegetwealthy.com/2010/03/stock-market-tip-and-investing-advice/

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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Sunday, 14 March 2010

Stock Market Tip and Investing Advice

Stock Market Tip and Investing Advice

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All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

Political and Economic News

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