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STOCK MARKET GUIDES FOR NEWBIES LIKE ME

mikoangelo · 735 · 190593

mikoangelo

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Reply #15 on: Oct 29, 2011, 03:23 PM
10 Commandments of Value Investing
http://dividendmoney.com/10-commandments-of-value-investing/

Once in a while investors need to be reminded of the concrete rules that have been proven successful by famous investors to make money in the market. The following are the 10 concrete rules for value investing.

Low Price-to-Earnings (P/E) Multiples: Search out stocks trading at less than 10 times price-to-earnings multiples, which reduces the risk of overpaying for a security.

Low Price-to-Cash-Flow Multiples: Look for companies trading at less than five times a price-to-cash-flow multiple. This also reduces the risk of overpaying and uncovers many dirt-cheap equities.

Discount to Book/Net Asset Value: Buy stocks trading at a discount to book/net asset value. In many cases, this not only uncovers significantly undervalued stocks but also prime takeover candidates.

Hidden Assets: Some examples of hidden assets that can be uncovered after a thorough analysis are tax-loss carry forwards, over-funded pension funds, real estate, potential spin-offs, IPOs and favorable litigation.

Management: Two types of management could be key in the search for a turnaround candidate: a) solid, proactive management and b) poor management, which leaves the company ripe for a proactive acquisition or merger.

Products/Services in Tune with 2008 and Beyond: This includes expandable, growing markets with good margins. We tend to avoid companies with outdated, shrinking products.

Value Catalyst: To push up the value of a stock, we look for a significant value creator. Some examples of possible value creators are fresh management with new directions, an important sale or purchase of a meaningful asset, an unsolicited takeover bid or disgruntled and impatient proactive shareholders who may put pressure on management to make changes or sell.

Discounted Valuations Compared with its Peers: Comparative valuation measures such as price to earnings and cash flow could indicate a takeover by relatively expensive Canadian or foreign competitors looking to expand market presence.

Contrary Opinion and Under-followed by Investment Analysts: With little investor exposure, undervalued stocks are pregnant with possibilities, providing very little buying competition when we attempt to accumulate the security. Generally, an undervalued and under-followed security will offer terrific capital-gains opportunities.

Discipline: Stay on track and adhere to strict value discipline of low P/Es and strong cash flows and price targets. Do not get sucked into buying the flavor of the day! Combine patience and persistence to attain superior performance. Patience! Patience! Patience!


TSO

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Reply #16 on: Oct 29, 2011, 04:07 PM
Aba, biglang naging investor ung "guide" ni miko ah! Ano 'to, heel face turn!? XDDD

Actually, kelangan pa 'yan idagdag eh:

1. HAVE BALLS. :3
2. WELCOME VOLATILITY.

Magandang supplement yan hahaha


mikoangelo

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Reply #17 on: Oct 29, 2011, 05:38 PM
^ I just came across that one while reading so naisp ko lang ishare,although

sa VI thread ko nga pala dapat siya pinost   :hihi:

Magandang supplement nga yan,ska dapat di kabado at baka atakihin sa puso lalo na kapag

bumabagsak ang price ng hawak na stocks  :hihi:


TSO

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Reply #18 on: Oct 29, 2011, 06:15 PM
Hindi, kasama yan sa collection ng guide mo ehehe.

Masyadong seryoso ung atmosphere ng VI thread, para sakin. (o baka ako lang yon?)


mikoangelo

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Reply #19 on: Oct 30, 2011, 01:34 PM
 ^  :hihi: :hihi: :hihi: naalala ko tuloy si samsam na natakot magtanong sayo.. :hihi: :hihi: :hihi:

I started reading the VI thread, and nosebleed ako sa mga post mo sir ha  :hihi: :hihi:

Parang ganito nangyayari sakin

 :scratch:

 :book:

 :wall:



 :pc:

 :idea:  :thumbsup2



Post Merge: Oct 30, 2011, 01:51 PM
HOW TO PICK WINNING STOCKS

by Martin Zweig


“Look for a clear uptrend on the stock’s chart.

If you see a series of HIGHER HIGHS and

HIGHER LOWS , like a stepladder on the way up,

that’s it ! Buy the stock !”


    ACTING BETTER. Look for stocks that are acting better than the other stocks, even

in a weak market.

    AVOID STOCKS that haven’t been keeping pace, left behind, stocks wallowing near

 their lows, weak stocks rising in a very lukewarm way.

    CLEAR UPTREND. Look for a clear uptrend on a chart where you see a series of

HIGHER HIGHS and HIGHER LOWS, like a stepladder on the way up.

    BEST BUY SPOTS. Your best buying spots are short pullbacks or (“corrections” or

profit-taking) of 5% to 10% from the stock’s recent peak price. Buy when the price drops a

 bit.

  BREAK OUT. Look for a stock that’s just breaking out from a long “consolidation” .

(Matagal na natulog ang stock, biglang gumising !) Look for rising volume — going with the

rising stock.

    MAKING MISTAKES. Even the world’s best professional traders make mistakes in

the market losing billions of dollars. Zweig says: “ I also make a lot of mistakes in the

market and I will make more mistakes in the future”. So, don’t be afraid or embarrassed to

make mistakes.

    CUT LOSSES. Let your profits run, but cut your losses short. Don’t wait too long,

hoping the stock will recover. In most cases, it won’t. If you bought a stock at 20, you won’t

be badly hurt if you cut loss by selling out at 17 for a 15% loss.You still have the bulk of your

capital— to look for a better, stronger stocK.

    JESSE LIVERMORE, the greatest stock speculator who ever lived, said :

“ A loss never bothers me after I took it. I forget it overnight. But being wrong

and not taking the loss, that’s what damage your pocket. Of all blunders, there

are a few greater than trying to average a losing game. Always SELL what shows

you a LOSS, and KEEP what shows you a PROFIT.

    STOP LOSS. Set your “stop loss” price at 7% to 10% below your buy price. For

more volatile stocks ( malakas gumalaw!) you can give more room at 10% to 15% “cut loss”

selling price to GET OUT of the stock. Don’t wait, don’t hope, get out!

    GETTING OUT. If a stock drops right away after you bought it, your “cut loss”

selling price gets you out of the stock with only a moderate loss. You still got most of your

money left. This gives you another opportunity to find a better,stronger stock.

    SMALL LOSS. A small loss becomes a good opportunity for making profits

elsewhere. This gives you the chance to turn a liability into an asset— instead of just sitting

there hoping and praying that your dying stock will come back,with your losses becoming

bigger and bigger…

    LOCK IN PROFITS. Use the same “stop loss” to trail behind a rising stock.

Let your profits ride as the stock keeps on rising. As it keeps rising, also keep raising your

“trailing stop” price—the price where you get off when the price drops 7% to 10% . Once it

drops to your target “stop loss” price, SELL the stock and get your profits!

    BUYING MORE. If the stock price just keeps on rising steadily, with “higher

highs and higher lows” on the chart, just hang in there and ride with the profits.

If you still have more cash to spare, BUY MORE of the same stock and “average up” as much

 as you can…

« Last Edit: Oct 30, 2011, 01:51 PM by mikoangelo »


TSO

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Reply #20 on: Oct 30, 2011, 02:19 PM
:hihi: :hihi: :hihi: naalala ko tuloy si samsam na natakot magtanong sayo.. :hihi: :hihi: :hihi:

I started reading the VI thread, and nosebleed ako sa mga post mo sir ha  :hihi: :hihi:

Parang ganito nangyayari sakin

 :scratch:

 :book:

 :wall:



 :pc:

 :idea:  :thumbsup2

LOOOOOOOOOOOL

Punta ka sa GuruFocus. Para sa US. Baka mas lalo ka pang madudugo sa ilong. hihihi

Kung nahabol mo pa akos a pRO days klo... hay nako, ung mga post ko sa ragnaboards. Kasinhaba at puro probability statistics.


freefront

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Reply #21 on: Oct 30, 2011, 03:36 PM
@mikoangelo- the lessons about cutting your losses runs counter to the idea that really kicks your backside, because it is particularly true of Pinoys and those who haven't taken the time to learn and ally their fears: People are more concerned of taking losses than that of receiving gains. Fear trumps excitement  most of the time.So, they let it slide to the negative side, past their mental cut loss, way past their exit plans, just because they won't take a loss.

There was an earlier post where the scenario is---if you are wrong twice, and correct once, you still come out winning. Example: 2 stocks with a cut-loss of 10% and you sold. Another stock gained 30% and you also sold. That's still a gain of 10%. If you go red at more than 18 or 20% on 2 stocks, I doubt if you can have one stock  go past 40% gain to cover the losses or break-even. Take the loss fast and soon. BTW---I already learned that lesson, fast and hard. Always protect your capital. Loss and gain are just ideas. Capital is your money, which no doubt is very tangible and real to you.

I don't know where we are right now about the global and local market forecasts, but I'll be selling and taking as much as 18% loss on some stocks simply because I can't beg for time to manage my account anymore. Maninibago na naman ako sa January.


mikoangelo

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Reply #22 on: Nov 05, 2011, 10:15 PM
No such thing as “luck” in the stock market !
by:Aurelio A. Pena / Goldelyonn Fund Management

There’s NO such thing as “luck” in the stock market.

If you lose money in stocks, that isn’t “bad luck”.

That’s STUPIDITY.

            Many people who “invest” in stocks all over the world and lost millions are simply,

complete IDIOTS. Bad luck didn’t hit them—  it’s simply, stupidity.

         When you do something you don’t understand, you will lose. You won’t even know

what hit you when you lose money in the stock market.

           And those who lose money in stocks, are people who think that the stock market is

just “gambling” and make “bets” on companies recommended to them by their brokers.

          The moment you start treating the stock market as “gambling” you’re sure to lose

your money and you’ll blame it all on “bad luck”

          That’s why it’s so important for people to understand the stock market as a market

place for companies seeking capital from investors ( banks, insurance firms, pension funds,

investment banks, mutual funds, small investors, etc) for their expansion plans and

operating capital.

          If companies think borrowing from commercial banks is just too costly for them,

they’ll go to the stock market and offer to sell some of the ownership to investors.

          That “ownership” is represented by a unit called “shares of stock”.  This is the stock

that you buy as “investment” in that company— and later sell when its price gives you a nice

 profit.
         Stock trading must be treated like a BUSINESS. When you start buying and selling

stocks for profits, it’s the same thing as buying and selling corn, copra, or rice to make

profits— and make your savings and retirement fund grow bigger.

           It’s a decent, honest and serious way to make a living. As long as you know exactly

what you’re doing, as a stock trader, you can build your savings over the coming months this

 year and multiply it 2X or 3X just by buying and selling stocks in short durations of 2

weeks, 5 weeks to three months piling up profits of 20% to 40%.

            Don’t approach stock trading as gambling— otherwise you’ll lose your savings and

investments. Learn the basics of stock trading in the stock market so you’ll know exactly

what to do— how to pick winning stocks,  how to cut your losses, how to read stock charts,

how to spot trends, how to buy at right time, how to sell and take profits, etc   


TSO

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Reply #23 on: Nov 06, 2011, 03:00 AM
^ Unfortunately, luck also plays a role.

Investing in stock market means investing in businesses. Even investments with extremely large margins of safety can fail...

The funny thing is, it's also difficult to distinguish luck from skill when analyzing a money manager's performance, even with the use of TWRR.


akira0422

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Reply #24 on: Nov 06, 2011, 04:23 AM
1.Low Price-to-Earnings (P/E) Multiples: Search out stocks trading at less than 10 times price-to-earnings multiples, which reduces the risk of overpaying for a security.

2.Low Price-to-Cash-Flow Multiples: Look for companies trading at less than five times a price-to-cash-flow multiple. This also reduces the risk of overpaying and uncovers many dirt-cheap equities.

3.Discount to Book/Net Asset Value: Buy stocks trading at a discount to book/net asset value. In many cases, this not only uncovers significantly undervalued stocks but also prime takeover candidates.

Hidden Assets: Some examples of hidden assets that can be uncovered after a thorough analysis are tax-loss carry forwards, over-funded pension funds, real estate, potential spin-offs, IPOs and favorable litigation.

Management: Two types of management could be key in the search for a turnaround candidate: a) solid, proactive management and b) poor management, which leaves the company ripe for a proactive acquisition or merger.

Products/Services in Tune with 2008 and Beyond: This includes expandable, growing markets with good margins. We tend to avoid companies with outdated, shrinking products.

Value Catalyst: To push up the value of a stock, we look for a significant value creator. Some examples of possible value creators are fresh management with new directions, an important sale or purchase of a meaningful asset, an unsolicited takeover bid or disgruntled and impatient proactive shareholders who may put pressure on management to make changes or sell.

Discounted Valuations Compared with its Peers: Comparative valuation measures such as price to earnings and cash flow could indicate a takeover by relatively expensive Canadian or foreign competitors looking to expand market presence.

Contrary Opinion and Under-followed by Investment Analysts: With little investor exposure, undervalued stocks are pregnant with possibilities, providing very little buying competition when we attempt to accumulate the security. Generally, an undervalued and under-followed security will offer terrific capital-gains opportunities.

Discipline: Stay on track and adhere to strict value discipline of low P/Es and strong cash flows and price targets. Do not get sucked into buying the flavor of the day! Combine patience and persistence to attain superior performance. Patience! Patience! Patience!
 
hi MIke! can you elaborate more on steps 1 to 3. i guess, if you provide sample computations,  or more specific examples, this could really help us understand more about the equities and points of wisdom you wann pass on.
like:
1.Low Price-to-Earnings (P/E) Multiples: Search out stocks trading at less than 10 times price-to-earnings multiples, which reduces the risk of overpaying for a security.
what does it mean when i buy and agi of pe 14.46?, an at of -26? or fdc of 8????? wer to get accurate data on PE of a company??? for PSE is it PSE website old or new or do we always have to settle with 17a and quarterly reports.

2.Low Price-to-Cash-Flow Multiples: Look for companies trading at less than five times a price-to-cash-flow multiple. This also reduces the risk of overpaying and uncovers many dirt-cheap equities.
whats the actual fomula for this? should we go for quarterly, semi or  annual monitoring of cash flow???
3.Discount to Book/Net Asset Value: Buy stocks trading at a discount to book/net asset value. In many cases, this not only uncovers significantly undervalued stocks but also prime takeover candidates.
can u help us make a model to simplify computation of this figures?

thank you.XD

as


TSO

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Reply #25 on: Nov 06, 2011, 05:02 AM
Akira,

Your inbox is full. As usual. You're the only one who's been missing my updates and I need your email address.

1. I must warn you that current P/E ratios can be misleading. For example, EDC's current P/E ratio of 27+ masks the likelihood it is 15.71.  

2. I prefer annual.

3. A model? You just compare the price to book value. Oorrr.... you slap on some kind of multiplier to total assets and subtract it by liabilities. That's pretty much it in a nutshell.


ferrariEverest

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Reply #26 on: Nov 06, 2011, 05:10 AM
luck is an inevitable component in trading/investing.
why? simply because we dont & cant control , and we cant forecast everything the market does.

ang tanong...
aasa ka lang ba sa luck....
o mas ok na you have an edge tapos paminsanminsan masasamahan ng swerte?


DonT

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Reply #27 on: Nov 06, 2011, 09:21 AM
Too lazy to search for the answer...but I guess many of you would probably know the answer off your head.

Is there a correlation on which strategy or type of analysis does one have to do if you want to invest in the short term...and on the long term.

For example....
Short term - I should do Technical Analysis
Long term - I should do Fundamental or Value Analysis

Tama po ba?
« Last Edit: Nov 06, 2011, 09:23 AM by DonT »


akira0422

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Reply #28 on: Nov 07, 2011, 11:04 AM
Short term - I should do Technical Analysis
Long term - I should do Fundamental or Value Analysis
--my opinion is always coupled with the news... however your right, sometimes we need to hanglose a liitle bite  and let some trends surface or peek at hhow the market reacts.


bauer

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Reply #29 on: Nov 07, 2011, 10:06 PM
short term trades - fundamental analysis, technical analysis, & news events

long term - fundamental analysis & news events


 


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