14 July 2013

Principle in Selecting Stocks - 14 July 2013

After I become a full time investor in Shares Investment, it gives me a lot of time in re-adjusting my principle in selecting stocks. Let me share with you here on some of the principle in selecting stocks. 

If you focus on tips, your confidence in holding a stock to rise to its top is very little, as you might not really know how accurate the news is from your research analyst / your grand-mum / your online friends, but it does give you a chance of practicing yourself to be more interactive with people around you so that you may try your luck next time. 

If you focus on the business that you are investing in, you may not really care about the changes in external environment such as the Fiscal Policy or Monetary Policy. I still remembered what KLSE.8K Uncle shared with me 10 years ago that, he had a friend who was a hawker selling Char Kuey Tiaw and this friend didn't really care what the politician or economists said to the public as his business were not really affected by that and he would just focus on his Char Kuey Tiaw business. 

If you focus on the news movement, your investing behavior would largely affected by the news update such as comments from Bernanke. If you really wish to focus on that, reading news could occupy most of your free time. You may be more sensitive and be more frequently trading based on the news released recently. 

In this stage, I just want to focus on finding out more "business prospects" of the stocks. It could be like for example, any acquisition plan / research & development plan / changes in Top Management etc that may affect the long term intrinsic value of a company. It may take longer time to reflect in the stock price. But it does give me some certain assurance that, as long as the business can grow in healthy and faster pace that its peers, it really worth for us to keep this counter. To do so, we should look on the business strategy of the company, how the company participate in changes of economy, as well as how strong the financial position it has to cushion during the bad time. 

The interesting part in investing in shares is that, the market remains calm most of the time, but only will get mad due to the fear / greedy. It is really up to us to choose what principle of selecting stocks. 

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