Wednesday, August 22, 2012

factors to consider b4 buying

Remember, patience is key to investment

buy only when score is 7/10

sell to profit, do not take into consideration negative,

Should have sold anchun:4, foreland 5, can still hold

1) Market sentiment,

VIX below 20, means Negative; 20-30, neutral; above 30 positive, above 45 highly positive

More than 10% gainhighly negative ,5-10% gain, negative, No correction from  recent peak,/or 0-5% correction,neutral, 5-10% correction neutral, above 10% positive, more than 10% highly positive

2) Sector prospect

Monopoly or very high barrier to entry, positive

Highly defensive/ or at the trough of cyclical, positive (Earnings resilience at the face of crisis)

3) Company credibility

No red flags, positive

Strong cash flow, good valuation- debt ratio, consistent margin and revenue and profits with sector, all factors in highly positive, only 1 missing, positive

execution record,  Plans executed without/with minimum delays

management assessment, how often is its forward looking statement fulfilled, are they candid with challenges or overly bullish?

4) Valuation Gap

>50% highly positive, 30-50% positive, 10-30% neutral, 10% or lower, negative

Potential to be around for decades?

Dividends to be collected over investment periods?? minus worst case scenario price. e.g. singpost price during GFC  assume 60 cents , potential loss46 cents, assume 6.25 cents for10 yrs,62.5 cents, as compare to UMS, not worth it.... esp china stocks...

 

 

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