People who buy shares often ask what are good stocks to buy now, or simply want stock tips. What they should be learning is how to properly invest with a robust methodology suitable to their psychology. Some can handle day-trading because they have more time, and can mentally handle making difficult and quick decisions. Others are busy and can only spare a few hours a week to look at news, and make investing decisions.
For most people who cannot day-trade, they are probably better off using some value investing principles combined with some basic charting.
Investing in shares requires us to know stock fundamentals like feeling the broad market, understanding the company's revenue models, competitors, supply & demand situation, and many other points. From there, we can shortlist a number of good companies selected for the purpose identified: Growth, Income or Speculation.
Fundamental information are useful for value investors, who really need to study a lot more into the companies they invest in. For hardcore value investors or some called "Deep Value" investors, they will calculate an intrinsic value of the stock based on the time value of future cash streams be it dividends or simply the company's free-cash-flow.
However, many use a hybrid which looks at Charting or Technical Analysis to determine buy and sell points. Charting is a study of past stock prices to predict the move of stock prices. There are trending indicators like moving averages and MACD crossover, oscillating indicators like Stochastics.
Typically, two to three indicators should suffice for light investors. It's more important to understand the application of the indicators than to use a lot of indicators. Get a feel of how it applies to the stocks you have selected.
A wise investor told me that "When the Broad Market tells you to Sell, Don't Argue with Them. Dump Everything, you can get it back later."
In modern times, we can easily buy shares from the stock market online, scour forums for share advice and tips, and research company information online. Fundamental information are frequently distilled for you to important ratios like Debt-to-Equity, Return on Equity with Dupont breakdown, Cash Conversion Cycle etc. A good stock platform should also have means to look at level 1 and level 2 quotes, and insider moves. For execution, most modern platforms can set trailing stops or take-profit targets, helping to execute when you are busy.
Studying investment guides, may help you intellectually understand stocks. But learning from a true master, and having a community of like-minded people who invest equity shares is very valuable. Why not invest your time in some shares investment education?
For most people who cannot day-trade, they are probably better off using some value investing principles combined with some basic charting.
Investing in shares requires us to know stock fundamentals like feeling the broad market, understanding the company's revenue models, competitors, supply & demand situation, and many other points. From there, we can shortlist a number of good companies selected for the purpose identified: Growth, Income or Speculation.
Fundamental information are useful for value investors, who really need to study a lot more into the companies they invest in. For hardcore value investors or some called "Deep Value" investors, they will calculate an intrinsic value of the stock based on the time value of future cash streams be it dividends or simply the company's free-cash-flow.
However, many use a hybrid which looks at Charting or Technical Analysis to determine buy and sell points. Charting is a study of past stock prices to predict the move of stock prices. There are trending indicators like moving averages and MACD crossover, oscillating indicators like Stochastics.
Typically, two to three indicators should suffice for light investors. It's more important to understand the application of the indicators than to use a lot of indicators. Get a feel of how it applies to the stocks you have selected.
A wise investor told me that "When the Broad Market tells you to Sell, Don't Argue with Them. Dump Everything, you can get it back later."
In modern times, we can easily buy shares from the stock market online, scour forums for share advice and tips, and research company information online. Fundamental information are frequently distilled for you to important ratios like Debt-to-Equity, Return on Equity with Dupont breakdown, Cash Conversion Cycle etc. A good stock platform should also have means to look at level 1 and level 2 quotes, and insider moves. For execution, most modern platforms can set trailing stops or take-profit targets, helping to execute when you are busy.
Studying investment guides, may help you intellectually understand stocks. But learning from a true master, and having a community of like-minded people who invest equity shares is very valuable. Why not invest your time in some shares investment education?
Brendan Yong has been in the Financial Advisory Business since Jan 2003, and is currently a Financial Services Manager with the largest Independent FA in Singapore. His passion is to help young entrepreneurs to achieve their fullest potential, and maintain a healthy work-life balance.
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