Investment is all about value investing. Money to be invested, money to be put to work. Invest in companies that have great business. Buy good value stocks. Holding it long term for capital appreciation. Receive dividend for passive income. Let money works for us & not working for our money. Review our portfolios reqularly. Below are some guardlines which maybe helpful in our investment:
1) Invest in Growth Stocks. Investment is about growth of companies.
2) Invest in undervalue stocks which give you a safe margin of risk.
3) Learn about market cycles.
4) Invest in sectors which you are familiar with.
5) Stay in focus & be disciplined.
6) Sell only stocks over-run it value or fundamental. Be thankful & never regret your decision.
7) Cut lost if the company future is in questions.
Managing risk is vital. If in doubt on the companies, keep clear; if smells of fish, keep clear; if smells of cockroach, keep clear. Don't take unnecessary risks. Even earning lower returns, it’s OK. Value & enjoy GOOD NIGHT SLEEP.
I want share prices to zoom higher when I am building my portfolio of Singapore stocks? But I don't mind even when share prices in my porfolio come down.
The reason is really quite simple. I am a long-term buyer of stocks, which means that I want to continually add more shares to my portfolio. So I want to buy shares when they are attractively prices. I can’t do that if prices are always rising.
There is another reason. I am an income investor. I get paid dividends for owning shares. These payouts regularly pop into my account, which, as far as I am concerned, is one of the great delights of investing.
The thing to remember is that dividends have no idea what the prevailing share price might be when they are being paid. They get paid regardless.
So, consider this. If I buy $100,000 worth of shares that yield 5%, my annual dividend income is $5,000. But for compounding to work, I need to invest the $5,000 to buy even more shares. So, ideally I want to reinvest the dividends as cheaply as possible. That way, I get to buy more shares. And the more shares I own, the more dividends I earn next time around.
Compounding has been the secret behind the success of investing in companies such as Dairy Farm, UOL and Boustead Singapore. Without the dividend kicker, the capital growth from the three companies over the last 20 years would have been 5.1%, 5.7% and 11.4% annually. But add in the reinvested dividends and the annual total return jumps to 11.1%, 10.4% and 14.9% respectively.
If you capitalise on the market lulls to make prudent additions to your portfolio you will be the winner. Robert Kiyosaki said, "True investors does'nt care market up or down because there are going to make money either way"
1. VALUE INVESTING
The best-known strategy is "value investing," buying companies that are inexpensive relative to their sales, earnings, book value and dividends. It offers not only the potential for exceptional performance but a high margin of safety as well, since you are buying assets for less than their intrinsic value.
2. GROW STOCKS
Second strategy is is "grow stocks," buying grow companies that have high profit margin. Stocks which increase it's top and bottom lines yearly. Stocks that pay perpetual dividend.
3. FOLLOW INSIDERS
The next strategy is buying the same stocks the insiders are buying. After all, corporate officers and directors have access to all sorts of material, non-public information about the companies they run. That gives them an unfair advantage when they trade their own shares. This can be find in the SGX anouncement file detailing how many shares they bought on what date and at what price.
Studies have shown that stocks under heavy accumulation by insiders outperform the market averages by a wide margin each year. It's not hard to see why. Insiders know the direction of sales since the last quarterly report, new products and services in development, whether the company has gained or lost any major customers, the status of pending legislation, and all sorts of other relevant data. Riding the coat tails of knowledgeable insiders is one of the best ways to outperform the market averages.
4. DON'T FOLLOW THE HERD
If you see investors scared out of their wits, morose about the future - buy. And if you hear them confident about their portfolios, optimistic about the future and bragging about the size of their profits - sell. It's that simple. The greatest problem is - "Most investors are emotionally unable to pull the trigger." It just feels wrong to go against the herd.
If you can move against the crowd, you are that rare breed: a genuine contrarian - and your long-term success is virtually assured. If you can't, then stick to using value, growth and insider buying.
Investors should think of themselves first and foremost as company owners. Keep track of a company's health and profitability. Focus on the strategy, value, profit margin, debt and cash flow.
1. The secret to achieving extraordinary returns is, therefore, to identify and buy shares in good companies.
2. The second is to not become too fixated on the price that you have paid for the stock.
3. The third is to resist grabbing a quick profit.
Sometimes, doing nothing after you have bought a stock can be harder than it might seem. But successful investors have learnt that doing nothing can be a good way to boost returns by cutting transaction costs and allowing the power of compounding to work its magic.
Running our own portfolio is not difficult. However, the disciplines that are required to manage our own investments effectively are something that we have to learn, develop and refine over time.
The key is to buy shares in businesses that we are happy to own for a lifetime. These are businesses that you understand.
