James Cook University at Sims Drive

James Cook University at Sims Drive

Wednesday, January 17, 2007

The secrets of picking stocks that multiply your money

Hope to share what I had learned from more than 17 year of investments experiences .

Take care of the downside, and upside will take care of itself.

Stock can lost 95% of it's value.

If it lose 50% of it's value, it needs 100 % to recover.

Mature stock usually start from small cap, so the probability of multiplying your earning in small cap stock is higher.

Turnaround stocks sometimes provide the best opportunities, as you can buy when they are at the cheapest level. Some of them, their business is cyclical in nature. Once their earning recovered they will move up a lots of times.

You can get the best bargain in loss making companies.

Some stocks like Venture Manufacturing, Asia Food and Properties & Golden Agri-Resources went up more than 20 times when they turnaround.

Loss making companies are likely candidate, for been takeover.

Invest in a stock where it's net tangible asset is more than their share price. It's chance of recovering from shock is better.

Stock tendencies to trade higher in an environment, where there's lots of liquidities.

When stock double it's price doesn't means it's overextend.

Share price went up due to their asset and earnings. Usually due to there's a lots of liquidities, where interests rate is low.

The best stock is never to sell it, e.g. Genting Highland Bhd. If you brought $3000 at it's IPO and hold on to it you are a millionaire by now, as it kept giving you bonus issues.

Do not overdiverisified. Concentrated on a few best stocks.

90% of people got rich from investing in properties.

Do not over leverage.

The best time to invest are during recessions.

Technical analysis, is just like seeing the x-ray of the company. If you invest at the lower quarter of the range , the chance of you making profits, is higher than you invest in the higher quarter of its trading range.

Buy good companies that are hit with one off big problem, where it's share price is at bargain level.

Where dividend yield is high, usually stocks are at their lowest levels.

In a bear markets, fundamental sound companies will drop less and the give more dividends.

The tendencies to follow the herd instincts is there, a lots of time when the good news is out the stock price tend to drop.

I felt the out of flavour stocks offer more value. Buy when not many people notice it when its cheap.

Top fund manager Peter Lynch had made a career out of Chrysler Corp. As car business is cyclical nature.

When Chrysler nearly bankrupt, as most people had brought their cars so business had gone downhill, it need some time for people to replace their cars, so Peter went to the company to thoroughly investigate the situations , will the company turnaround or went bankrupt.

He was correct Chrysler had chance to survive and later when the company turnaround. He made a fortune out of it.

Numerous good companies like Low Kheng Huat, Sincere Watch, Hwa Tat Lee, which are around for a lots of years, became penny stocks when the market conditions were very unfavourable. Had since multiply their value a lots of times after the market recovered.



To be continue.

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