Tuesday, October 19, 2010
A good place to track the market
Yahoo Finance: http://finance.yahoo.com/charts?s=^KLSE#chart6:symbol=^dji;range=20061017,20101018;indicator=ema%2850,100%29+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Tuesday, September 14, 2010
Rights issue
If a company announces a 1-for-2 rights issue, this means the shareholder will be entitled to one new share for every 2 shares he or she is holding.
The Prince D Rule
P: Price Earning Ratio – not more than 15 or the industry average
R: Return on Equity – at least 15 for at least 3-5 years
I: Institutional Buyers – favourite among the fund managers
N: Net tangible assets – share price should not be more than net tangible assets
C: Current environmental scan – scan for any potential threats and opportunities face by the company
E: Earnings per share growth – look for significant EPF growth
D: Dividend yields – at least 5% per year
Source: I Love Stocks – Your Guide to Profitable Tracks (Author: Pauline Yong)
R: Return on Equity – at least 15 for at least 3-5 years
I: Institutional Buyers – favourite among the fund managers
N: Net tangible assets – share price should not be more than net tangible assets
C: Current environmental scan – scan for any potential threats and opportunities face by the company
E: Earnings per share growth – look for significant EPF growth
D: Dividend yields – at least 5% per year
Source: I Love Stocks – Your Guide to Profitable Tracks (Author: Pauline Yong)
Trailing stop
After buying a stock at RM 5, you immediately place a sell order at RM 4 – 20% below the purchase price.
Say, if the price rises to RM 7, you then raise sell order to RM 5.60 – 20% below the market price of RM 7.
As the price rises further, adjust your sell order accordingly. Hence, your sell order is trailing the prevailing market price.
Once the price falls to your predetermined selling price of RM 5.60, sell.
The strategy maximizes your gains and protects your principal.
Say, if the price rises to RM 7, you then raise sell order to RM 5.60 – 20% below the market price of RM 7.
As the price rises further, adjust your sell order accordingly. Hence, your sell order is trailing the prevailing market price.
Once the price falls to your predetermined selling price of RM 5.60, sell.
The strategy maximizes your gains and protects your principal.
Stop loss
Stop loss is an order placed with the broker to sell once a stock reaches a certain price.
The key is to set an appropriate stop loss percentage for a security. E.g. it would be unwise to set a 5% stop loss on a security when its average fluctuation is 10%.
The stop loss level also depends on whether you are an active trader as a long term investor.
The key is to set an appropriate stop loss percentage for a security. E.g. it would be unwise to set a 5% stop loss on a security when its average fluctuation is 10%.
The stop loss level also depends on whether you are an active trader as a long term investor.
Looking at earnings
Companies with consistent earnings per share (EPS) growth of at least 25% for the last five years are worth considering. As a rule of thumb, the EPS growth has to be supported by at least the same percentage of growth in sales.
Volume and price
Heavy volume with rising price
- Healthy sign in the market
- A lot of trading activities going on and buyers are outnumbering sellers
- When volume is heavier than yesterday’s volume, and accompanied by a price increase of at least 1%, it may be signaling a trend reversal from bearish to bullish soon
Light volume with rising price
- Price is losing steam
- Price is going to drop soon, as investors are not willing to pay for the rising price
Heavy volume with declining price
- Troubling sign (investors are bailing out)
- A possible reversal from bullish to bearish
Light volume with declining price
- Bottoming out
- Investors are holding on their stocks rather than selling for lower price
- Healthy sign in the market
- A lot of trading activities going on and buyers are outnumbering sellers
- When volume is heavier than yesterday’s volume, and accompanied by a price increase of at least 1%, it may be signaling a trend reversal from bearish to bullish soon
Light volume with rising price
- Price is losing steam
- Price is going to drop soon, as investors are not willing to pay for the rising price
Heavy volume with declining price
- Troubling sign (investors are bailing out)
- A possible reversal from bullish to bearish
Light volume with declining price
- Bottoming out
- Investors are holding on their stocks rather than selling for lower price
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