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Sound Investment
5 years 2 months ago #25005
by Rock
Replied by Rock on topic Sound Investment
So much concern about US & China trade war going on I had updated risk management check lists below:
RISK MANAGEMENT CHECK LISTS
1) PROFIT MARGIN: Keeping track of profit margin changes.
2) BUSINES COMPETITION: Either companies gaining market shares or losing market shares.
3) DELAY Project delay, material delay, goods delay etc.
4) COST – Product costs, administration costs, marketing costs, labour costs, etc.
5) PROBLEMS: political, social, environmental, etc
6) POLITICAL: Change of Government.
7) INTEREST RATE: Changes in Interest Rate.
MANAGEMENT: Company Mismanagement Or Accounting Problems.
9) DEBT: Look at debt level, some sectors like property developers, it's common to have debt, but know the industry norm for debt level.
10) IN VENTORIES: For manufacturing or distribution or retail, check inventories and receivables turnover rate, cash cycles etc.
11) OUTLOOK OF SECTOR: If possible, the state of health of their customers and suppliers. Track expiration/ renewal of key contracts
12) RESIGNATION & FUND RAISING: Check for sudden resignation of personnels, frequent fund raising.
13) MANAGEMENT STATEMENTS: Over bullish outlooks that dun pan out frequently, hiding problems, etc. management selling large amt of shares.
14) Understand as much as possible you can about the business you are buying. If some things doesn't make sense give it a miss. Better be safe than sorry
15) Businesses or products which may be affected by US China trade war.
************
INVESTMENT PITFALLS
1). Letting our egos get in our way - our emotion.
2). Over-trading.
3). Momentum Investing - chasing after penny stocks when they suddenly burst back to life. Watch out for BB in the game (Penny stocks in play)
4). Noise trading - confused between the false signals sent out by a stock's trading pattern & the overall market trend. Investors have poor timing, follow trends, over-react to good & bad news.
5). Growth Investing - buy out-of-favor stocks with low price-to-earnings and price-to-book ratios.
6). Selling the winners & keeping the losers. We should build a portfolio of winners not losers.
7) Don’t be taken in by increase in profit. Profit comes from one-off increased. Examples; Sale of assets, revaluation of assets & completion of project.
Share price low does not mean it will rise to its past high. This is because its prospects are dim.
9) Don't stir-frying fundamental sound stocks, do that in the kitchen and not in the stock market. Trading in fundamental sound stocks rather than hold for long term investment.
RISK MANAGEMENT CHECK LISTS
1) PROFIT MARGIN: Keeping track of profit margin changes.
2) BUSINES COMPETITION: Either companies gaining market shares or losing market shares.
3) DELAY Project delay, material delay, goods delay etc.
4) COST – Product costs, administration costs, marketing costs, labour costs, etc.
5) PROBLEMS: political, social, environmental, etc
6) POLITICAL: Change of Government.
7) INTEREST RATE: Changes in Interest Rate.
MANAGEMENT: Company Mismanagement Or Accounting Problems.9) DEBT: Look at debt level, some sectors like property developers, it's common to have debt, but know the industry norm for debt level.
10) IN VENTORIES: For manufacturing or distribution or retail, check inventories and receivables turnover rate, cash cycles etc.
11) OUTLOOK OF SECTOR: If possible, the state of health of their customers and suppliers. Track expiration/ renewal of key contracts
12) RESIGNATION & FUND RAISING: Check for sudden resignation of personnels, frequent fund raising.
13) MANAGEMENT STATEMENTS: Over bullish outlooks that dun pan out frequently, hiding problems, etc. management selling large amt of shares.
14) Understand as much as possible you can about the business you are buying. If some things doesn't make sense give it a miss. Better be safe than sorry
15) Businesses or products which may be affected by US China trade war.
************
INVESTMENT PITFALLS
1). Letting our egos get in our way - our emotion.
2). Over-trading.
3). Momentum Investing - chasing after penny stocks when they suddenly burst back to life. Watch out for BB in the game (Penny stocks in play)
4). Noise trading - confused between the false signals sent out by a stock's trading pattern & the overall market trend. Investors have poor timing, follow trends, over-react to good & bad news.
5). Growth Investing - buy out-of-favor stocks with low price-to-earnings and price-to-book ratios.
6). Selling the winners & keeping the losers. We should build a portfolio of winners not losers.
7) Don’t be taken in by increase in profit. Profit comes from one-off increased. Examples; Sale of assets, revaluation of assets & completion of project.
Share price low does not mean it will rise to its past high. This is because its prospects are dim.9) Don't stir-frying fundamental sound stocks, do that in the kitchen and not in the stock market. Trading in fundamental sound stocks rather than hold for long term investment.
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