Not long ago, market start to slow down, couple of incidents happen in Middle East Asia follow by Japan's earthquake, all these gave the reason for the market to start the correction. For experience investor, they know that every 1 to 2 years, for market to go down 10% or 20%, is a norm. Every 4 to 5 years, there will be a financial crisis where market down for 30%. (which we already went through in 2008)
So, what's hot now? Timber and Glove making company going to benefit! For short term, share price of these companies will go up. However, chasing this hot stock is only suitable for short term trader who prepare to cut loss in case if market not move as per their expectation. If you are the person who feel hard to cut loss, please do not consider the hot stock, instead buy only the 5 Star rating company .
For long term investment purpose, remember, it's 5 Star that we should consider. Early March 2011, we have another company, Transmil going burst in Bursa, this remind me, never buy any trouble company, even it's cheap, what's the point for us to buy cheap if the company can not survive and go burst?
The 5 star investment rating company's check list:
1. Is the company having ROE and ROA of more than 15?
2. Is the company earning increase in the past three years?
3. Is the management honest?
4. Is the company's financial position healthy, do they borrow a lot of money?
5. Do you have margin of safety, buy at low PE?
6. Do you plan to buy more if the share price of the company going down?
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