Beginner's guide for new stock investor - Stock selection

  Beginner's guide for new stock investor

- Timing - refer to my previous post

- Stock selection

They are hundreds of stock trading in Singapore Stock exchange. You can start your select from

1. Company you like ? e.g. if you like beer, you may like F&N
2. Company you are know? e.g. banks, MRT....
3. Company within STI index components.

Don't buy company which you don't know their business ? e.g. High tech research company. You can buy Google which you know their business. 

After you shortlisted some companies, you shall start to do your homework i.e. fundamental analysis.

1. PE                      Not more than 15 lesser is better
2. Dividend Yield    Not lesser 3%  more is better
3. Quick Ratio       Not lesser than 0.5, more is better
4. Price / NAV      Not more than 1.5, lesser is better

If you can talk with companies' customers about their business, it will be better. Read their reports especially their market Outlook page. Never buy stock only because you believe that it will go up. e.g. someone suggest a company to you, you shall do your homework. Don't just rely on someone.

If you use fundamental analysis to compare between Facebook and Google. They can tell which one is better. I pick a number of companies from analysis. And wait for buying opportunity

When the TIMING is right, you could use technical analysis methods e.g. probability, stochastic chart ..... to determine your buy in  price. Technical analysis can improve your earning. However, overall market position are more important than technical analysis.  

If you are looking for quick return, the above method will not work. When someone sell their stock to you, they may think that is good price. You can have quick profit only if seller is wrong.

Company are growing. Share price will normally go higher with their profit grow. Therefore It take time to grow investment return.

Buy low, review companies' finance ratio and allow time to grow your return.