I just finished read this book
and is time to share with all people that came to view my page
this books talking about an experience of he himself in the life as an investor
and before he know about the share market he was a speculator which just to get a shortcut way to earn more money but after get some profit and loss more of his money
he realize that as an investor is to use his money to invest in a good company which will give him more returns than he advised the people around him and friends to be a good investor and not to speculate too much in the share market
Starting of this, he mentioned lot about the history of the market
about the Tulip story in Holland which got overvalued as bubble, and after that the price of tulip depreciate lot until lot of people making losses
and lot more
after that start the real topic
as an investor you are investing in a company
that's why you need to understand more about the company that you need to invest
First you need to understand what is the business your company doing
Secondly Is there any future hope and growth in the company
Third Is the top management of the company reliable?
Fourth Is the company financial statement stable?
as a starter normally encourage investor to invest in a blue chips company which is a very stable company although is high price but at least you get the return as the dividend will be given out to their shareholders
other than that
he mentioned about how a share is overvalued or undervalued
is better for investor to invest in a share with a P/E(Price/Earnings ratio) lower than 10
which is a better one and not overvalued which got a higher growth chances
P/E = 5 is same to say that we will get our 5 times return in 5 years
for example a market share is RM3 and the EPS is RM0.3 and which got the P/E as 10
which also mean in this 10 years our P/E is 10.
Lower the P/E faster the return
that is why buy lower P/E will get more growing chances
there is others way to value
which is Dividend yield, Net Tangible Assets/ Share).
Besides he mentioned we needs books to improved our knowledge and skill
to understand more about a company
we need to read books which is the company Annual Report
and in an Annual Report
must take note on company Financial Highlight
how the director's manage the company and the experience in managing the company
the reliability of the top management really important too
and also the notes of the financial statement which explained everything of the company financial statement
need to understand the P/E ratio, Net tangible assets per share, dividend yield, times covered profit over share price and the other is the current ration which is current assets and current liabilities which also the higher the better means the assets can cover the liabilities
which the cash own and other people owe you, can cover the cash that you owe to other people
How to choose a company to invest in?
most importantly, is the company have a bright future and to understand it well
and the company had gained profits over the 5 years time and have the high chances of growing in the future
3 most important rules in as an investor
1) must not loss your money, you earn the money with your hard work, and let the money work for you to gained more money so make sure not too lose it, that is why invest in a good company is very important.
2)make sure the company have a future growing opportunity
3)Dividend given out to shareholders every year
Choosing a good company is very important
another topic talking about diversification which minimize your investment portfolio risk
which investing in many different industries sectors company
if one industries showing down side effect the other will help you to cover the losses
and that is why Long Term Investment is far more better than Short Term investment which need to take higher risk
another is buy low sell high
which mentioned by him is buy during the bear market which everyone going to sell of all their share
and sell during bull market which everybody buying share at high price
inverse relationship
when people buy you sell
when people sell you buy
and is better to invest in long term as the risk in much more lower than short term investment
short term-less than 1 year
medium term-more than one year but less than 3 years
long term-more than 3 years
there are also some really important rules if you borrow money to invest
just make sure don't take such action only invest with the money you have
if really have to
make sure the company you invest is really strong
and not to hesitate to cut losses if really not good as expected
is better not to borrow money to invest as in not encourage such action unless you really have high confidence in the share you invested in
and he also taught some of his formulae
which is contrarian, growth and time
which doing the different things as others, like mentioned before when people buy you sell, when people sell you buy, vice versa, inverse relationship
and the company share that you invest must have the chances of growth
and is the time to determine all these
and other part just talking about the advantages and the benefits of invest in long term
all I share here is just the knowledge I learnt from this book and share with others
about the knowledge and the sharing the experience of an investor
just the purpose of learning
not to teaching people invest
for more details we just have to buy more books to read and gain more knowledge
sharing all this just for knowledge purpose
hope everyone will get the chance to learn all these knowledge
and really hope i can learn more and more each day
happy always
