Everything around us is being segregated, sub divided label into classification for easy identification and the stock market is no different.
A recent evening investment seminar of a few hours shares some insight of stock selection. After all, there are hundreds of mine favourite to choose from compare to thousands of stock out there.
The area of focus on is call sector. Which sector is hot, which is not?
The first is to know what the market sentiment is. Is it bullish (up) or bearish (down) We don’t want to be cause buying a stock that look cheap when the sentiment is bearish or selling down a stock that is ‘overprice’ or seem expensive when the sentiment is bullish.
After which we move into which sector of the industry, just like GDP contribution making up of consumer, manufacturing, service and such. The more common one are Finance (Banks / Investment Firms), Property, (Developer / Hotels) to Transport , not to mention a hot sector call resources these days.
Next up, we identifying which sector is the leader (Sector that react strongly to market sentiment), we move on to identify which particular stock receive most attention. (The big capitalization company to the smaller one) Share price and daily trading volume and Company branding are a few common indicators.
Upon narrowing down our selection, the next thing we sniff around for in news indicating the sector we selected is still hot or is the sector changing. The term I was taught is call sector rotation which I’m relative green to it still. (Commonly used to describe deep pocket investors/ fund houses identify another sector of better return and shifting funds to that sector before retail investor does.)
In a more layman term is, look for the wave to ride on, get out before it crashes. This seminar shown me that stock buying is an art of screening and filtering. Not just buying evergreen stock that be around long and hold long for a small gain after all, inflation is in all time high again~
*I can only discuss basic as I only get the basic gist. Contact me if you like to help me out on the quest of understanding sector rotation.
Showing posts with label Investment. Show all posts
Showing posts with label Investment. Show all posts
Sunday, August 3, 2008
Thursday, January 10, 2008
General Guildlines To Start Investing In Stock Market.
So we got an online brokerage ac open. What the next step?
For a start, there's free news feeds we have access to on the market. Start reading it and creating watch list on the stock of your interest.
That's all. No Buy. No Sell. Yet.
Step 1:
We start of by defining the capital we want to set investing with. Preferably not your whole life saving. May be $100,000 or $20,000 depending on how much you have and your risk appetite.
If I have $100,000, 20% is $20,000. If I only have $20,000, 20% is only $2000. The amount of capital you can set aside will depend on what type of stock you can look at.
Step 2:
Understanding your risk profile. There are lots of investment risk profile test online. Just Google it. It will mainly classified us under 1 of the 3/4.
a.Highly Adventurous. ( 10% or more loss)
b.Adventurous. ( 7% max loss)
c.Cautious ( 3% max loss)
d.Peace finder ( 0% loss)
I only emphasise on loss this point of time because, who wants their profit be cap? we stop at 7% if there upside of 4% more?
But losses is some thing we all want to avoid, by determine the figure before we start, we are able to make rational decision and not emotion hope, pray for better price tomorrow investor.
Another simple method is of the capital you set aside. $50,000. What is the maximum lost of capital i can absorb before I will declare its the end of the world, the stock market is not meant for me feeling floods the mind. If its $2500. Your risk appetite would be $2500/ $50,000 giving you 5%
Step 3:
Though I'm not sure where this 7-8% stop loss come about. I believe it got to do with something about support and resistance and if the stock drop more then 7-8% a day. Its going to tank more.
There are some point of time we have to cut loss. Lose a leg to diabetes or I die keeping that leg with me. Don be fool into situation Long term investor because the stock that I purchase has drop 40% and I can't sell it now.
Step 4:
Stocks moves along various ranges. In Singapore context, a Bank share can move against / with
you on a spread of 0.1 to 0.5. ($100 - $500) where as a Telco Share range between 0.02 to 0.1 ($20-$100) in an intraday.
If I'm starting out with a capital of $10,000 with a risk tolerance of 5%. it works out to be $10,000 x 0.05= $500.
You identify a share with great potential upside after researching and monitoring.
Share X is price at $10.30 ($10,300) a lot and have a spread of 0.3 to 0.55 ($300-550)
I believe its 'cheap now' and I make a purchase on margin. ( making payment after 5 working day) the next day it drop to $9800. ( becaase other feels it should be cheaper )
Wat do you do?
The above trade itself have a few fundemental mistake.
a. If knowing the stop lost limit at 8%. I wold only need to sell at $9480 ( Rounded to the nearest 10s)
It has exceed my personal stop loss limit of 5% of $500.
b. Knowing that the spread on an intraday can go between 0.1 ot 0.55. The max loss of $550 has also
exceeded my personal risk margin of 5%.
c. Will be tempted to cough up another $300 to purchase the share at $10,300. In the hope to sell later at a higher price. Freezing our captial and preventing future trades.
To sum this up. before we make any purchase, we have to identify stocks with daily spread that don't exceed our highest risk amount of 5% , $500.
Even though the potential upside is $500, so is the down side. Instead of looking at stock of this spread. We look for stocks that move between 0.1 to 0.3 or 0.05 to 0.1 which every that suits you more. ( Industry sector, company reports appealing ..etc..etc.. ) To prevent being prematurely kick out of the market.
With the watch list created, we start monitoring.
Step 5: Armed with daily news and Technical analysis ( Support and resistance line ) of the stock graph. We wait for a time to entry, exit.
Buying only near support and exiting near resistance. As market is irrational more often then usual. News and global happening can easily tip the techincal aspect.
Step 6: How much to buy is next in line. Share Y cost $.1.95 My captial is $10,000. so it will be $10,000 / $1950 = 5 lots ( Rd to nearest 1000s)
But nope its not that simple. There's 1 more step. Theres a stop lost of 8% we mention earlier. $1.95 x 0.08 = $0.156
Exit price of the share would be $1.79. Taking $1.95 minus the 8% loss.
With an inital capital risk of $500 divided by $0156 we get to pruchase about $3205 share. which Rd to nearest 1000s would be 3 lots.
So with an Captial of $10,000 of a risk torelance of $500. I can purchase 3 lots of Share Y at $1.95 with an Exit price of $1.79 should it move against me. Using $5850 of my total captial and maximum lost of $480 when sold at $1.79.
The above 6 step are a general guild to make stock buy / sell a tiny bit managable. Each has its own preference, thus if theres step 7, 8 or 9 that you think should be included.
Do drop me a message at the Shout-out box or email me as I too am still learing.
For a start, there's free news feeds we have access to on the market. Start reading it and creating watch list on the stock of your interest.
That's all. No Buy. No Sell. Yet.
Step 1:
We start of by defining the capital we want to set investing with. Preferably not your whole life saving. May be $100,000 or $20,000 depending on how much you have and your risk appetite.
If I have $100,000, 20% is $20,000. If I only have $20,000, 20% is only $2000. The amount of capital you can set aside will depend on what type of stock you can look at.
Step 2:
Understanding your risk profile. There are lots of investment risk profile test online. Just Google it. It will mainly classified us under 1 of the 3/4.
a.Highly Adventurous. ( 10% or more loss)
b.Adventurous. ( 7% max loss)
c.Cautious ( 3% max loss)
d.Peace finder ( 0% loss)
I only emphasise on loss this point of time because, who wants their profit be cap? we stop at 7% if there upside of 4% more?
But losses is some thing we all want to avoid, by determine the figure before we start, we are able to make rational decision and not emotion hope, pray for better price tomorrow investor.
Another simple method is of the capital you set aside. $50,000. What is the maximum lost of capital i can absorb before I will declare its the end of the world, the stock market is not meant for me feeling floods the mind. If its $2500. Your risk appetite would be $2500/ $50,000 giving you 5%
Step 3:
Though I'm not sure where this 7-8% stop loss come about. I believe it got to do with something about support and resistance and if the stock drop more then 7-8% a day. Its going to tank more.
There are some point of time we have to cut loss. Lose a leg to diabetes or I die keeping that leg with me. Don be fool into situation Long term investor because the stock that I purchase has drop 40% and I can't sell it now.
Step 4:
Stocks moves along various ranges. In Singapore context, a Bank share can move against / with
you on a spread of 0.1 to 0.5. ($100 - $500) where as a Telco Share range between 0.02 to 0.1 ($20-$100) in an intraday.
If I'm starting out with a capital of $10,000 with a risk tolerance of 5%. it works out to be $10,000 x 0.05= $500.
You identify a share with great potential upside after researching and monitoring.
Share X is price at $10.30 ($10,300) a lot and have a spread of 0.3 to 0.55 ($300-550)
I believe its 'cheap now' and I make a purchase on margin. ( making payment after 5 working day) the next day it drop to $9800. ( becaase other feels it should be cheaper )
Wat do you do?
The above trade itself have a few fundemental mistake.
a. If knowing the stop lost limit at 8%. I wold only need to sell at $9480 ( Rounded to the nearest 10s)
It has exceed my personal stop loss limit of 5% of $500.
b. Knowing that the spread on an intraday can go between 0.1 ot 0.55. The max loss of $550 has also
exceeded my personal risk margin of 5%.
c. Will be tempted to cough up another $300 to purchase the share at $10,300. In the hope to sell later at a higher price. Freezing our captial and preventing future trades.
To sum this up. before we make any purchase, we have to identify stocks with daily spread that don't exceed our highest risk amount of 5% , $500.
Even though the potential upside is $500, so is the down side. Instead of looking at stock of this spread. We look for stocks that move between 0.1 to 0.3 or 0.05 to 0.1 which every that suits you more. ( Industry sector, company reports appealing ..etc..etc.. ) To prevent being prematurely kick out of the market.
With the watch list created, we start monitoring.
Step 5: Armed with daily news and Technical analysis ( Support and resistance line ) of the stock graph. We wait for a time to entry, exit.
Buying only near support and exiting near resistance. As market is irrational more often then usual. News and global happening can easily tip the techincal aspect.
Step 6: How much to buy is next in line. Share Y cost $.1.95 My captial is $10,000. so it will be $10,000 / $1950 = 5 lots ( Rd to nearest 1000s)
But nope its not that simple. There's 1 more step. Theres a stop lost of 8% we mention earlier. $1.95 x 0.08 = $0.156
Exit price of the share would be $1.79. Taking $1.95 minus the 8% loss.
With an inital capital risk of $500 divided by $0156 we get to pruchase about $3205 share. which Rd to nearest 1000s would be 3 lots.
So with an Captial of $10,000 of a risk torelance of $500. I can purchase 3 lots of Share Y at $1.95 with an Exit price of $1.79 should it move against me. Using $5850 of my total captial and maximum lost of $480 when sold at $1.79.
The above 6 step are a general guild to make stock buy / sell a tiny bit managable. Each has its own preference, thus if theres step 7, 8 or 9 that you think should be included.
Do drop me a message at the Shout-out box or email me as I too am still learing.
Tuesday, December 11, 2007
Getting Started With Singapore Stock Market - SGX)
Buying the first stock in Singapore is relative easy. To start trading in Singapore, We need a CDP A/c (Central Depository ) and a Brokerage Firm ( Securities Members ).
Thｅ ＣＤＰ ａｃｃｏｕｎｔ ｋｅｅｐ ｔｒａｃｋｓ ｏｆ ｏｕｒ ｓｔｏｃｋ ｐｕｒｃｈａｓｅ ａｎｄ ｓａｌｅｓ ｗｈｅｒｅ ａｓ ａ Ｂｒｏｋｅｒａｇｅ Ｆｉｒｍ ｐｒｏｖｉｄｅｓ ｕｓ ａ ｐｌａｔｆｏｒｍ ｆｏｒ ｕｓ ｔｏ ｅｎｔｅｒ ａｎｄ ｅｘｉｔ ｔｈｅ ｍａｒｋｅｔ．
For this list taken for SGX , a few common what that we know are the local banks like UOB Kay Hian ,DBS Vickers , OCBC Securities to name a few where you can walk into the respective bank and request for an opening of an a/c. ＣＤＰ ａｃｃｏｕｎｔ ｏｐｅｎｉｎｇ ｆｏｒｍｓ ａｒｅ ｎｏｒｍａｌｌｙ ｄｏｎｅ ｔｏｇｅｔｈｅｒ ｉｆ ｙｏｕ ｈａｖｅ ｎｏｔ ｈａｖｅ ａｎ ｅｘｉｓｉｔｉｎｇ ＣＤＰ ａｃ．
Ａｃｃｏｕｎｔ ｏｐｅｎｉｎｇ ｖａｒｉｅｓ ｆｒｏｍ ａ ｗｅｅｋ ｔｏ ｔｗｏ ａｎｄ ＣＰＦ statement ｏｒ ａｎｎｕａｌ ｉｎｃｏｍｅ ｔａｘ ｓｔａｔｅｍｅｎｔｓ ａｒｅ required to have a 'margin' account.
Margin ac is similar to a credit card. ( Just that you have to clear your bill within a week) How big your credit limit is affect the amount of stock you can own and purchase at 1 time.
The margin limit normally is peg to your annual income of 1 to 3time. where a whole lots of other factor. ( Referred by a friend... have a 'fat' saving ac in the bank or such ).
Brokerage firms are a good source of getting additional local market news on top of whats mention in the papers and the news. ( through the website or though a broker that is assigned to you when your ac is open)
All in all, to get a feel of investing. trying out buy/sell virtual trade before coming in with the real money. Brokerage firms are a good start as its basically free and you can familiarize the tools , platform and system.
With a CDP ac and a brokerage ac open, what to trade when to trade comes after.... everything starts somewhere and to invest in Singapore market.. opening of the above mention a/c is the first step.
Thｅ ＣＤＰ ａｃｃｏｕｎｔ ｋｅｅｐ ｔｒａｃｋｓ ｏｆ ｏｕｒ ｓｔｏｃｋ ｐｕｒｃｈａｓｅ ａｎｄ ｓａｌｅｓ ｗｈｅｒｅ ａｓ ａ Ｂｒｏｋｅｒａｇｅ Ｆｉｒｍ ｐｒｏｖｉｄｅｓ ｕｓ ａ ｐｌａｔｆｏｒｍ ｆｏｒ ｕｓ ｔｏ ｅｎｔｅｒ ａｎｄ ｅｘｉｔ ｔｈｅ ｍａｒｋｅｔ．
For this list taken for SGX , a few common what that we know are the local banks like UOB Kay Hian ,DBS Vickers , OCBC Securities to name a few where you can walk into the respective bank and request for an opening of an a/c. ＣＤＰ ａｃｃｏｕｎｔ ｏｐｅｎｉｎｇ ｆｏｒｍｓ ａｒｅ ｎｏｒｍａｌｌｙ ｄｏｎｅ ｔｏｇｅｔｈｅｒ ｉｆ ｙｏｕ ｈａｖｅ ｎｏｔ ｈａｖｅ ａｎ ｅｘｉｓｉｔｉｎｇ ＣＤＰ ａｃ．
Ａｃｃｏｕｎｔ ｏｐｅｎｉｎｇ ｖａｒｉｅｓ ｆｒｏｍ ａ ｗｅｅｋ ｔｏ ｔｗｏ ａｎｄ ＣＰＦ statement ｏｒ ａｎｎｕａｌ ｉｎｃｏｍｅ ｔａｘ ｓｔａｔｅｍｅｎｔｓ ａｒｅ required to have a 'margin' account.
Margin ac is similar to a credit card. ( Just that you have to clear your bill within a week) How big your credit limit is affect the amount of stock you can own and purchase at 1 time.
The margin limit normally is peg to your annual income of 1 to 3time. where a whole lots of other factor. ( Referred by a friend... have a 'fat' saving ac in the bank or such ).
Brokerage firms are a good source of getting additional local market news on top of whats mention in the papers and the news. ( through the website or though a broker that is assigned to you when your ac is open)
All in all, to get a feel of investing. trying out buy/sell virtual trade before coming in with the real money. Brokerage firms are a good start as its basically free and you can familiarize the tools , platform and system.
With a CDP ac and a brokerage ac open, what to trade when to trade comes after.... everything starts somewhere and to invest in Singapore market.. opening of the above mention a/c is the first step.
Thursday, September 13, 2007
New Reads – Secrets of Millionaire Investors.
This is the book that I found some time to read. relative big and thick book, not briefcase friendly. :P
What got me started was how can I start investing, The safe and sure way if possible. Cause in Singapore, investment is more like a taboo, something meant for the rich and the wealthy to play with and investment through hear say is a no-no.
With bank interest hovering around the 1% mark and inflation near to 3%. I figured its time to find alternative to place my saving that won't shrink over time.
Through reading this book, I got to understand investing in simple terms. Where investing is like buying into a company and owning a part of it, so it’s important for us to know a few things before buying any stock.
1. The sector of the company. (finance, retail, property, etc)
2. The market share of the company.
3. The earning of this company.
4. The value of share price now. Is it over price or under value.
The meaning of compound interest comes into play where the longer we can have our money stay invested. (Money at work) the greater the gain will be.
Using US market as case studies. The theory of buy at a low price, selling at a high get explained in details. (not every stock works that way as it could ready be at the high when we decided to buy.)
But it’s not cheap to invest for long term in companies that are of value fundamentally. Cause all other investors has realize its value and have invested long time ago. Thus good companies are also call blue chips company.
However there are methods and ways in which we can dig for undiscovered gems and wait for them to be the next big thing but the time horizon need for value investing is relative long in term of years before any decent profit comes in.
For many of us like me who desired the way for ‘quick easy bucks’ the book introduced the method of momentum investing where we can identify stock that is ‘hot’ with high volume with lots of money pouring into a particular sector. Take for example Singapore, the ‘Hot sector’ would be Property and Constructions shares, where big jumps in stock price are experience.
But it always brings back to one problem, how much do we start with? A few hundreds, several thousands or? Well, its depends on what stock we intend to buy. A lot of DBS cost around $20,000 where as Genting International cost less then $2000 as of now.
The last method discussed in the book is the use of options for less capital and bigger gain. Reason being, option is a contact to buy a particular stock. (normally a blue chip, large cap stock that expensive to hold) and to sell of the contact after its exceed a certain pricing mark for a profit.
In a Bullish market, a CALL option allows me to buy a stock at $70 for a premium of $2, so only when the stock moves pass for example $72 then I will break ever and make a profit only if it’s exceed $72. If the stock doesn’t move over $72 within a period of time ( around 1 mth – 1 year ). I lose the premium of $2 that I paid.
Likewise in a Bearish market, a PUT option allows me to sell a stock at $50 for a premium of $3, so only when the stock drop pass for example $47 then I will break even and make a profit.
In the stock market, for the buyer to buy a PUT, CALL, there have to be a seller of PUT and CALL. The concept gets a bit gray as I read on for investment idiots like me, but after some checking up and asking around the realization will dawn in~
Overall, this book is like a introduction to investing which I feel is like a pre reading notes to the course taught in Adam Khoo Technologies Group.(www.akltg.com )
*Feel free to drop me a email should you like to know more about the various course.
What got me started was how can I start investing, The safe and sure way if possible. Cause in Singapore, investment is more like a taboo, something meant for the rich and the wealthy to play with and investment through hear say is a no-no.
With bank interest hovering around the 1% mark and inflation near to 3%. I figured its time to find alternative to place my saving that won't shrink over time.
Through reading this book, I got to understand investing in simple terms. Where investing is like buying into a company and owning a part of it, so it’s important for us to know a few things before buying any stock.
1. The sector of the company. (finance, retail, property, etc)
2. The market share of the company.
3. The earning of this company.
4. The value of share price now. Is it over price or under value.
The meaning of compound interest comes into play where the longer we can have our money stay invested. (Money at work) the greater the gain will be.
Using US market as case studies. The theory of buy at a low price, selling at a high get explained in details. (not every stock works that way as it could ready be at the high when we decided to buy.)
But it’s not cheap to invest for long term in companies that are of value fundamentally. Cause all other investors has realize its value and have invested long time ago. Thus good companies are also call blue chips company.
However there are methods and ways in which we can dig for undiscovered gems and wait for them to be the next big thing but the time horizon need for value investing is relative long in term of years before any decent profit comes in.
For many of us like me who desired the way for ‘quick easy bucks’ the book introduced the method of momentum investing where we can identify stock that is ‘hot’ with high volume with lots of money pouring into a particular sector. Take for example Singapore, the ‘Hot sector’ would be Property and Constructions shares, where big jumps in stock price are experience.
But it always brings back to one problem, how much do we start with? A few hundreds, several thousands or? Well, its depends on what stock we intend to buy. A lot of DBS cost around $20,000 where as Genting International cost less then $2000 as of now.
The last method discussed in the book is the use of options for less capital and bigger gain. Reason being, option is a contact to buy a particular stock. (normally a blue chip, large cap stock that expensive to hold) and to sell of the contact after its exceed a certain pricing mark for a profit.
In a Bullish market, a CALL option allows me to buy a stock at $70 for a premium of $2, so only when the stock moves pass for example $72 then I will break ever and make a profit only if it’s exceed $72. If the stock doesn’t move over $72 within a period of time ( around 1 mth – 1 year ). I lose the premium of $2 that I paid.
Likewise in a Bearish market, a PUT option allows me to sell a stock at $50 for a premium of $3, so only when the stock drop pass for example $47 then I will break even and make a profit.
In the stock market, for the buyer to buy a PUT, CALL, there have to be a seller of PUT and CALL. The concept gets a bit gray as I read on for investment idiots like me, but after some checking up and asking around the realization will dawn in~
Overall, this book is like a introduction to investing which I feel is like a pre reading notes to the course taught in Adam Khoo Technologies Group.(www.akltg.com )
*Feel free to drop me a email should you like to know more about the various course.
Subscribe to:
Posts (Atom)
Blog Hits
