Monday, March 28, 2011

Early Knowledge about Stock

I'm read lots of articles, books & magazines about stock investment & financial management. As of today,  I didn't gain much wealth & not very success in managing my money. 


Recently I bought a poster, there is a famous quote in the poster:
" Knowing is not enough, we must apply"
" Willing is not enough, we mus DO!"


This quote bring a big impact to me!! and I'm decided to DO IT NOW!!


Flash back what I have learn previously, sharing with people..
Someone told me, the most effective way of learning is to teach & sharing..


Investing in stock is like own a company.
You believe in the company, products, services & organisation.
You love the company revenue, cash flow, asset & earning.
Then, you decided to become one of shareholder, money will start flowing into your pocket.


The rule of thumb:
- The simplest the business, The most I like.
If you don't understand how a company operate it's business, how to earn money, don't buy their SHARE.


Ideal Company:
1. A Boring business
- when you find a company with a good Earning & Balance sheet running a boring business, you can buy in the share at cheaper price. When investor chase after the company, and price is overvalue, you better move out.


2 A Despondence business
- Search ideal company from those inconspicuous business or forgotten company by corporate investor.


3. Corporate investor will not buy their share, analyst will not monitor their share performance
- if a company is highly chase by corporate investor, we will not follow. We shall early find out their potential, and one day the corporate investor is agree with their potential.


4. In a zero growth rate industry
- In a zero growth rate industry, you don't worry about competitor, because no other company will interested in this industry. So, the company can expand their profit & market share. That's the company called - Ideal growth company.


5. Competitive advantage, like patent.
- if a company's product has it's patent, they can decide the price tag on the product. Also, it eliminate competition.


6. People continuous buying their product.
- if people need to continuous buying a company product, and the company have it's own brand, then you find a company that can invest in long term.


There are only few of the conditions of an ideal company.
I will share it more in details in future..will see...

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