Friday, 20 February 2015

4 R's of Value Investing

If you are newbies in the field of investing, you might want to create your steps to pick a winning stocks. There is an excitement to jump without checking if there is a potential upside and returns in the future. We need to be careful because stock market is risky but it does n't necessarily mean to stay away in this risky investment.

Here are the 4 R's of Value Investing:
1. Research.
2. ROE - Return On Equity.
3. Remind.
4. Recollect.

First. Research. Research. Check the plans and expansion of the company. Do they have a competitive advantage? "Magtatagal ba ang company na ito? Example: Meralco- main product electricity, "Naalala ko pa ang Econ 101 Professor ko at sabi nya nabili ang MER sa halagang 2 pesos lamang" at ipinamana nya sa apo ang stock na ito. MWC "hanggat gusto mo maligo hindi mawawala ang company na ito".

Second. Return On Equity. This is important to know. Check the earnings report of the company on PSE edge. This is basic metrics to evaluate a company's stock. Here is the formula:


High growth companies should have a higher ROE.

Third. Remind. Remind yourself to collect gains once hit the Target Price. At the time you bought the stock, set a target percentage gains(if you are using PAM PSE Tracker premium version, in My Portfolio tab , you can input your Target Price) . If you consider yourself a value investor then you should not sell in a short period of time. Stick to your target.

Fourth. Recollect. Recollect another form of bonus which is DIVIDENDS. Make sure that the chosen company is consistently giving dividends. Dividends distribution is a sign of healthy company. You are waiting not only the set target gains but also the potential Cash Dividends, Stock Dividends or Property Dividends.

Keep investing.

Feel free to share your 4 R's.

Sincerely yours,

Jonathan I, Ruiz

P.S. Kung may pambili ka ng IPHONE malamang may pandownload ka din ng PSE Tracker

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