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Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥
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Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > 2020-04-06 13:03 | Report Abuse
How to Make More Money if Stock Prices Rise and Lose Lesser if Stock Prices Fall than Other People in the Stock Market?
Benjamin Graham, a mentor to Warren Buffett, a living investment legend once quoted, ‘Investing is most intelligent when it is most Businesslike’. Thus, instead of treating shares like lottery tickets, we should assess the investment potential of a stock as if we are going to be a long-term partner of the company.
1. QUALITY FIRST (Quality of business and Quality of Management).
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True investors are cash-flow orientated. When they view a stock, they will want to find out its business model, its management team, its track record of earning profits and generating cash flows, its cash-in-hand and its future plans to utilise its cash-in-hand to generate more profits and cash flows into the future. This is usually Step #1 in stock investing.
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1. VALUATION (Price versus Value, Margin of Safety)
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Step #2 is about valuation, an art to assess if the stock is cheap or expensive. Its method of assessment involves calculating valuation ratios of a stock such as its P/E Ratio, P/B Ratio and Dividend Yields and comparing its with its past ratios in the last 10 years or comparing its with its peers of the same industry. As such, it encourages investors to buy good stocks when they are undervalued and avoid any investments which are ridiculously overpriced.
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The odds would be in favour of investors because they are encouraged to invest in stocks when they are undervalued, which mostly happen when the prices for their preferred stocks fall in the stock market. So, in the event their stock prices increase in the future, they make more money. If the stock prices decline in the future, they lose less money as compared to others who bought them at higher prices in the stock market.