We all know we should buy when prices are cheap and sell when it is expensive, but after investing for 6 years, i realized it is really hard to follow. How do you guys do it?
For me, I focus on CostYield.
As long as the dividends collected yearly (or monthly) and CostYield year after year is good (~5% or more), then I am happy
I only buy at prices below 5-yr historical mean average. It’s an aga aga figure that I estimate from the chart because I can’t find any tools with that calculated figure.
I sell when fundamentals don’t make sense anymore, or when there is sudden price jump of 40% within 6 months which are not fundamentally driven.
Rest of the time, just ignore everything you hear about the market being bear or bull.
thanks for the replies. Hehe maybe can’t keep watching stocks cafe everyday also.
Guys just an update, after not watching the markets everyday I am thrilled to see the stocks that I want to buy crash lower. Lower means more room for growth.
Previously I was having problems as I didn’t really do a clear entry and exit plan. So I kept on averaging down and the stock kept on going down.
By having a plan and sticking to it, I realised that investing is actually kind of boring and boring makes you money.
First there is too many cheap stock. But you dunno how long it will stay that way. 1 think I have learn don’t buy just because you have cash on hand. Just like hotel Transylvania, u need to feel the zing. Once you have it, you know that is the biz you wana own. If got doubt, its very hard to keep the stock long which I ended up in a bad trade.
I try to do DCF and buy with a minimum 40% MOS, but the stock can drop below 50% MOS . But I know What i buy is value, althougth the next lucky guy buy at example FB at 130 and I have avg down till 161. What to do. Lucks play a part in investing.
not watching is a double edge sword. u can miss or found opportunity, Best to find a way that you are fine with the volatility. After 1 year of investing in grow/value stock, I got better now with some tuition fees paid to Mr. market
I thought u bought CRCT?
I learned to avoid highly speculative stocks and buy solid dividend paying companies. But sometimes, I still make mistakes like Hyflux, Noble etc … I thought they were blue chips
I also resist the temptation to chase after stocks that have spiked up quickly.
I tends to buy stocks when they are near the bottom and average down as they continue to decline.
Investing in high dividend yielding companies is a better choice.
I second that
Yes get paid while waiting. Doesn’t have to be high dividend yield. Decent wilk do
I keep a watch out on the debt level of the company before I buy. =)
whats the range of yield u looking at?
Just for discussion purposes. which debt ratio do you use and whats the percentage you will be consdering?
Dividend yield: for me I am looking between 4+ to 6+% yield - above 8%, usually there is something wrong with the company, do your homework before diving in as there is usually no such thing as free lunch - below 3.5% I try not to invest too much because we should be looking at low hanging fruits first to optimize your capital.
Also too low dividend yield (made worse by bad operating cashflow), from past horror lessons, I avoid coz good companies should be able to pay dividends to share their earnings / not keep too much undeployed cash on hand. Companies with a lot of cash and receivables and still dont pay meaningful dividends - I question if the cash is really there.
Debt levels: For reits I pick those preferably with debt-equity below 55%. Too much debt means they do rights issue or a lot of share issue when they buy properties. Good reits should be able to manage their debt well, and go first to borrow to fund the acquisitions. For stocks, I think lower is better. I like those with little debt to fund their revenue growth coz it shows that they are prudent w using $$ and know how to prioritize investments. For me, thats one of the reasons I started looking at Venture Corp.
Very clear thoughts here. Why not create a public screener
I usually buy REITs with gearing of less than 35%. For not so big REITs, lower than 30% is better. Otherwise, I just stand aside and do nothing.
Thank you Evan. I am flattered. . Sorry had some issue logging into the forum these few days.
I dont think I can do a screener well, but I dont mind sharing my logic if anyone else may want to try. [note: I do notice there’s a difference between the dividend yield I see on stocks cafe vs sgx, so it may produce slightly different results]
On sgx stockfacts
set net profit margin to 6% or around there. This weeds out loss making companies. For me as dividend income investor, loss making coys wont pay much dividends. Note: this could accidentally remove coys with huge write offs which is non-cash.
I set 3 yr net revenue growth to at least 0.5% . I noticed this weeds out coys listed less than three years so far though eg netlink trust.
dividend yield of more than 3.5%. But as many coys still remain in the residual population, I increased this to about 4% to pursue low hanging fruits.
market cap about minimum 0.9 to 1 B. The population should have enough liquidity in market, and should be audited decently by big 4.
less relevant but I do try these as well in deep filtering. Ignore P/E less than 4.5 (weeds out some property developers), ignore net profit margin above 100% (excludes extraordinary income from asset sales), ignore dividend yield above 10%.
I then sort the output by debt-equity and cut off the list for those above 60%.
By this time, sgx stocks would have filtered from 332 to less than 40.
For those I have some interest, I go in the individual page. For those with earnings quality more than 3 bar, I would generally also avoid / refrain.
Thats my method of sieving for now.
Edit: I admit I have been lazy recently, but still need to do homework on financials. This is only a filter to focus my “studying”.
Also, you will need your own sense of the value eg CMT dividend yield dropped from 5.3% to 4.7% (after price increased to 2.4) - I have not sold, but have also stopped buying.
@caulinez What you need is a proper framework to make investment decisions. This ensures that investment ideas run through a proven selection process with guidelines based on sound principles (eg entry price, reasons to buy, reasons to sell etc). If you understand the importance of the thought process for selecting stocks, trust me, it’s much easier to follow. Many investors find it hard to follow a systematic process because they are drawn to the idea of making a quick buck from hot and popular stocks. I’ve done that in the past but never made any money that way. Ever since I created a framework for my stock selection, investing is less stressful and more fulfilling. I shared my investment framework here if you are keen to know. As the saying goes, if you fail to plan, you plan to fail. So I recommend you find a suitable framework for yourself and investing will be much simpler for you.
Agree with aruzaini. U need to find the style that fits you.
Once I abandoned buying on hearsay, started divesting some stocks (bought on hearsay or from some blog), and started switching based on my criteria, my 2018 returns improved from -8% to -3%, and my 1 yr return is now surprisingly decent.
Part of the improvement I guess is really doing homework (whether you fall into FA or TA camp). I think homework gives you solid ground if you found justification for the purchase compared to luck or hearsay.