Tuesday, September 29, 2009

How to make money in good and bad times

NOTES: just for personal pupose..

  1. Select Stocks with 25% to 50% and higher annual earnings growth rates
  2. The annual rate of earnings growth for the companies you pick should be 25% ...100% or more
  3. 2) Look for big return of equity
  4. ROE is calculated by dividing net income by shareholders equity. This shows how efficeintly a company uses its money there by helping to seperate well managed firms from those that are poorly managed. ROE atleast 17%-50%
  5. 3) History demonstrates most bull markets last 2-4 years followed by bear .
  6. 4) In the beginning phase of a bull market growth stocks are usually the first to lead and make new price highs
  7. 5) 3 out of 4 big market winners in the past were gowth stocks 1 in four was a cyclical
  8. 6) Rallies in cyclical stocks may tend to be more short lived and prone to failure at the first hint of recession on anearning slowdown
  9. 7) Insists on a 3 year annual earning growth this would weed of 80% of stoicsk in any industry
  10. 8) The stock of a company hthat has an outstanding 3 year growth record of 30% but whose earnings growth has slowed to 10% or15% in the last several quarters acts like a fully mature growth stock. Older and larger organizatin sare usually characterized by slower growth and many of them should be avoided
  11. 9) The fastest way to find a compnay with strong and accelerating current earnings and solid 3 year growth is by checking the proprietary EPS
  12. ITS ALL ABOUT GOOD EPS
  13. 10) Contrary to most investors beliefs p/e ratios were not a relevant factor in price movement and have very little to do with whether a stock should be bought or sold
  14. CONSIDER EPS UP OR DOWN
  15. User P/E t estimate the potential price objective for agrowth stock over the next 6 to 18 months
  16. for e.g. Atock breaks out its first base at 50Rs and its P/E ratio is 20
  17. multiply (20*(120/100))* EPS = stock price in the future.
  18. CONCENTRATE ON STOCKS WITH PROVEN RECORDS OF SIGNIFICANT EARNINGS GROWTH IN EACH OF THE 3 YEAR + STRONG QUARTERLY IMPROVEMENT .. DONT ACCEPT ANYTHING LESS