Today I would like to share my personal investing strategies which I have used over the past 6 years. For those who are consistently investing in SG and overseas markets, you would definitely came across the various types of investing strategies used by different investors.
Below are some examples of different stock investing strategies:
1) Value Investing
Value investing is buying stocks when the stock is trading at a discount to its intrinsic value. By assessing the company's financial reports and using financial ratios, value investors buy stocks with huge margins of safety to provide "insurance" in case the valuation goes wrong.
2) Growth Investing
Growth investing is buying stocks based on the high growth potential of a company. This is despite a higher share price or price to earnings ratio or higher instrinsic value.
3) Momentum Investing
Momentum investing is the art of buying stocks to take advantage of the news and trends of the company. Momentum investors can invest in shares based on good and bad news. Investors will ride on the rising share on good news while they can also capitalise on bad news by buying shares on lower price and hoping it will appreciate at later stage. It is more like trading in that you buy and sell more frequently.
4) Income or Dividend Investing
Dividend investing offers a chance to create a stream of income in addition to the growth of your portfolio's market value from asset appreciation. Buying stocks that pay dividends can reward you over time as long as you take care to follow a few guidelines and make intelligent buying choices. Generally good dividend investors tend to focus either a high dividend yield approach or high dividend growth rate. But I'm not saying you should based on these factors only and you should do your own due diligence on the company's fundamentals, earnings and potential growth etc..
5) Defensive Investing
Defensive investing is very popular for investors during times of Volatile stock market where investors look to accumulate Defensive Stocks. These stocks have high resistance level to any global news or economic downturn and generally, their share price would not be affected that much during any downturn.
Assessing your risk appetite:
However before deciding on which strategies to use, perhaps we should first try to understand what kind of investor we are and the type of risk appetite we have. Are you an investor looking for quick growth or capital gain of the shares? Or are you a long term investor whom is comfortable having a large amount of money being vested in the market and values dividends as passive income ranging from 4% to 7% per year? Or are you a trader/investor and looking to do some quick trading to make some profit within the next few days?
For the past few days, one of the most trending stocks in SGX market is YZJ Shipbuilding which is part of the STI. Due to the news of YZJ Chairman missing, the share price plunged from all time high of 1.40 to 0.80 before recovering back to 1.04 resistance level and subsequently support level of 0.98. The volume traded reaches 100 million per day and definitely offers the opportunity to make a profit if you catch the right timing.
I have a friend who did just that. He would aim to buy 50K worth of such stock when the price is lower and he would throw it off within the same day once the price goes up by a few cents. He would make few hundreds to few thousands each time.
Question is do you have to courage to put your cash in when the share price is plunging? He told me it was very exciting and scary which I agree. Of course, you could be rewarded handsomely if the decision is right. However to me, this is similar to speculation and the risk of losing part of your capital is high.
Hence it all just voice down to making choices in life and I always believe there is no right or wrong decision as long you are making profits, regardless alot or little.
For me, I am definitely a long term Investor whom is hungry for Dividends as passive income. I am willing to hold as long as possible until one day my dividends surpass my expenses which means Financial Freedom for me. But at times, I will look out for some great value stocks and will offload some when the price is right.
In short, I think we should always first assess our own risk profile and understand what is our appetite for risk v.s rewards.
If you are someone who do not wish to take a little bit of risk on your money, bonds is one of the best option besides for fixed deposits and saving accounts.
Of course for equities, the next step would be to researching on the right companies to invest based on their fundamentals and also entry at the right price which is Financial Analysis and Technical Analysis. You also need to identify which are the stocks that you can hold for long term based on their fundamentals and which are the ones you have to sell.
Lastly, Portfolio Management is another important area to cover which we will talk about this in the next Episode.
Personally for my own porfolio, I am currently using the following strategies for different stocks:
1) Dividend/Income Investing:
Blue Chips and Reits - Hold for long term due to stability and consistent Dividends payouts.
2) Growth Investing:
YZJ, Genting, Thai Beverage and Sheng Siong - Aim for high growth and capital gain with entry at the right price.
3) Value Investing:
Basically buying any stocks that is trading below their NAV e.g. HK Land and etc.
4) Defensive Investing:
ST Engineering, ComfortDelgro, SBS Transit, SATS - These stocks are deemed necessities and/or have great resistance level against economic downturn or crisis.
There are also a few Nos for me when it comes to investing in Stocks. Some of them I have personally experience it and some of it are learning through the mistake of others.
Type of Industries that I do not touch at the moment:
1) Airlines
2) Oil and Gas
3) Penny Stocks
4) Pure Shipping and Offshore except for Congolmerate that have diversified businesses
6) China Small to Mid Caps
Regards,
SG Cashflow Investor
No comments:
Post a Comment