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Ten Minutes To Teach You To Pick A Good Stock.

2011/9/28 18:32:00 28

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Ten minutes. In such a short time, you can choose.

Do you?

I seem to have heard some people's suspicions, but what I want to tell you is that this is possible.

In the face of thousands of stocks unable to start, these standards at least provide you with a basic strategy for screening enterprises, and most of the stocks selected by these standards are stocks of good quality companies, and can even become stocks that bring dozens of returns.

In fact, the core of stock investment is how to evaluate the relationship between the value and price of the enterprise. The core goal is only two, that is, finding a good company and valuing it.

A good company is not necessarily a good stock, because there is a decisive factor in it, that is, price. Only two conditions that satisfy both good company and good price are the good stocks we define.

Here, the main answer is to answer the first question: how to choose the business problem succinctly and quickly.

First of all, I think the most important point is the past shareholders of enterprises.

Equity

The rate of return (ROE) has always been high, and it would be ideal if it could last over 15%.

The return on equity is a very important financial indicator for investment. It reflects that 100 yuan of shareholders' funds create a net profit of 15 yuan, which reflects the core elements of the earning power and competitiveness of an enterprise.

For example, the return on equity of A enterprise shareholders is 20%, B is 10%, so it is also the 100 yuan net production. The profit created by A is 20 yuan, while B is only 10 yuan. If this situation is maintained for 10 years, the two enterprises will not make profits and make all the reinvestment. Then, after 10 years, the A company created 124 yuan profit in that year, while B only had 26 yuan profit, and the difference was obvious.

However, the return on equity of many enterprises is achieved by using unreasonable financial leverage. That is to say, he has made use of a large amount of debts to achieve the growth of enterprises. If investment does not achieve the desired effect, it may lead to losses or even collapse. Therefore, we should be cautious about the use of financial leverage.

Second, enterprises should always be profitable.

Although only a small proportion of our investment increment comes from shareholders' dividends, this does not mean that the profits of enterprises are not important to us.

Enterprises that have always been profitable illustrate two problems. One is that their own business is very good. They have been creating profits for shareholders. At the same time, they also show that enterprises have experienced relatively stable economic cycles, and the relative changes in their industries are not great.

For such a stable enterprise, we can easily see clearly and better see its future.

On the contrary, if an enterprise fluctuates more frequently, it will sometimes gain profits.

loss

For ordinary investors, it is difficult to predict its future performance, and it is not easy to assess its value.

Third, the average operating value of revenue and net profit in the past 5 years is over 20%.

Can these historical data foresee the future?

Of course not.

But at least this company tells us that its past performance is excellent and stable, and it is likely to continue to grow in the future.

Conversely, if the growth rate of an enterprise in the past 5~10 years is relatively poor, the probability of high growth in the future will be small, especially at the present stage of rapid development in China.

The secret I want to tell you is that investing in stocks is the root of the growth of the business.

From 1998 to 2008, China's economic growth rate remained at an average of more than 10%. During this period, the growth rate of many industries reached 10% or more than 15%, for example, the financial industry, consumer goods and retail industry.

In the next 10 years, China will still be able to maintain a relatively high growth rate.

Fourth, investors must invest in companies that know how to make money.

The business law of "unfamiliar or not" applies equally to the field of stock investment.

Only by having a clear and profound understanding of the company's business and business models can you know what the future events will have on the company's performance. Only then can you know if the company's products and services have competitive advantages.

If you don't know how a company can make money, you can't predict the future of the company.

Finally, continuous operating cash flow is the guarantee of corporate financial health.

What we usually call corporate net profit is accounting profits on accounting statements, and often can not truly reflect the financial situation of an enterprise.

Statistics from most developed countries show that four out of every five bankrupt enterprises are profitable, and only one is losing money.

It can be seen that enterprises are mostly bankrupt because of the lack of cash, rather than the loss of profit.

If you can find companies that are fully in line with the 5, congratulations on winning the prize.

Enterprises, like people, are not perfect. This method can not be applied to all industries and companies. For example, the real estate industry, few ROE continue to exceed 15%, such as the banking industry's own characteristics, and financial leverage is much higher than other industries.

As an ordinary investor, if we can achieve the above "ten minute selection of enterprise standards", I believe that investing in stocks will become simpler, not only will greatly reduce your investment risk, but also really bring you the fun of making money in stock investment.

Of course, we should remind you that the "ten minute selection of enterprises" standard is only a preliminary screening of enterprises, rather than a final investment decision.

But even this simple ten minutes is much more valuable than the "darts" stock selection strategy of ordinary investors.