Tuesday, 26 April 2011

Traits of good companies

  1. High consistent earnings. Good margins
  2. Increasing FCF.
  3. Manageable low debt, short and long term.
  4. Good return on shareholder's money
  5. Good management
  6. Increasing retained earnings...
There are much more, I only listed a few. 


    la papillion said...

    Hi OT,

    Unfortunately, what makes a good company need not be a good investment. Conversely, a bad company may not necessarily be a bad investment too. So what's the difference?

    I think it boils down to the price you entered. A bad company bought at a cheap price will, in all likelihood, return a good investment yield. On the other hand, a good company bought at a high price would likely return a bad yield. So, price is what determines.

    These days, so long as it's not downright sucky, I'll pay attention to the price that I purchase. Less effort, more bucks :)

    OT83 said...

    Hi OT,

    What you said is correct.

    As long as the company is not super sucky, price is important. But is is hard to determine what price is good - I could use TA or DCF etc to find but ultimately it is just a probability.

    Higher chance of winning.

    How do you normally determine your entry price?

    la papillion said...

    Hi OT,

    Go read elder's method, as you've obviously done so, abit half-heartedly. To me, elder's method marries both aspect of buying below value and the right time to buy. I no longer chase after breakouts when I learn of his method. There are, of course, many different ways to determine entry price, but these days, I normally enter only after I've observed macd bullish divergence. This method suits me very well, though I do not claim that it will suit you well too.

    But we'll not know till we've tried, isn't it?

    If you do not know what bullish divergence is, you need to read more on his books. Do try sell and sell short after reading trading for a living :)

    CreateWealth8888 said...

    Measure your performance and show your result and that is the only way to learn and revise your method.

    No of wins/No of losses = ??

    Total Win ($) / Total Loss ($) = ??

    XIRR = ??

    Min holding day = ??
    Max holding day = ??

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