strategies for investing in stocks, practical examples
The strategy of investing in the shares of practical examples. In subsequent articles will explore some basic investment strategies. I will say at once, that all of the strategies, which will be presented, are long-term.
So, the first in the review of strategies of investing in the shares will be universal strategy. It is designed for long-term investment with the placement of shares for a period of a year or more. It's not even such a strategy, how many instructions or memo of four points, explaining what it is necessary to pay attention at a choice of the shares.
1. Dynamics of growth of profit. It can be said that the most important parameter, which is a ranking of paper to select them in your investment portfolio. The pay will be a specific enterprise, the higher it will be in the list. Enterprises with negative revenue will be at the bottom of the list and their shares will not be considered as candidates for investment.
When comparing different companies on the fact of their yield, the absolute growth figures are not used, and used the profit growth in per share calculation. You need to look the quarterly increase in the profit and compare with the same period of the previous years. After that you need to check the yield on the results of the year, again comparing with past performance . The results of the year, in contrast to the results of the quarter show the final result, not taking into account the seasonal fluctuations of economic cycles.
2. Dynamics of growth of volumes of sales. The second important indicator in this strategy, supplementing the previous one. Investors interested in the company, whose sales volumes increase, and not Vice versa. If the income of the company is growing, and the volume of sales fall, it is clear that high profitability is not the result of realization of their products, and is achieved at the expense of something else. For example, due to reduction of costs of production. It's not so bad and scary as it may seem, but, nevertheless, in the long term can serve as a signal to the emerging negative trend. Therefore, enterprises, at which grows not only profit, but also sales volumes, will stay in the list above, than those in which there is an increase profit and decrease in volumes of production and sales.
3. The sustainability of growth dynamics. Here you need to move from the selection of the companies in the rating for the elaboration of the already selected enterprises. Making a list of companies on the basis of the data of the profit and sales volumes and defining leaders, to select from them the very best. For this you can use a parameter as of the time. And, again, should be put in the leaders of the company, who have a good indicators for several years in a row and move to the end of the list of those, who have the worst indicators.
4. The return on equity of the company. Figuratively speaking, the own capital - it is the means that will receive the shareholders in case of bankruptcy of the enterprise. This is the absolute value of minus liabilities and debts, and also minus the value of preferred securities, as we remember, that the holders of preferred shares are entitled to receive their share first. This criterion is not the main. It can be used in the case, if you want to choose the leader of the few companies, which are in Your list.
Exactly a year later a procedure should be repeated again. If changes in the portfolio of shares not, then everything is left as it is. If the same calculation showed that now will be more profitable to other shares, then you need to move the money that is in them, and the shares, which on the background of worse to sell. Such a procedure should be carried out annually, in any case not less frequently.
Here is a pretty simple system of selection, but nonetheless very effective. If plan a long-term investment, one of the system will be quite enough to build your investment portfolio on the basis of the shares, with the potential for a very good development in the next few years. It should not be forgotten that, as mentioned in the previous articles, namely, at the first stage of the portfolio should contain no more than 1-4 securities. Otherwise, instead of the diversification of risks, and for which formed a portfolio of several papers, one is faced with the inability to effectively manage a portfolio and as a result get a lower yield. Therefore, you should not rush and it is better to choose one security paper, but the most promising and in her invest their money. Later, with the increase of investment experience, it will be possible to increase the number of securities in the portfolio. Everything should be done gradually in order not to get the opposite effect.
