FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

Click Link to get instant AI answers to all business queries.
Click Link to find latest Economic Outlook of Sri Lanka
Click Link to view latest Research and Analysis of the key Sectors and Industries of Sri Lanka
Worried about Paying Taxes? Click Link to find answers to all your Tax related matters
Do you have a legal issues? Find instant answers to all Sri Lanka Legal queries. Click Link
Latest images

Latest topics

» Latest Financial Status and Future Outlook of SMB Finance PLC
by ChatGPT Yesterday at 11:15 pm

» Latest Financial Status and Future Outlook of Overseas Realty PLC
by ChatGPT Yesterday at 11:00 pm

» Latest Financial Status and Future Outlook of Merchant Bank of Sri Lanka & Finance PLC
by ChatGPT Yesterday at 10:55 pm

» McDonald’s අපේ නෙමෙයි අපේ බෝස්ගේ – අබාන්ස් කියයි
by ChooBoy Yesterday at 10:19 am

» AI Assistance for Stock Market Research and Analysis
by ChatGPT Yesterday at 7:12 am

» Comparative Analysis of the Insurance Sector
by God Father Tue Mar 26, 2024 11:46 pm

» Sri Lanka: Why Pay Exorbitant Taxes?
by ChatGPT Tue Mar 26, 2024 10:52 pm

» LANKA CREDIT AND BUSINESS FINANCE PLC (LCBF.N0000)
by K.R Tue Mar 26, 2024 3:15 pm

» CENTRAL INDUSTRIES PLC (CIND.N0000)
by D.G.Dayaratne Tue Mar 26, 2024 9:11 am

» SIYAPATHA FINANACE PLC (SLFL.N0000)
by ChatGPT Tue Mar 26, 2024 7:58 am

» FINANCE AND LEASING SECTOR
by ChatGPT Mon Mar 25, 2024 6:45 am

» LOLC FINANCE PLC (LOFC.N0000)
by ChatGPT Mon Mar 25, 2024 6:36 am

» CIC HOLDINGS PLC (CIC.N0000)
by ChatGPT Mon Mar 25, 2024 6:18 am

» UNION ASSURANCE PLC (UAL.N0000)
by ChatGPT Mon Mar 25, 2024 6:15 am

» First Capital Holdings PLC: Current Financial performance and future outlook
by God Father Sun Mar 24, 2024 10:58 pm

» LankaBizz: Sri Lanka's First ever Artificially Intelligent (AI) Business and Research Assistant
by God Father Sun Mar 24, 2024 7:27 am

» HOTEL AND TRAVEL SECTOR
by ErangaDS Wed Mar 20, 2024 7:22 am

» CIC Holdings Good Times Ahead
by ashan silva Mon Mar 18, 2024 11:00 am

» EPF Fund keep eye on low P/E Shares
by K.R Mon Mar 18, 2024 8:45 am

» SINS - the Tailwind effects of a crisis hit Economy
by Hawk Eye Mon Mar 18, 2024 8:37 am

» Ceylon cold stores
by Hawk Eye Mon Mar 18, 2024 8:25 am

» Asha securities Provide buy signal for CIC
by ddrperera Fri Mar 15, 2024 1:10 am

» CSE ready for another Downtrend?
by D.G.Dayaratne Thu Mar 14, 2024 11:24 am

» LankaLAW Forum : Sri Lanka’s #1 Discussion Platform for Legal Questions and Answers
by blindhog Thu Mar 14, 2024 9:14 am

» Sri Lanka poised to benefit from demand surge for ‘non-China origin’ graphite
by samaritan Wed Mar 13, 2024 1:31 pm

LISTED COMPANIES

Submit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)



CHRONICLE™ YouTube

Disclaimer
FINANCIAL CHRONICLE™ Disclaimer

The information contained in this FINANCIAL CHRONICLE™ have been submitted by third parties directly without any verification by us. The information available in this forum is not researched or purported to be complete description of the subject matter referred to herein. We do not under any circumstances whatsoever guarantee the accuracy and completeness information contained herein. FINANCIAL CHRONICLE™ its blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not in any way be responsible or liable for loss or damage which any person or party may sustain or incur by relying on the contents of this report and acting directly or indirectly in any manner whatsoever. Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility, FINANCIAL CHRONICLE™ blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. The information on this website is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.

Further the writers and users shall not induce or attempt to induce another person to trade in securities using this platform (a) by making or publishing any statement or by making any forecast that he knows to be misleading, false or deceptive; (b) by any dishonest concealment of material facts; (c) by the reckless making or publishing, dishonestly or otherwise of any statement or forecast that is misleading, false or deceptive; or (d) by recording or storing in, or by means of, any mechanical, electronic or other device, information that he knows to be false or misleading in a material particular. Any action writers and users take in respect of (a),(b),(c) and (d) above shall be their own responsibility, FINANCIAL CHRONICLE™ its blogs, forums, domains, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental violation of securities laws of any country, damages or loss arising out of the use of this information.


AI Live Chat

You are not connected. Please login or register

Stock Market Investment Rules

5 posters

Go down  Message [Page 1 of 1]

1Stock Market Investment Rules Empty Stock Market Investment Rules Wed Feb 22, 2012 8:56 pm

notme

notme
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

The stock markets or equity markets are large market places or trading platforms in the modern sense of the word; where investors buy and sell equity shares or part ownership of various corporations representing various industries and services. To engage in this exercise of buying and selling equity shares the investor would be required to follow certain rules, to enable a successful and profitable conclusion to their transactions or trades.

We would get to these rules presently. However, investors are well advised to tread with caution and attain a certain level of comfort with the system they propose to implement. After all a system which works for one person may not necessarily work for another person. A dry run on paper would be in order for a period of time before the investor implements his or her system in real time in the stock markets. Further, we would restrict the application of these rules to the equity markets or the cash market. The other two sub-markets being Options and Futures which are different investment instruments with their own risk-reward profiles and require a different set of rules.

The stock market investment rules are listed below:

1. Make investments in the larger companies with price-earning ratios (P/E) of 10 or below.
2. Keep investments limited to the top 2 - 3 companies in each industry or service group.
3. Invest in companies operating in high growth (or sun rise) industries.
4. The price-earning ratio and earnings per share are important tools to estimate the fair value of shares.
5. High price-earning ratio implies that:

super growth is expected in the company's earnings in the near future;
investor confidence is high; and
watch out for low earnings per share ( an earnings per share of 15% of par value of a share is reasonable).
6. Low price-earning ratio implies that:

investor confidence is low or poor; and
a high growth stock or company not yet recognized.
7. High returns can be earned from high priced stocks with reasonable price-earning ratios. The best investment opportunities usually lie in the most unexpected places.
8. Apply the theory of contrary opinion:

The crowd is usually wrong, go against the crowd.
When everyone expects the market to decline, prices will rise; and when everyone expect the market to rise, prices will fall. Markets tend to do exactly the opposite of what everyone expects.
In the early stages of majority opinion, it pays to follow or precede the crowd.
Contrary stock market action pays off only when timed to coincide with the last stages in the consolidation of a widespread majority viewpoint.
Sell a stock below the anticipated peak price. Always leave a little margin for the person who buys the share from you.
Buy and sell stocks at intermediate levels. To put it in perspective, "Sell, regret and grow rich".
The bulls make money, the bears make money, the pigs go broke.
Never buy/sell in line with the prevailing market opinion.
Habitual non-conformity is no more profitable than habitual submission to fashion.
Buy when others are selling, and sell when others are buying. That is buy in depressed markets and sell in boom markets.
Always ensure that your stand is supported by reason and logic.
When majority opinion begins to dominate the market, watch for crowding in contrary opinion.
9. Preferential allotment should be treated as subsidiary opportunities for making money.

10. Rights issues enable fresh investment without dilution of ownership. It enables investments at prices below the prevalent market price of a stock. And also enables step up of dividend yield substantially.
11. Bonus shares expand the total shares outstanding, trading volume and liquidity of the share. It also raises the dividend amount and gives tax benefits. Further, it also acts as a signal confirming good future prospects of the company.

12. Timing your buys:

Initially base investment decisions on selection rather than timing, unless you have an intuitive flair for predicting short term price fluctuations.
For superior results learn to combine good selection with good timing.
Time the buy at share prices close to the lowest price of the year. Last years average price would be close to current year's lowest price.
Never buy shares at prices greater than or equal to peak price of previous year.
Under normal conditions buy shares at prices between last year's lowest price and average price.
In a rising market, buy shares at prices greater than or equal to previous year's average price. However, do not buy shares at prices greater than 10% of previous year's average price.
Do not buy shares when they are in the limelight, as they maybe over priced. Alternative 1, buy the shares at early stage of publicity. Alternative 2, buy the shares when the publicity dies down and the prices fall.
Do not buy shares immediately after a steep rise in prices, as this is usually followed by a steep fall.
A sharp fall in share prices is an opportunity to buy. However, you should be confident that the fall is temporary; and that the future outlook of the company is good enough for a future rise in prices.
If you have a promising growth stock in mind, and are looking for an opportune moment and price to buy it, the best time would be at the middle of its accounting year.
Stock prices record sharp rise just before an expansion project of the company goes into commercial production. If you are a buyer, buy the stock a month before this happens. If you are a seller, sell the stock 2 months after the start of commercial production on an expanded scale to take full advantage of the stock or share price rise.
Companies often issue press releases about expansion, diversification, new products, rising order book positions, proposed bonus/rights/conversion and so on. This has a bull effect on the stock prices. If you wish to buy the stock of such a company, do so on the same day the news is released. This same rule applies to companies with improved half yearly results.
Buying shares immediately on receiving favorable news about a company is a good timing decision. It would be even better to buy the stock in anticipation of favorable news or market development.
Keep a watch on the performance of similar companies in the same industry. Use this information to improve the timing of the buy decision.
Improve your investment performance by staying and being ahead of the crowd.
13. Timing your sells:

The best time to sell usually coincides with the stock market boom.
Reasons why investors are unable to sell at the right time are that investors tend to marry their stocks. They are unable to accept mistakes and correct them. They desire to at least break even on the same stock. And on occasion are reluctant to pay capital gains tax.
Reasons why investors sell shares are that they may have made a mistake in their initial selection. Periodic review and reconstruction of their investment portfolio. Enables investors to take advantage of market swings and new buy opportunities. Necessary for regular adjustment of capital gain/loss for tax purpose. And also to provide for regular spending money to meet seen and unforeseen expenses.
14. When to sell:

When the price-earning ratio of a stock held in the portfolio shoot up to unrealistic levels.
When the investor has made 100% to 200% profit on his or her investment.
The investor has overshot his original objective.
The investor incurs a loss of 8% to 10% due to a fall in the stock price. However, do not sell in case the loss is due to temporary and widespread decline in the stock market.
Keep capital losses short term. Do not let tax considerations hamper a good sell decision.
It is always better to sell too soon than too late.
Sell after a steep rise in stock price.
Do not sell stock immediately after a steep fall in price. Sell during a rally.
Sell when in doubt.
source http://www.narachinvestment.com

2Stock Market Investment Rules Empty Re: Stock Market Investment Rules Wed Feb 22, 2012 8:59 pm

sriranga

sriranga
Co-Admin

Thanks for sharing a good article.

http://sharemarket-srilanka.blogspot.co.uk/

3Stock Market Investment Rules Empty Re: Stock Market Investment Rules Wed Feb 22, 2012 9:03 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics

Good one to read.

4Stock Market Investment Rules Empty Re: Stock Market Investment Rules Thu Feb 23, 2012 4:48 am

a_randy

a_randy
Manager - Equity Analytics
Manager - Equity Analytics

Good post Like a Star @ heaven

5Stock Market Investment Rules Empty Re: Stock Market Investment Rules Thu Feb 23, 2012 9:11 am

rmark

rmark
Manager - Equity Analytics
Manager - Equity Analytics

Thanks for sharing, good article to read.

Sponsored content



Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum