Some neglected stocks and stocks in dull industries are also in strong hands. We should own good businesses at good prices and then should forget volatility. Mr Market will create very bullish chart for them later. After weeks of struggling, market and stocks are in consolidating mood now. Stocks are building their bases. We cannot time the market but we can find out movers in the market. We should stay with next movers in the remaining stages of current bull market. If we can identify some great movers in the market we should not worry much. In some days, these great movers will stay calm before they become active again.
Have a reasonable target for stocks according to the industry, industry outlook, value, cash flow and growth etc. When market becomes very hot even P/E ratio can go above 27.CSE had higher P/E ratio in the past. Even in bull market some stocks can trade below the P/E ratio of 20.
Never sell winning stocks in bull market. We could miss some of the big move. That is the time where we can recover losses that we made in the past. Companies are producing good results. In September quarter, we should see some super results from supper stocks. We should see further upside in stocks in the coming weeks and months. Some sectors should get budget boost as well. Exports will do well in the coming months.
Types of stocks to identify in the market:
Strong stocks and strong groups
Strong stocks in weak groups
Out of favour stocks which has great potential
Stocks will adjust according to the stage of market and according to their earnings in this bull market. Defensive stocks such as food and health care stocks will have more demand during final stage of current bull market.
Knowing our investor profile will help us work out the kinds of investments we should consider.
There are four sides to our investor profile:· ·Duration:
How long do we want to invest for?·Returns:
Do we want income or growth?·Liquidity:
Do we need to be able to get our money easily?·Risk:
Understanding the risk and returns involved in different types of investment. Different stocks have different risks and returns.