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Two Golden Rules of Sensible Stock Investing
Learn how to pick strong companies and find sensible buy and sell prices.
Contents
I.
Make your money work for you, Always!II.
First Golden Rule
1.
Five Significant Variables
1.1
Earnings Per Share (EPS)1.2
Sales1.3
Book Value Per Share (BVPS)1.4
Return on Invested Capital (ROIC)1.5
Debt to Profit Ratio
2.
Assessing the Company
III.
Second Golden Rule
1.
MRP2.
Discount Price3.
Rate of Return4.
How do we calculate the MRP?5.
Using Price Calculator @
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IV.
Summary
By
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Enabling Sensible Stock Investing
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I.
Make your money work for you, Always!
We all invest our hard earned money to get good returns. Are the returns always up to our expectations?Sometimes they are. Sometimes they are not.Have you imagined a life where your money works 4 you,
Always
? It is possible, if we invest a part of ourearnings sensibly. We all know that Inflation eats up most of the returns from different investment sources.To beat the inflation you need to invest some of your money in stocks, Sensibly!
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enables you to sensibly invest in stocks so that you can take charge of your stockinvestments.But what is sensible investing?It is a method by which you buy into a business that is worth owning forever at an attractively low price and sellit, obviously at an attractively high price.This sounds sensible, but is it possible? As according to the Oracle of Omaha Warren Buffet
“
To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or insideinformation
”
All you need is to be sensible and follow two simple Golden Rules:
1st Golden Rule:
B
UY WHAT
’
S WORTH OWNING FOREVER
2nd Golden Rule:
B
UY AT
50%
DISCOUNT OR LOWER
,
AND
S
ELL AT
MRP,
PROVIDED IT GIVES MINIMUM
20%
COMPOUNDED ANNUAL RETURN
.
Start making your money work for you by following these Golden Rules of Sensible Investing. And it’s all very easy @
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Log on now and Find out if a stock is worth investing inand at what price.
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II.
First Golden Rule
The first golden rule says:‘Buy what’s worth owning forever’. This is beautifully said by
Warren Buffett
“Ourfavorite holding period is forever” and to avoid the temptation about buying stocks which don’t meet thiscriteria he said‘If you don’t feel comfortable owning a business for 10 years, then don’t own it even for 10minutes’.The major questions here are:
1.
Does the company have a sustainable competitive edge that will enable it to grow its profits in the futureeven through tough times?To answer the first question, check if the company
Own great brands
Has an edge in terms of trade secrets like patents, secret formula, technology etc.
Operates in an industry that is difficult for other players to enter
Provide products that consumers find it difficult to switch away from
Sell products that have specific advantage in terms of price/quality etc.The Company which gets maximum number of “Yes” to the above parameters is the company to investin. To know such details about a company you can view the ‘Wiki Reports’ available at
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.
2.
Does the company have great financial track record that proves beyond doubt that it has been able togrow its profits in the past? We, at MoneyWorks4me.com have created the
‘10-year X-ray’
to help you answer this question withease and without being deluged by financial data, that would make your head spinThe Five Significant Variables are necessary to be understood and applied thoroughly to answer thisaccurately. And what are these Five Significant Variables? Well, just common sense explained in financial lingo!
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