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In this section, we will look at the fundamental aspect of stock investing. Let’s compare
Stock A with Stock B.
Which stock is cheaper? If your answer is Stock B , you need investment lessons and you’
ve come to the right place to learn more about stock investing. As a stock investor, we
don’t just look at the stock price alone, we study the entire business of the stock or the
company that we are buying. For the above example, the better choice would be Stock
A, with lower PE ratio. However, PE ratio is not the only criteria, please read on if you
want to know more.
How do we know which stock to buy?
I have come up with a simple acronym for you to follow: PRINCE D
P stands for Price Earnings ratio, PE
R stands for Returns on Equity, ROE
I stands for Institutional support
N stands for Net Tangible Assets, NTA
C stands for Current Market Environmental Scan
E stands for Earnings per Share Growth
D stands for Dividend Yield
THE PRINCE D RULE
This is a simple criteria suitable for investors who have little or no knowledge about
stock investing. They are easy to follow. The data can be obtained from our newspapers
and the Bursa Malaysia website at www.klse.com.my.
| "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell." Warren Buffett |
"Focus on return on equity, not earnings per share." Warren Buffett |
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| Quotes |
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| Tip #3 - The PRINCE D Strategy |
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