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I'm a Singaporean. The purpose for all my blogs is to share my life experiences in Singapore.

My Lessons on Investment

What are Shares, Unit Trust and ETF?
See which investment instrument is suitable for you.
What are Preference Shares?
It is different from the common shares.
How to invest using your CPF saving?
Enhancing your retirement saving
How to invest regularly if you do not have a lot of saving?
You still can invest if you can save $100 per month
How to buy gold in Singapore?
Different ways of investing in Gold.
My Investment Strategy
Having a winning strategy is important
Be a investor or a trader?
Reasons on why I want to be a investor rather than a trader
Peace of mind after buying shares?
Reasons on sleepless night after buying shares
Things to avoid in stock market.
Don't attempt to try these even you are an expert
My favorite quotes from Warren Buffett
Very meaningful and useful investment quotes
Buying stocks based on price and value
This is the method I use when buying stocks
Investor, Traders and Speculators Charts
Charts are affected by different players in the markets
My Quotes/Rules of Investment
My own investment rules and quotes
The Goose That Laid the Golden Eggs
Protect them at all costs
Dealing with Market Randomness
Reasons on why market direction cannot be predicted
Who can be trusted in the market?
Beware of people who give you tips
Why I am not afraid of losing money in my investment?
Know your own limits and rules of the game.

My Market Analysis

STI Index
Comparison between 1998-2000 and 2008-2000
STI Index movement
Prediction from Oct 2009 to 2011
Reason Why Gold might be a good investment
EUR/USD 10 years chart
Will it go up or down?
Taiji Symbol VS S&P 500
S&P 500 25 years chart
True value of S&P 500
Based on dollar index from 1988 to 2009
US Dollar Index
Using Taiji to Analyse
S&P(2007 to 2009) VS NIKKEI (1990 to 1992)
Is there any similarity?


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Tuesday, November 10, 2009

Buying stocks based on price and value

Warren Buffett said, "Price is what you pay. Value is what you get."

Sun Tzu said, "The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand."

That is why I always based on price and value and do my own calculation before buying stock See below for the formula that help me to know when to buy stock.

Price is the current price of the stock.

Value can be capital increase or dividend given from the stock. It will be very hard to estimate the capital increase of the stock, but it is easy to identify which are the stocks that are giving regular dividends. I always look for stocks with good fundamentals that give regular dividend even during the recession time. These stocks normally go up and down at a slow rate which is what I like. To me it works like fixed deposit. Click here if you are interested in my choice of stocks/ETFs.

Target return is the minimum amount of return you want to see when you invest in a stock. For example, if you set it at 5%, then every year you will expect to get 5% return from your stock. I will only buy a particular stock when the result of the formula is greater than my target return.

Example 1:
If a stock is giving dividend of $0.05 per year and the current price is $2, then the return will be 2.5%. So if my target return is 5%, I will not buy this stock at the current price.

Example 2:
If a stock is giving dividend of $0.1 per year and the price is $1.00, then the return will be 10%. So if my target return is 5%, I will definitely buy this stock at the current price.

1 comment:

Alice Clark said...

You really are impressive for coming up and suggesting such a trading formula that is really great. Though I don't have to deal that much with binary options, I still find your posts very helpful. I am going to include your blog along with binary options broker review as my new source of knowledge and signals for my trading. Really you are great!