15 Nov 2019
Mind sharing how were your experiences like when you first get involved with investing, be it in stocks or REITs?
My advice would be to understand your investment objectives. If you are investing just to gain experience in the financial markets, then I would suggest that you can start small. However, if you have preplanned objectives, I would say that you have to know the fundamentals of investing and get-to-know the products that you are investing in. In each asset class, understand what are the key figures/ratios that you have to know (equities - fundamental analysis, general - TER). Education is perhaps the most important factor before you invest. If you are starting with small amounts, refrain from taking on a gambling approach unless you are willing to lose all your money. Most importantly, treat each new encounter as a learning experience and understand why something happened.
I entered @ May 2019, markets were at their highs and I didn't know. Fast forward, the next 4 weeks, all I can see are red upon red. Paper loss of 10% even, but I kept my stocks as I already did my research and plan to hold for the long term, now I'm already up 10+% including dividends!!
Important things to note :
Cheers and good luck in your investing journey!!
Buying a stock is equivalent to buying a piece of the company. I would recommend reading the annual report of the company.
Know how they make their monies. What’s their core business, what other businesses do they own?
Look their competitors, as it has a direct impact on market share which affects revenue.
Think with a horizon of 3-5 years, where do you see the company to be at?
Alibaba core business is ecommerce: Taobao, TMall, Alibaba, AliExpress, Lazada etc. Their main competitor in China is jD.com second largest in China with 17% market share. Their other business segment also includes cloud computing, Digital & Media (Alibaba Pictures, Youku.)
They also own food delivery company ele.me which competes with meituan. ￼A stake in Ant Financial which owns a payment processor Alipay vs Tencent’s wechat.
And the list goes on and on.
Lastly, the most important part is the valuation. How much are you willing to pay for its earnings (P/E Ratio)? How much does it cost to purchase a dollar of their assets (P/B Ratio)? Value from Discount Cash Flow analysis?
If you are into dividend stocks also check out the payout ratio and how the company is doing, understand if the payout is sustainable. Do not just look at the yield. An example would be StarHub.
Disclaimer: I’m not an expert in stock or financial advisor. Just some guy that likes reading up on businesses. I own Alibaba shares.
I think it's important to understand what's your risk tolerance before you get your hand dirty with stocks or other financial instruments.
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