Sunday, September 14, 2008

5 Rules To Pick Winning Stocks!

I've simplified the method to pick winning stocks, after reviewing the methods adopted by Warren Buffett and Adam Khoo.

The 5 Rules to Pick Winning Stocks are:
  1. Competitive Advantage – company must have sustainable monopoly status or have characteristics which is difficult to replicate to protect their market share.
  2. Consistent performance with growth potential - measured by ROE, profit margin
  3. Low or no debt – debt/equity ratio
  4. Price is right – share price lower than intrinsic value
  5. Time is right – stock on uptrend, ie. breaks out and above 20/50 DMA.

I'm more a TA person than fundamental person. But I know whether a company is good or not, without the need to go through exercise 1 to 3.

I'll will time the market before I buy using my Big-Picture Approach. I know when to buy and when to sell using my Crystal Ball!

So when should you sell your value stocks?

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