Learning more about investing in stocks
What is the best price to buy or sell a stock? This is the question that stock investors are most co...
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Portal-Retirement
Article
01/04/2016

Learning more about investing in stocks

Tips for retirement
Stocks
Becoming a good investor
Risks

What is the best price to buy or sell a stock? This is the question that stock investors are most concerned about. Yet, there are many more areas about stock investment that deserve your attention.

Things to note about investing in stocks after retiring.

A holistic approach. It is vital to clearly understand the company's business and financial standing to accurately assess the value of its stocks. Know the basics. Understand the fundamentals of a listed company: Business prospects and competitive edge, as well as development plans, operational conditions such as sales and profit, quality of senior management, as well as assets, liabilities and cash levels. Stock price ≠ value. The price and the value of a stock are two different matters – a low price does not imply the stock is a bargain, nor does a high price mean it is expensive. Start with financial ratios such as P/E ratio, P/B ratio and dividend yield to evaluate the stock value. Avoid high risks. Stocks to avoid: High P/E ratio (e.g. over 100 times), stock prices moving like a roller coaster within a short time, stocks with highly concentrated shareholdings, companies with significantly higher liabilities than their peers. Be cautious with market news. Risks involved if you make your trading decisions by following news of listed companies' proposed transaction because the transaction might not materialise, and any impact of the news on the stock price could already be fully reflected before or by the time the news is broadcast. Watch out for prolonged suspension. Unstable management or poor corporate governance, abnormal changes in auditors, or auditor's reports mentioning 'Qualified opinion' or 'Disclaimer of opinion', a lack of substantial business activities, a high level of liabilities, a high concentration of shareholdings, volatile stock prices.

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