Category: Money tips Release Date: 2006-10-12
Profitable investment in shares is the primary means of buy low sell high, which in itself is not difficult. But to judge when a stock is cheap and when the high price is a very enigmatic problem. The article mentioned that the stock price in three ways: one is the majority shareholder like to use the net asset pricing, a shareholder in circulation pricing theory net cash flow method, the last one is actually in the circulating shares of the net amendments to the pricing of cash flow method. Investors not only want to know the pricing of these three methods, but also know when to be what the price is valid.
There is a small story about a newly married couple, my wife decided to give her husband every day for breakfast. The first day my wife had a fried egg, frowning, said her husband wanted to eat boiled eggs. The next day his wife cooked an egg or a frown, said her husband wanted to eat fried eggs today. On the third day his wife cooked an egg then fried in an egg, I thought that the overall satisfaction of the bar. However, seeing her husband was still frowning, said after breakfast, you cooked fried eggs, boiled eggs to boil. Real life does not appear such a husband, but the stock trading so frequently Shique investors. Because if you lost money in the stock market, it must be that you should sell the stock at the time to buy stocks in the market should buy stocks when they sell the stock. For example last year, a number of individual investors unable to understand why the value of steel is so low PE stocks are still down, Moutai such a high price are still going up. Therefore, investors choose when to make the sale of the enterprise not only well aware of the fundamentals, but also proficient in a variety of stock pricing principle.
The stock market from overseas experience, a variety of stock price without taking into account the impact of short-term psychological factors have a general rule. To invest in stocks, the average rate of return should be above 8%, but because of individual stocks, compared with the overall market, there is a risk, so the stock's annual internal rate of return of approximately 10% of the more reasonable, on this basis, the price structure can be divided into fourth gear. The best stocks are growth stocks, whose PE value (price-earnings ratio) can be 15 times higher than the individual fast-growing technology companies, such as PE classes and services companies for more than 30 times the value can be achieved. Mainland, such companies are rare, Suning Appliance, and Yantai Wanhua and other enterprises have had such a valuation.
The second file is steadily growing class or rate of return, such as Yangtze Power, the future, Shanghai airport, or Moutai slowdown in its growth will be attributed to such a post. Its PE value should be 10 times to 15 times the dividend yield of up to 5%.
The third tranche of smaller companies, industry development space is limited, its capacity is not strong. There are many companies these companies can not maintain more than 10 years of continuing operations. Therefore, the stock of such companies should be relatively cheap, such as the current board on the market and some small businesses. If the growth of these enterprises there is a problem, then, when more than 10PE should guard.
Finally a stall with the PE companies can not accurately value of valuation, mainly banking and capital-intensive businesses, make more use of PB (book value) pricing. If the bank is not the middle of the business, which PB is generally 1.5 times. However, because banks in the Mainland has not yet opened, the scale is faster, so if not listed banks asset quality problems in the valuation may have to go up. Most of the enterprises is a cycle of capital-intensive enterprise, if investment does not barriers to its PB between 1 to 1.5 times would be more appropriate.
