I think sometimes we got reason to sell :

1. Company profit will decline due to deterioration of economy situation, hence low profit -> low dividen.

2. Interest rate will go up, which is related to No.3 below.

3. share price is unreasonable price or price is expensive based on forward PE ratio. Eg. if interest rate is 5% so theorectically forward PE shouldn't be more than 20 since PE ratio of 20 is also about simple 5% return rate. What for you invest in share which give you the same return rate as FD. Forward PE is more accurate to measure, not current PE.

4. Poor prospect or management change (from good to bad)

5. Also, dividen yield must be based on profit earned, special dividen can't be reliable since it is one off which used company acculumated profit to give out. Eg. Pos Holding recent declare special dividen Rm1.++ which is one off.

Share price won't forever go up or go down. If economy situation or share market has peak that better sell it first and taking its profit. After all, like everybody said, it is still a paper profit untill you sell it.

Thanks dreamer for your advice, I will remember what you've said and try not to predict how the share move in short term...

Yes, I have to learn to say more with less, but it's not the only reason for us to sell the share...so, I disagree with the statement you made, which states IF AND ONLY IF... I agree with cherroy, if the management change, the performance might be poor, and dividend will be less or no more dividend. Just imagine, a good performance company change management then buy over some bad companies, sure the performance will become bad...

Cherroy,

Let's look at your reasons and compare with my reason of buying high dividend yielding bank stock.

1) Company profit going down to recession

Maybe the bank will make less money due to bad loan. But, I am sure that the bank will recover since it had done that for the last time. I may buy more if the share price goes down further.

2. Interest rate will go up, which is related to No.3 below.

Bank make a hell lot more money when interest rate goes up.

3. share price is unreasonable price

Why should I care?? I make money when I buy. Okay, if the P/E went up to 100, I may sell. Anything less than that, I collect dividend every year.

4. Poor prospect or management change (from good to bad)

Only if Malaysia allow foreign bank to open unlimited local branches, I may change my mind.

5. Also, dividen yield must be based on profit earned,

Bank's profit is based on 3% to 4% margin on their loan which is NOT open for competition. Unless the bank makes a lot of bad loan, you can pretty much know 80% to 90% how much money they will make.

Dreamer

<< if the management change, the performance might be poor, and dividend will be less or no more dividend. Just imagine, a good performance company change management then buy over some bad companies, sure the performance will become bad...>>

1) Which means at that time, you get better ROI by selling the stock and buy something else.

<<Thanks dreamer for your advice, I will remember what you've said and try not to predict how the share move in short term...>>

2) You can predict and gamble BUT do not be over-confident. Limit how much money that you will gamble with. Manage your risk.

Dreamer

since bank is a business, base lending rate will always > interest rate. means if FD interest goes up, the loan interest will goes up as well (i guess). further more ppl who dun do med-high risk investment will pour their money to the bank FD.

Ky_khor,

You are wrong in your sequence of how things usually happens. Bank always raise BLR and credit card interest rate first. Then, wait for a few months before they raise FD and saving rate. So, bank always makes a lot of money first for a few months when interest rate goes up.

Dreamer

Normally, what methodology u guys practise when looking for individual stocks to buy??

omg is the market really that good ?
i just called my broker wanted to place an order for the new call warrant on MPLANT which is only open for sale today, and heck, it was over-subscribed by lunch time

Speculation in the making.

hey i thought you cannot trade ?

We can but have to disclose every transaction to internal audit

I never buy share before, but I think is like this:
The share must be active.
Study the financial statements, know about their profit, liabilities, liquidity, EPS and PE.
Look for the dividen distribution history.
Look for the future plan of the company.
Get know well about their current activities and news.
Study the share price to determine its over valued or under valued.

Several criteria are the key in analyst a company for share trading purposes, generalise only.

1. Its management
2. Earning aka PE ratio (forward PE)
3. Asset or NTA of the company, some company did hold a lot of assets which is undervalued in paper (like KLK)
4. Prospect of the company especially its core business
5. Dividen yield
6. Liquidity of the share
7. Healthy cash flow, a company may earn/profit a lot but huge and pro0longed negative cashflow will bring down the company also, the better exmple is TNB, profit a lot but facing serious cashflow problem.

A share is active or not is less important since if you are talking of investment rather than speculative, the trading volume won't be so important unless you buy a lot. Some quality counters only trade a few each day but bare in mind if the liquidity is poor, it is easy to be manipulated, also can't attract fund to buy it.

This post has been edited by cherroy: Nov 10 2006, 01:13 PM

All,

1) "Trust but verify". Remember Enron.

Please noted that even in USA, you have accounting scandal. And, sometimes the numbers reported in quarterly and annual reports are lies. So, do not be so confident that the numbers you see in those reports are REAL.

2) Remember UEM.

Before anyone buy stock in Malaysia, they need to remember and study the whole affair about UEM reverse takeover of Renong. They need to ask themselves whether this can happen again. Please noted that 50+% of KLSE is owned by GLC and GLIC. Government is the majority share holders of most companies.

Dreamer

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This post has been edited by lipkhin: Dec 1 2010, 02:36 AM

Above mentioned are quite good company also but one need to mention is Bjtoto although giving out high dividen yield, its management previously has previous bad track of record using bjtoto's huge cash flow to financial its parent company debt through inter-company loan while Bj-toto get none from interest from it. (if not mistaken in the range of RM800mil). Although it is not against law but is totally unfair to the minority shareholders.

Bj-toto now basically is a 'empty' company after 2 round of capital repayment but fortunately its business nature generate huge pile of cash every year which support its high dividen.

@mod,

I would like to suggest this thread be split to:
1. Investment -General (Comparison between instruments & Strategy)
2. Investment - Unit Trust
3. Investment - Stock

There are lots of good discussion here, but at the later post its too much on focus stock.

Just my 2 cents...

I STRONGLY agree...if this thread can be separated to more specific categories, it's easier for LYN forumers to follow the discussions. Hope the admin or moderators can do something on this...

How bout property investment?? Suggest to move the Property Investment Tread at http://forum.lowyat.net/index.php?showtopic=346639 to here also.

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This post has been edited by lipkhin: Dec 1 2010, 02:37 AM