QUOTE(Soulsareworthless @ May 2 2009, 02:23 PM)
You prefer penny stocks with higher beta values?
If my goal was just to get dividend, no. If i'm not mistaken, sustainable high dividend stocks are usually stable, they dont fluctuate much in relation to the overall market.
If im a speculator, yes Id go for volatile penny stocks.
Since virtualgay mentioned his goal was sustainable dividends, and I'd suggest not buying into only one counter. The reasons are:
1) Diversify, in case something happen to that company. In the case of BJTOTO, Govt may inc taxes, or some states may ban number forecasting thereby some risks there.
2) he mentioned "I am not aiming high.. just enough for me to cover my montly expenses will do...". Buying into 1 counter will pay dividends quarterly/half yearly. But if u really need some cashflow on monthly basis, u can plan(rough estimate) the dividend payout periods accordingly.
I'm still new in this investing field. All the sifus please correct me if im wrong.
QUOTE(elhh82 @ May 2 2009, 02:59 PM)
That is not the right way to determine if a share is expensive or not. Other values like EPS etc are the right gauge of how expensive a share is.
Most of the "cheap" shares are priced low because,
1. the company is worth very little, or has very little potential (sometimes they are undervalued of course)
2. the company has many shares listed, so when you buy 1 share, you are buying only a very very small piece of the cake.
Many companies like to exploit this incorrect assumption on the side of investors to boost their trading volume. They keep splitting their share over and over and over, so the shares are "cheap".
Think about this, would you buy 1 whole cake at RM10 or will you buy one slice of cake (whole cake cut into 10) for RM1.5? Which one is cheaper?
Sry about making a very vague statement there about 'expensive'. I did not mean 'over-valued', but more like 'high price' in the sense that the no. of shares you own will be low and its harder to diversify.
I agree with you, companies split shares just to make their share more 'speculation-friendly', similar to wats goin on in KLSE now. Imagine Genting at rm40, resorts at rm23, knm at rm2 - I would think they wont be speculated that much.
Btw, I usually judge the value of a share by P/E and if Im not mistaken that how research houses value shares too. Correct me if im wrong.
To me,
PE around 10, price is normal.
PE at 20 or above, expensive.
Again, all this depends on many factors like the industry it is in, whether its a speculated stock, its fundamentals.
This post has been edited by ks3114: May 2 2009, 05:34 PM