Global stocks have experienced significant corrections over the past 1 year, many stocks including blue chips are at attractive low prices, start to recover now. How to screen for undervalue stocks which we could invest safely?
Benjamin Graham, the first teacher of Warren Buffett, taught him on value investing, i.e. buying at much discounted price for a stock compared to its intrinsic value. The primary indicator is to compute net asset value (NAV) or book value of a stock, buying below this price. The ratio of share Price to Book value (PB) ratio, if less than 1, discount is given. This method is very suitable for banking/finance and property sectors because their main assets (cash / property) do not depreciate easily with time. For stocks from other sectors, it requires a more advanced strategy to give a discount for different types of assets recorded in company balance sheet.
Hong Kong Land (SGX: H78) is a good example, PB is about 0.5. The stock is currently on sales at 50% discount for its Grade-A commercial properties in major cities of Singapore, Hong Kong and China. This giant stock has been recovering from low optimism. There are many other property stocks in Singapore at huge discount but it requires next level of filtering to find a stronger one. An investor has to combine PB strategy with Optimism Strategy developed by Dr Tee, understanding how much discount over PB is required to safely buy a giant stock.
This simple but powerful method is also applied by company during acquisition process to estimate the reasonable offer price, buying good business at discounted price. A stock investor should learn how to buy undervalued stocks to maximize its growth potential.
When Optimism Strategies are combined with Fundamental Analysis (value investing & growth investing), Technical Analysis (support / resistance / trends), and Personal Analysis (mind control of greed and fear), it is very powerful when one is able to take the right action (Buy, Hold, Sell, Wait or Short) at the right time aligning with own personality.
The unique Optimism Strategy developed by Dr Tee provides a special advantage to know which investment (stock, forex, property, commodity, bond, etc) to buy safely, when to buy, when to sell, including option of long term holding. So far over 10,000 audience have benefited from Dr Tee high quality free courses to the public. Take action now to invest in your financial knowledge, starting your journey towards financial freedom.
Brexit has created new stock trading and investing opportunities globally. At the same time, British Pound is severely corrected, one could apply Forex Optimism to maximize the gains in stock market. The fear factor has supported the bullish gold price and gold related stocks (eg. gold miners), analysis with Commodity Optimism is needed. Every crisis is an opportunity, provided one knows how to position.