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Investing in stock market

+2
milanka
wis
6 posters

Go down  Message [Page 1 of 1]

1Investing in stock market Empty Investing in stock market Fri Feb 11, 2011 6:25 pm

wis


Manager - Equity Analytics
Manager - Equity Analytics

When you read about investing in shares, what they say is buy good businesses, diversify and keep it for like "5 years".
Is this valid for post-war Colombo stock market? Or is the short-term buy-and-sell trade the only thing left?

2Investing in stock market Empty Diversify Fri Feb 11, 2011 6:43 pm

milanka

milanka
Vice President - Equity Analytics
Vice President - Equity Analytics

The general accepted norm is not to put all the eggs in the same basket which means diversify. In other words from one share you may loose and from another you would win .

http://forum.srilankaequity.com/u188

3Investing in stock market Empty Re: Investing in stock market Fri Feb 11, 2011 6:51 pm

wis


Manager - Equity Analytics
Manager - Equity Analytics

yep, but the thing is, "keep it for 5 years", is this valid for "Colombo" stock market? Or current stock prices have already taken up several years of growth to a couple of months so that in the long term prices would just go up and down without a consistent growth like in stocks markets. That is, has the seller has already taken up years of profit already.

4Investing in stock market Empty Investing in stock market Fri Feb 11, 2011 7:21 pm

Antonym

Antonym
Vice President - Equity Analytics
Vice President - Equity Analytics

My investment advisor has a general principle for identifying countries to invest in:
If Market PE Ratio is less than 2 times the country's growth rate, the stock market is probably underpriced and there are likely to be many companies worth investing in.
What do you think? How does Sri Lanka stack up on this? Can we consider a projected growth rate of 7.5%?

5Investing in stock market Empty Re: Investing in stock market Fri Feb 11, 2011 7:52 pm

wis


Manager - Equity Analytics
Manager - Equity Analytics

Growth rate is estimated at 7%
That gives a good PE ratio of less than 14
But average PE is like 18
Doesn't look good for instance when you consider even consumer goods shares like CARG going around at 50, NEST 20. Same mouths to feed, even with shrinking to budget packs
Does that mean the market will have no long term "growth"?

6Investing in stock market Empty Re: Investing in stock market Fri Feb 11, 2011 8:33 pm

tubal


Vice President - Equity Analytics
Vice President - Equity Analytics

wis wrote:Growth rate is estimated at 7%
That gives a good PE ratio of less than 14
But average PE is like 18
Doesn't look good for instance when you consider even consumer goods shares like CARG going around at 50, NEST 20. Same mouths to feed, even with shrinking to budget packs
Does that mean the market will have no long term "growth"?

Spot on wis, except for the fact that 18 is the forward PE. No one hardly mentions the trailing PE now. I myself have forgotten the exact figure I guess that's what's happened to you too. I have a hazy memory of some absurdly high figure though.

7Investing in stock market Empty Re: Investing in stock market Fri Feb 11, 2011 8:51 pm

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics

look it's entirely unfair to judge the quality of the market by looking at average numbers. A lot of the problem here is that the large caps are trading at an absurdly high PE. That doesn't mean that there aren't any worth while stocks to invest in. And with all these IPOs coming in there will be alot less to worry about. Remember this the S&P 500 is trading trading at a PE close to 25 and it doesn't look like its about to crashing. at the end of the a stock is worth how much the next person is willing to pay for it. If there aren't any major macro-economic demons there is little to worry about the CSE in the future

8Investing in stock market Empty Re: Investing in stock market Fri Feb 11, 2011 9:38 pm

wis


Manager - Equity Analytics
Manager - Equity Analytics

No no I wasn't talking about crashing, What I mean is in the long term if you invest in good businesses like JKH, COMB and many others, and let's say current price is Rs. 100, in a stock market it should gradually add value like in the next few years going 115, 132, 152 ... This is at 15% growth rate for example.
But in CSE will it be like 100, 101, 103, 106...

9Investing in stock market Empty Re: Investing in stock market Sat Feb 12, 2011 12:52 am

Antonym

Antonym
Vice President - Equity Analytics
Vice President - Equity Analytics

@Mono: You've made some valid points, but where did you get the 25 number from?! The S&P 500 is at a forward PE of 13.3X.

From a relative perspective, the CSE looks expensive (forward PE: 18?). There are more attractive frontier markets available, which explains why the foreigners have been selling. Given a choice between Eastern Europe and Sri Lanka, for example, frontier funds would prefer the former because it has a more favourable PEG ratio.

For now, I am going defensive - restricting my portfolio to shares of profitable companies in Sri Lanka whose prices are justified by their underlying assets. You know which they are... Wink

10Investing in stock market Empty Re: Investing in stock market Sat Feb 12, 2011 1:25 am

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics

i got the PE from here
http://www.multpl.com/

11Investing in stock market Empty Re: Investing in stock market Sat Feb 12, 2011 1:48 am

Antonym

Antonym
Vice President - Equity Analytics
Vice President - Equity Analytics

@Mono: Thanks, that looks like the historical PE... Here's my source for the forward PE.
http://www.derekcooper.ca/?p=655
(Something's not quite right, no? Unless these companies' profits are expected to grow by 80%!)

12Investing in stock market Empty SL The Best performing market 2010 Sat Feb 12, 2011 2:10 pm

RockStock


Manager - Equity Analytics
Manager - Equity Analytics

https://www.facebook.com/video/video.php?v=1840277452683&oid=302440998300&comments

13Investing in stock market Empty Re: Investing in stock market Sat Feb 12, 2011 5:18 pm

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics

Antonym wrote:@Mono: Thanks, that looks like the historical PE... Here's my source for the forward PE.
http://www.derekcooper.ca/?p=655
(Something's not quite right, no? Unless these companies' profits are expected to grow by 80%!)

I was going with historical PE for S&P because the market was holding this current PE even before the recent reports were published.

but i think you get my general point

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