How to choose stocks for long term investment – Due to the increasing number of stock investors who lose because of following influencers, I want to discuss How to Choose Stocks for Long-Term Investments
For me, stocks are good for long-term storage, look for dividends. if it looks like crypto, just sell it when you make a profit. because the future of crypto is full of speculation. while stocks, the picture is more certain and clear in the future, and the objects are also clear
How to Choose Stocks for Long-Term Investment
Value Investing and Fair Price of Shares
*note: purely for educational purpose
Today, the admin wants to discuss how to choose the right stock to be a long-term investment (more than 1 year).
Previously, I assumed that you already understood the difference between mutual funds, bonds, and stocks. Well, we will only discuss high risk stocks.
If we look at the stock market, there are a variety of different prices on offer. The way to check whether a stock price is expensive/cheap is usually seen from 5 things.
1. PER (PE ratio)
2. PBV (Price to book value)
3. EPS (Earning/share)
For laymen, usually only use 2: PER and PBV
– PER: price-earnings ratio, the formula is: share price per share divided by earnings per share.
– PBV: book price/fair price of an issuer of shares, the formula is: share price divided by BV (total equity divided by outstanding shares)
PER is good, usually in the range of 15-25.
Good PBV, below 1.
How to see it? In each application there is, here’s an example:
The examples above are 2 stocks that are currently being fried by influencers. If we see, the PER of the two shares is still minus, meaning the company is still at a loss.
The two stocks also have PBV above 1, some even go up to 140, meaning that it is very unreasonable.
But, are these two stocks definitely going down? The answer is no because if the stock market is emotional, it can still go up.
Again, stocks with these statistics are unreasonably priced and are not recommended.
Additional tip: you can compare the PBV of a stock with other similar stocks. For example, the PBV is $BBCA (Bank Central Asia), please compare it with the PBV $BBRI (Bank Rakyat Indonesia) and others.
Find the lowest PBV of its competitors.
Some other tips:
1. See company growth per year
2. Compare the company’s current PBV with previous years (check on the IDX website)
3. See the directors and commissioners, are they good or a lot of deceit
4. Never trust influencers
Well, if you have analyzed and found the right stock, it’s time to choose the right time to buy it.
We can do a simple technical analysis by looking at the RSI, this is the easiest for the layman.
It’s easy, you just need to look at a chart like this (in every application there is or you can go to it). http://tradingview.com). Then click the indicator and activate the RSI (Relative Strength Index).
The graph below will appear. Well, the RSI of this stock shows the numbers 56 and 60, buy it?
Don’t, get into the habit of buying stocks when the market is correcting, usually the RSI around 20-35 is the right time.
Every time you want to accumulate shares, make it a habit to buy them when the market is corrected, not when it is bullish (all prices go up).
When can you sell the shares you have purchased? Yes, when the price is in accordance with the book price (PBV). Learn things like this yourself, much more information on the internet like investopedia.
Characteristics of a Stock that Easily Rebound
1. Have good price fluctuations
2. Not sideways for a long time
3. Stocks that have an upward trend in the long term. Besides that, what else do you think should be paid attention to to assess stocks that are easy to rebound?
Again, don’t be fooled by influencers.
All stock samples are here for education, hopefully we will be wiser and the news of the loss of playing stocks because of influencers can be reduced
A few ways to choose stocks for long-term investment