Sunday, 16 February 2014

Is best really the best ?

As an avid reader on articles written by Senior Correspondent Goh Eng Yeow , today section on small change was on " In Investing , stick to the best companies ."

Mr Goh Eng Yeow cited in any successful investment strategy , the key rules are buy into only the best companies and stick to business sectors which enjoy predictable earnings and higher than average growth , and pay a fair  price for the investment .

He gave an example on CNBC Jimmy Cramer who enthralled with Florida orange grower which he knew next to nothing about the business , bought 10 shares of it , made a loss due to frost hit that wipe out the crops .Cutting his loss , he invested into another clothing firm which further halved his capital when the company reported a set of poor earnings.

Jimmy Cramer reflected and came to conclusion that he does not know much about the business which he invested . This perhaps struck it off as chasing the " best sexy hot " stocks for immediate gains and helping the brokers with their commission income effortlessly .

To summarise  , the quality of earnings growth over long term will determine the company's fortune , not the quarterly profit figures that send analysts high nine . Some of the best investment ideas may came from observing the habits of consumer , or things near round you . ( This maybe something we tend to overlook when we focus on things too much that we do not know and forget about things we knew) .

Best is rather subjective on individual aspect , as different investors valuate differently.  

More importantly is ....