Stock market investment rules

The stock market investment rules are listed below:

1. Make investments in the larger companies with price-earning ratios (P/E) of 10 or below.

2. Keep investments limited to the top 2 – 3 companies in each industry or service group.

3. Invest in companies operating in high growth (or sun rise) industries.

4. The price-earning ratio and earnings per share are important tools to estimate the fair value of shares.

5. High price-earning ratio implies that: super growth is expected in the company’s earnings in the near future; investor confidence is high; and watch out for low earnings per share ( an earnings per share of 15% of par value of a share is reasonable).

How to Analyze Stocks

Analyze stock Bursa Malaysia

• Company and Industry Overview

Find out something about the company’s business and its industry.
It may be in a business or market sector that you favor or that you want to avoid. For instance, the home building industry usually prospers when interest rates drop and suffers in a rising interest rate environment. So your take on the future direction of interest rates would influence how you view homebuilders.