Hello friend, in today’s article we see chapter 15 of the intelligent investor book. In this chapter, benjamin gram discusses the enterprising investor criteria. These criteria help you to become an enterprising investor in-stock selection. Let’s see chapter 15 of the intelligent investor book.
6 Criteria for the stock selection:-Intelligent Investor: Chapter 15
- Strong financial condition: Each and every investor those are a defensive investor or an enterprising investor sees the strong financial condition of the company. This condition helps you to boost your confidence about the investment, so check for a strong financial condition. (Intelligent Investor: Chapter 15)
- Earning Stability: Enterprising investors also check the earning stability and this earning increase by 5 % in a positive way. For this purpose, you can consider the previous year’s earnings.
- Dividend Record: Great investor of all time warren buffet says, ” Your investment principle gets from the dividend, and with this dividend, you can invest in other companies. all your investment money comes in dividend form, so check for the dividend record. “
- Earnings Growth: with a dividend record enterprising investors also check for the earning per share i.e. earning growth. This EPS increased by 4% in these years as compared to the previous year.
- Moderate P/E ratio: You can also for the price-earning ratio. this ratio is not more than 15. If your price-earning ratio is more than 15 so don’t buy that company’s stocks. This type of company takes money from the investor for the trading event. this type of event can be changed every time. (Intelligent Investor: Chapter 15)
- Moderate P/B ratio: enterprising investors also check for the price-book ratio. this ratio is not more than 1.5. and also make calculations between the p/e ratio and p/b ratio it’s multiple is not more than 22.5.
we see the 6 criteria for stock selection for the enterprising investor, with this author, gives us some other things that every enterprising investor considers.
how to become a value investor
Other things to consider:
- Net-Net result: enterprising investors see the net-net result that means current asset – current liability. making this calculation you get the exact condition of the company.
- Special situations: enterprising investors check for the company’s special situations like acquiring the company, novel discovery, etc. (Intelligent Investor: Chapter 15)
- Selecting individual stocks is not necessary: If you are very busy with your work so you can hire a broker for your Investment.
- Use virtual money to pick stocks: If you are a beginner in the stock market. Benjamin gram recommends you practice for one year with the virtual money to pick stocks. After this, you can use your real money for the investment. (Intelligent Investor: Chapter 15)
- Index funds: author give the most advice the buy index funds with minimum charges and invest them each and every month.
after this author gives us the two traits of an enterprising investor, those are as follows:
- Disciplined and consistent: Don’t change your approach even if it is unfashionable regarding stock selection.
- Pay little attention to what the market is doing: enterprising investor has to focus on what they need to do and how to do it. (Intelligent Investor: Chapter 15)
this is all about the enterprising investor traits and criteria
Next chapter: Click here
Read More: One Up On Wall Street book
Read More: Common Stocks and Uncommon Profits book