enterprising investor vs defensive investor Archives

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 both see the strong financial condition of the company. This condition helps you to boost your confidence about the investment, so check for the strong financial condition. (Intelligent Investor: Chapter 15)

Earning Stability: Enterprising investors also check the earning stability and this earning increase by 5 % in the positive way. For this purpose, you can consider the previous year’s earnings.

Dividend Record: Great investor of all time is warren buffet say’s, ” Your investment principle get from the dividend, and this dividend you can invest in other company. all your investment money comes in the 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 is 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 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 in 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 give us some other things that every enterprising investor consider.

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 acquire the company, novel discovery, etc. (Intelligent Investor: Chapter 15)

Selecting individual stocks is not necessary: If you are very busy in your work so you can hire a broker for your Investment.

Use virtual money to picks stocks: If you are a beginner in the stock market. Benjamin gram recommends you to practice for one year with the virtual money to picks stocks. After this, you can use your real money for the investment. (Intelligent Investor: Chapter 15)

Index funds: author give the most advice is the buy the index funds with minimum charges and invest in 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: an 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

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Hello friends, today article we see what is the enterprising investor and there quality that help to get success, this qualities form the intelligent investor book, In the article, we discuss the enterprising investing, their quality needs to get success from chapter 6 and 7 of The Intelligent Investor book. let’s see step by step.

Previous Chapter: Click here

Enterprise Investor need qualities to success:

To become enterprise Investor, you have to face to two challenge they are as follows

Enterprising Investing is physically, intellectually challenging
It requires lots of time and lots of energy.

the author gives some knowledge required to become an enterprise investor. an enterprise investor is not doing trading all the days. So for that purpose author give some point regarding the day trading to become an enterprise investor. (Enterprising investor need qualities to success)

Day Trading:-(Enterprising investor need qualities to success)

Day trading as financial suicide: When you are doing trading, we have to sell the share on that day. It becomes some time risk and the maximum time you lose more money, for this reason, the author says about this on day trading.
The broker always makes money: In day trading broker is always makes money, they make money when you buy. And also when you sell the share of the company.
Difficult to Brake even: Day trading is very hard to give up from those things when you doing that. In this process you try to convince yourself to you can do better. (Enterprising investor need qualities to success)
Some bets you win, but most you lose: In day trading some time you win by your luck, and the maximum time you lose the tonne of money in day trading.
Patient investors get to keep almost everything.
Say no to IPOs is probably overpriced: In IPO’s people decide the price of share with his optimistic point of view, they think someone else sits in the market to give me more money on share. So the reality is that market is the Voting machine in the short term and weighing machine in the long term, so say no to IPO. (Enterprising investor need qualities to success)

The author gives us some pointers to be considered as an enterprise investor, they are as follows:

Some knowledge of Enterprise investor: (Enterprising investor need qualities to success)

Pay attention to value, not price: Market is the voting machine in the short term, so pay attention to the value, not on price, price can be fluctuating or manipulate by some trader.
Be wary of stock with good prospects: Buy the good stocks of a company with good prospects.
P/E < = 25: Price earning ratio is less than the 25 not only one year, you can take it for five to seven years of average earning. (Enterprising investor need qualities to success)
Look where others are not looking.
To obtain better than average results, remember: 1) Approach should be different from others 2)Company should pass the test of soundness

After this author gives us some recommendations to looks for the opportunities, they are as follows.

Where to look for opportunities(Three Recommendations):

Relatively unpopular large companies
Purchase of bargain issues: In this, you get the bargain issues by doing Current asset – total Liabilities = intrinsic value, so you can get the good opportunities here. (Enterprising investor need qualities to success)
Special situation: when the bear market time you get the maximum opportunities that have good prospects. say no to the preferred stocks.

After this explanation author gives some advice that relates the ideal word for Intelligent investors. they are as follows.

Some Advice:

Can’t time the market: most people do that but it not run the intelligent investor.
A great company is not a great investment if you pay too much for it: so you need maximum return then buy the small company with good prospects.
The sale and market cap of small company double easily.
Invest in big companies when something goes wrong.
Don’t put all eggs in one basket.
Great fortunes are made by concentration but not stable for the long term, so put your egg with different companies also. (Enterprising investor need qualities to success)

So if you follow this advice you will become an enterprise investor, lastly, the author gives us some recommendations they are as follows: