Happy Year of the Monkey! In my last post, I talked about participating in this crude oil opportunity through buying crude oil-related shares. With all the crude oil-related shares taking a hard beating, the next question is: How to pick stocks that will eventually go out of business? I think the key to profit from the panic is to buy stocks that will not go bust and hold them tight tight till the stock price rebounds, right?
Buying ETFs suits this strategy really well. ETFs won't go bust. And for instance, STI ETFs sort of follows the STI. So I can participate in the eventual stock market rally without spending too much time analysing company stocks.
Now that I don't have a choice, timely that I revisit stock picking criteria too.
Let's discuss stock picking criteria using the 4 stocks I mentioned in my last post: Sembcorp Ind, Keppel Corp, Ezion and Nam Cheong.
Criteria #1 Company has solid backing
Essentially, whether the company has sound management. A company with good management can do magic and turn the tides during bad times. But too bad my level not so high, I don't know most of the people running these companies. On paper and especially in pictures, they all looked like super smart people with damn good credentials.
Then I look 1 level up. Government-linked Temasek Holdings owns 49.5% stake in Sembcorp Ind (Dec 2014) and 20.43% stake in Keppel Corp (Nov 2015). Trust me, some of Singapore's brightest minds are in Temasek Holdings. They must have done their due diligence before buying these companies. And I don't think they are thinking of selling them (yet). In fact, big mama has been thinking of ways to increase cash flow for them.
(to be continued...)
photo credit: Heerema Hermod via photopin (license)
