Stock investment tips for beginners

"Stock investment" is something quite interesting in the field of business. due to the investment shares of a careful, we can benefit doubled in an instant.

Most of the people we never heard the word "stock" but often that still leaves many questions in his mind. For example, if investment in shares can be done by individuals? Or, if my income is less than Rp 5 million per month, can I invest in stocks? Or, if I want to invest, what stage and who should I contact? Well, because there are some emails that ask similar questions, then I might as well write it here.

As we all know, stocks are securities which shows the ownership of a company. You buy a stock means you buy part ownership of the company. During the company's operations and recorded a gain, you are also entitled to share in the form of dividends. You can also take advantage of the rising price of these shares from time to time. For more details, please download and learn the Indonesian Stock Exchange publication. 

How to Start?
Before you begin investing, you should open a securities account in advance through a securities firm registered as a member of the Indonesia Stock Exchange (BEI). In addition you are required to deposit a number of deposits which can vary between Rp 10 million - USD 50 million. Individual securities are different from each other - there that offer full-service, there are only serving the buy-sell it. There is also a securities firm which provides online brokerage services, so you can make buying and selling via the Internet. Some of them are:
    * Securities Etrading
    * Indo Premier Securities
    * Phillip Securities Indonesia
    * Samuel Securities Indonesia
    * Sarijaya Permana Securities
    * Supra Securinvest
The full list can be viewed at this site: http://www.idx.co.id/MainMenu/Brokers/BrokerageProfile/tabid/72/lang/en-US/language/en-US/Default.aspx

Once you fill out the form, complete the requirements and administration, usually 2-3 days, then you can start investing. The amount of fee for the transaction of about 0.2% to 0.3% for buying and selling. Securities firms typically allow you to trade 2-3 times the value of the deposit that you deposited. Funds are usually transferred to / from your account on T +2 (buy) until T +3 (sell).

However, you also need to be careful with the broker. They are paid on commission and purchase-sale - no matter your profit or loss. Rogue brokers often use your funds without permission to do trasaksi own. In addition, some brokers (brokerage) also act as underwriters (underwriter) when a company registered in the stock. For reasons of marketing, they have an interest to keep the stock price is still "good." Therefore, do not make recommendations of analysts as a major source of investment - but as an input only. The best, of course, do your own homework!

Fundamental & Technical Analysis
In the investment world, there are 2 methods commonly used as a tool, namely fundamental analysis (FA) and technical analysis (FA). FA to assess stocks based on fundamental condition of the company itself, therefore, FA is more suitable for long term investment. A true FA usually does not merely analyze financial data, but also came to the targeted company, speak with management and owners, saw the vision, mission and strategic plan forward, and so forth. Not infrequently a true FA to fly all over the world to extract information directly from the company.

Meanwhile, the TA to assess the stock price based on the reflection of prices in the past with reading the sentiment, trends, and projections that may occur in the future. The TA will help you memerkirakan direction of price movement, making the boundaries of movement in certain circumstances, and indicate the target direction and its risks. TA is typically done with the help of software applications and many exploit graph (chart). Due to the nature and character, TA is more suitable for trading (speculation) in the short term or protection (hedging).

Particularly in Indonesia, there are some people who enter bandarmologi analysis (BA) as one of alternative tools. In summary, BA is done by searching a specific rumor and whisper, and then riding the airport when they would fry a share. BA is only appropriate to be done within a really short - and you have access to discover which stocks are ready to be fried.

Fried (cornering) is the action being undertaken to manipulate prices by creating a very high demand for these shares. After its share price target over a certain point, they then sell to achieve capital gains. Stocks fried food is usually a two-three-tier stock whose distribution is not much and the price is relatively cheap. They can go up and down with very dramatically for no apparent reason and the stock price does not reflect the actual performance.

Which is most appropriate? Each is only a tool that will be useful when used by the right people at the right time as well. I myself prefer the FA because my philosophy is to buy shares in order to have the company. So far, all calculated only with a calculator (or phone) and recorded on paper / folder without any special software. So far, I have not ever sell the shares I ever bought.

If you're interested in learning more fundamental analysis, please read the book The Intelligent Investor by Benjamin Graham, published by HarperBusiness Essentials. Originally, the book was published in 1973, but rewritten in 2003. Book Henry Markowitz, Portfolio Selection: Efficient Diversification of Investments, published by Yale University Press also deserve to be a reference.

In the meantime, if you'd prefer to technical analysis, I suggest you read the book Technical Analysis of the Financial Markets by John Murphy, published by the New York Institute of Finance (1986). There is also a suggested book Technical Analysis A to Z by Stephen Achelis (2003) - but I've never read. About bandarmologi analysis, so far seems to have no special writing a book about it. :)

Selecting Superior Stocks
Once your stock account is ready and you can make sale or purchase of shares, then the hardest part of the investment is to choose a hero who will give the best results for us. Because the stock is a sign of our ownership of the company, so it's good to think like business owners (business owner). Before determining which companies are willing to buy, do an investigation prior to the fundamentals of the company that you seek.

There are hundreds of companies listed in Indonesia Stock Exchange (BEI). You can start by sorting the companies with which you understand the field of business or companies that have products and superior service. Choose a company that you expect to continue to grow for 10, 20, 30 years into the future. Furthermore, the sorting based management and owners. Choose a company that is managed by a capable management team. Avoid companies that have a trend of "strange", for example, when a coal company coal commodity price rises but its stock price declined.

There is also a good idea to choose a company owned by government or professional well-known business group. Government-owned company (SOE) is usually "required" for profitable and contribute to the state through the receipt of dividends. Avoid companies that are owned (managed) by business groups that have less good reputation. Be careful because they not infrequently do the manipulation of financial statements or perform tricks rough financial engineering.

Warren Buffett advised to select companies that have economic moats, or competitive advantage that is difficult to be imitated by competitors. Economic moats could be advantages in the form of brands (brand strength), cost (cost efficiency), switching ("difficulty" to switch to products / services), or the protection (protection of patents, property rights, government regulation, etc.). Economic moats will make the customer willing to pay higher. Therefore, companies that have good economic moats will be more profitable and still be growing - even if interest rates or prices are rising.

Some people also recommend to buy big companies berkapitalisasi (bluechips) and a liquid and often dijualbelikan (LQ45). Note also if the company plans to repurchase (buyback) of their shares. Usually it is a sign of their shares more cheaply valued and have good prospects in the future.

Still confused as well? Maybe you can get a little "cheat" a portfolio of stock mutual funds so far have moncer performance. Stomach contents of such mutual funds can be seen from the annual report and / or their prospectus. You can use their portfolios as guidance for selecting companies that will be where you invest.
Well, if you sort the several hundred companies listed on the BEI, so until this stage the remaining options may live only 20-30 companies. Find more information about the actual condition of these companies, such as from employees, clients, suppliers, or accountants who audited the company. When you have time, visit the company in order to get a more complete picture. If not, then you have to "make sure" that the financial statements already reflect the real condition of the company.

Read the financial statements and annual reports companies that you seek. You can find it here, here, and here. Alternatively, you can also download the relevant company web site.
Choose a company with a return on equity (ROE) of more than 15%. This illustrates how the management capability in managing its equity. If ROE is only around 8-9%, then invest in these companies is tantamount to saving money in time deposits.

Next, select the companies that profit growth (earnings growth) is stable ranging from 20% or more. Select is also a company that has a ratio of debt to equity ratio is relatively low and the low price per free cash flow. That is, firms can generate large amounts of cash to finance its operations and its expansion without the need to rely on external loans to high cost. The ratio of debt / low capital that also enable the company to generate cash flow in a more healthy and not too sensitive to movements in interest rates.
Until this stage, may live only 10-15 companies are left in your hand.

Predicting Stock Prices Fair
Assume you've found the best according to your company 10-15. Then, how to determine the price of these shares? First, determine the earnings per share (EPS) and the trend growth for the next 5 years. If growth is above 15%, 15% use rate, whereas if growth is below 10%, 10% use rate. Multiply to see the future value at the end of the fifth year.

After finding the EPS at the end of the fifth year, multiply it by the price earnings ratio (PER) for the year. PER for the year is calculated by a simple rule if the PER is less than 20%, 12% use rate if the PER of more than 20%, 17% use rate. So far, research shows very rare company posted a higher PER of more than 17% over the years. Once multiplied, you will find the estimated share price at the end of the fifth year.
Next, determine how much actual value of the shares. The trick, add an estimated share price at the end of the fifth year in dividends received. Dividends are calculated by summing over the five-year EPS multiplied by the dividend payout ratio (DPR). Having met the fair value of these shares at the end of the fifth year, stay discounting to present value with the target (hurdle rate) that we want.

Simulation of Fair Value Shares
Consider the following examples. By using the hurdle rate of 15%, which assumes the company's stock return of 15% will provide continuous, TLKM shares may be purchased under the price of Rp 10,500. While the hurdle rate of 20%, TLKM shares to be purchased under the price of Rp 8,500. Well, if the current price of Rp 9,700, if the expected return of at least 15% per year, you can buy now. However, if you expect a return of at least 20%, you have to wait until the price fell to Rp 8,500.

Of course these calculations are still very rough. I also calculate only with doodles. In addition, the rate that I use very conservative because many of these stocks have a growth in EPS and PER is very high. Could be, the price of which later formed far beyond calculation. But at least the above simulation can be a reference to estimate the fair price of a stock.

After finding the best stock 5-7 that meet your hurdle rate and is trading below its intrinsic value, buy as much as you can. Hold for a long time. Insha Allah your investments 4-5 years beginning to show results.

Last but Not Least
Invest your time before invest your money. Before entering real, it's good to spend time studying, reading books, workshops, and dig up more information. [Campaign: I'm writing a detailed book about the stock. Please prayer of blessing, hopefully resolved soon.

Do not forget also the basic rules of investing: buy good companies at discount prices. Do not be Afraid to wait. Find a good timing that allows you to buy at cheap prices, for example, the months from January to February. If you can buy cheap, although prices are not rising, you keep doing the "best buying" and still earn potential profits through dividends.

How movements rise and fall with the price? I myself was not too concerned. John Bogle, in his thesis while still at Princeton, said that in the short term prices will always move to the psychology and market sentiment. But in the long term, prices will reflect the fundamentals of the company itself. During our shots telling, in the long term, he will give a considerable advantage for us. Do not be tempted to come and go just because of price fluctuations. You better focus on other work or look for alternative income to invest back into your portfolio.

Despite sounding cliched, do not forget to always pray for guidance in making the analysis and the best investment decisions. If your investments are successful, do not forget to set aside at least 10% of your profits for those who are less fortunate. If there are others who are interested in trying to follow your footsteps, do not hesitate to share knowledge and experience.