Wednesday, November 12, 2008

How to pick stock (part 2)

After the top glove investment, it helped me a lot and I had learns some new terms, some of it really affected me a lot, such as ROE, PE, NTA, CAGR and so on which I will describe in more details in another blog later.

Financial term:

1. ROE - a measurement on how many cents the company earned when one dollar of equity spent. The higher it is, the better it is. However, we would need to take into consideration of other things after we take care of it.

2. PE - price per earning ratio. We normally invest based on future PE ratio. It determine when should we buy and sell.

3. NTA: the nta means net tangible assets. In other word, this is a measurement to the clients asset. Normally roe is derived from eps devided by nta.

To be continued...

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