Produced by: BT Desk Designed by: Manoj Kumar
According Colin McLean, changing market conditions can sometimes impair signal-to-noise ratio, which makes it important to look closely at emerging economy politics, currency moves
McLean says investors should buy stocks they can live with. "If you cannot stand day-to-day share price volatility, you will only end up selling out a stock at the worst time and lowest price."
McLean says share prices will not tell you what risks a company is running, or how good it is. "A fall in the share price does not mean it is now cheap; a rising share price does not make a company good."
McLean says one must focus on the stocks you hold, rather than worrying about missing out on performing stocks you don’t own
Some industries will never earn more than 2% on sales, others 30%. Lots of sales are not the same as value - look at operating profit
McLean says given low liquidity and limited research coverage, it is dangerous to buy small companies unless they are likely to become big.
McLean says investors should understand the business model, and the key factors involved in a company making money.
You need to look much harder for what the negative view is. It is very important in owning a stock, not only to have a view of your own analysis. But to try to understand where the consensus is. If there is a disconnect between your analysis and what is happening with the share price, you need that contrary view into your own mindset.