A Guide to Safe Investment in Stock Market
A growingly-popular type of investment these days is investment in stock market. In Indonesia, the Composite Stock Price Index (IHSG) has even hit a historic record of above 3000.
No wonder people now flock the exchanges stock market to “try their lucks”. With many investment management firms there to help individuals make their investment, investing in stock become much easier.
However, are you aware of the risks of investing in exchanges stock market? As they say, “high risk high return”, the risk of loss here is indeed quite huge.
To keep your profits at maximum level, the world’s king of stocks, Warren Buffet, said in an interview: “Firstly, if an investment looks very good, MAYBE it is actually good. Secondly, always see how much one has earned before they help you. Thirdly, don’t get trapped in debts.” Sounds Simple. But, with those rules in mind, Warren Buffet is one of the world's wealthiest pesrson.
Here are some other things that Warren Buffet takes into consideration to ensure his investments in stock market…
• Does the company operate in an industry with a good economy, or is it an industry based on price competition?
• Does the company monopolize the consumers, or does the brand have high loyalty to the consumers?
• Can another companys with abundant resources compete successfully with the company?
• Has the revenue been continually increasing with good and consistent margin?
• Is the debt-to-equity ratio or profit-to-debt ratio high? This is to indicate whether the company will be able to pay its
debts even during years when they earn less than average.
• Does the company have high return and is it consistent with invested capital?
• Can the company maintain profits for its growth?
• Does the company invest its revenue for better business opportunities?
• Does the management of the company have good track record?
• Does the company flexibly adjust its prices during inflation?