Week Five: How to Pick Stocks?

Hi there,

   This time we had a special guest. The economics teacher, the philosopher, the gardener – the one and only, Mr. Jerome Lee. Besides that, he’s pretty good in shares/stock market thingy. So here’s a small recap of today’s meeting,

   1) Begin with sorting all the shares into appropriate industries, e.g. banking, insurance, mining, pharmaceuticals etc.

   2) Then look at the PE ratio (read more here), which basically tells you how much market confidence there is in a particular company. High ratio indicates stable growth and confidence, whereas low ratio signals low performance and no confidence. Keep in mind that’s just a huge generalization.

   3) And that’s that – later on we discussed options (read more here), contracts between buyers and sellers that give buyers the right, but not the obligation, to buy or to sell particular assets (theunderlying assets) on or before the options’ expiration time, at agreed price.

   4) Jerome also briefly mentioned that ‘in 2010 there will be no growth, stock market will go down again, whereas properties won’t pick up in prices until 2017’ (quoting for future references, I personally think the opposite will happen)

   5) And Jerome’s top tip: look at what is happening to the USD. Basing on the performance of this currency, made your decisions.

Cheers,
John A62