彼得·林奇的成功投資 (One up on Wall Street - Peter Lynch)

Just scanned the book, and impressed by the suggested idea of identifying investment target from daily lives.


I tried to summarized the stock-picking tips as follow:

1) PED <=1, the higher growth rate the better
2) debt/equity < 1/3
3) consistently growing dividend
4) high earning before tax
5) high level & proper usage of cash
6) high free cashflow (cashflow less capital expenditure)
7) inventory should not grow faster than sales revenue
8) pension asset >= pension liabilities
9) high operating profit margin (for long term investment target only, may not be true for short term)
10) buy right stock at the right price, sell only when the fundamentals deteriorates. (e.g. for blue chips, sell when p/e much higher than industrial average)

The Little Book That Beats the Market

Just reading the book of "The Little Book That Beats the Market", which suggests a simple method for stock picking with two criteria:
1) high return on capital by EBIT/(net working capital + net fixed assets),
where EBIT = operating earning or earning before interest & tax
(net working capital + net fixed assets) = total tangible asset - non-interest bearing loan
2) high earning yield by EBIT/EV
where EV = enterprise value, = (market value of equity + net interest-bearing debt)

The author quoted that this simple approach has worked extremely well over the years.
Over the past 17 years, owning a portfolio of about 30 stocks that had the best combination
of a high return on capital and a high earnings yield would have returned approximately 30.8% per year.

remarks: the author suggests to eliminate non-US stock, utility & financial stocks (banks, insurance companies, mutual funds etc) when using the criteria.
=============================================================

personally, i think these two ratios can help picking companies with good operating efficiency.

however, i query if the ignorance of debt may be a problem.
Take the following example:

	Company A	Company B
Sales	100	100
EBIT	10	10
Interest expense	0	5
Pre-tax income	10	5
Taxes (@40%)	4	2
Net income	6	3
Equity	100	50
Debts	0	50

Assume no goodwill, no non-interest bearing loans, and market value of Equity equals book value,
the ratio of EBIT/(net working capital+net fixed assets) of both Company A & Company B
= 10/(100) = 0.1; the ratio of EBIT/EV = 10/100 = 0.1 as well.

However, investors of the Company B, which is more risky due to higher leverage, should demand a higher return.

基金 vs ETF?

上回提及多位財經友人都不願投資基金，即使强迫選擇也只會選管理費成本較低的交易所買賣基金 (ETF)。

交易所買賣基金多追蹤某股票指數作被動式投資，如盈富基金 (2800)追蹤恒指表現 。不過，即使投資同一市場，由於追蹤不同指數，基金表現也可能有很大分別。


(擇自萍果日報)

另外，由以下比較圖可以看到，一隻表現優異的開放式基金，相對指數基金而言，長遠能為投資者帶來越倍的回報。


(擇自中銀香港網站)

基金 vs 股票

與多位熟識股票投資的朋友傾談，發現他們都抗拒投資基金，原因多是認為基金收費高，自行選股能達到更好回報。

不過，筆者認為基金可分散風險、分享海外市場回報，應是整個投資組合的重要一環。

回想十年，亞洲金融風暴期間，香港以至整個亞太區股市皆受震燙，同期歐美市場却不受影響，可見全球市場並非完全關聯 "perfectly correlated"。




雖然近一、兩年中國市場己成全球焦點，中國相關股份被普遍認定為是最有前景的投資對像。但環觀其他新興市場如東歐、亞太區、印度以至拉丁美洲，過往數年指數升幅並不遜色。

另外由於直接買賣外地股票成本不輕，基金是低成本分散風險及分享回報的好工具。