My 5 simple steps will lead me to simple but effective value investing. My way to minimise the risk and maximise the gain.
Step 1: Check the PNL. Profit? Potential turnaround to profit?
Step 2: Check the cash flow. Where is the money generate? Where is the money go?
Step 3: Check the Balance Sheet. Is it only left the shit (e.g debt)? Cash status? Retained earnings for potential bonus issue? NTA vs price? Fair value vs price vs NTA?
Step 4: Check the price status? Which wave? Uptrend? Downtrend? Consolidation? At peak? Measurement of margin of safety?
Step 5: How is the outlook of the existing business and any potential sales pipeline?
If score 1 or 2 points...forget it
If score 3 points...monitor closely
If score 4 points...collect slowly
If score 5 points...full force...sai lang
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