So what are my strategies in picking the stocks to invest? As I mentioned earlier, I will use a fundamental approach instead of technical analysis. There are two things I am looking for:
i) the past performance of the business and its outlook in the future;
ii) the valuation of the company at its present price.
There is no specific industry which I will concentrate on but I will look into a company with a simple business model. This means I will most probably not going into banking, properties and technology counters. I am also more inclined to look into small to mid cap companies with potential to grow. To me, this means that the company must have exposure to oversea markets and China is one country where there is a lot of potential. Of course this does mean that risk is higher since I will not be able to have an actual feel of the market and there is always an inherent risk of creditability of China companies. However, this is the risk that I will have to take and be more prudent in analyzing the companies’ reports. This again works on the assumption that the reports are genuine and there’s no manipulation of figure. How would I know? I won’t but if I don’t believe the creditability of the report, then there’s no point in carrying on with the analysis.