“The greatest opportunities in the markets come at times when investors desert them in droves. The end of the biggest global stock market bull run in history at the beginning of the new millennium caused many investors to shun equities but this is the one investment class that has outperformed all others over time.”
- Steven Vine
There are endless possibilities of opportunities for a zero-to-hero status change on the Nigerian stock market if one is versed or savvy enough to apply the right tool over the right information and be patient enough to watch/monitor his investment/trade to achieve the desired result. There are so many ways to achieve this but the most effective and result-oriented approach is what I call the “Maverick Value Strike System” *(MVS SYSTEM) and is identified by this formula:
Locate intrinsic value – margin of safety = Entry Point (MVSS)
To locate the intrinsic value of any stock you have to calculate with this formula thus:
P/E (Price earning) ratio X EPS (Earning per share) = Total Obtained (intrinsic Value.)
Then compare the total obtained with the current market price/value to arrive at a destination scenario below:
*If the obtained result (intrinsic value) is lower than the current price, the stock is under-valued. But if the reverse is the case, when total is higher than the stock’s current priced, the stock is said to be over-valued.
This approach could be further used to get BEST VALUE STOCK by doing same over different sectors in the stock market, picking the best rated on each and then doing a comparative analyses on them by matching the best of the best of each competing sector begging for your money and casting your lot with only the best and keep the very top seeds of the better on your watch list.
Practical Session: Calculating the Intrinsic Values of Companies and Applying Margin of Safety to Determine Best Buys.
Applying the above formula over each stock in a given or selected sector, then doing comparative sectors analysis to determine the most-undervalued stocks and sectors and then applying the margin of safety rule will greatly enhance your stock picking skills and reduce the incidence of market panic that is associated with the spur-of-the- moment buys of stocks and its attendant seed capital losses.
TOOLS FOR THIS TASK:
I implore you to visit www.fsdhsecurities.com and subscribe to their daily stock market report- It is Free. You will be receiving daily report to your email box at the close of each trading day.
On this report at the first page which is the closing share price, at the heading bar you will find divided sub-data categories, about 24 in all (numbered in the sequence of alphabets B-Y). Each category is important but for the purpose of the task before us, we are to concern ourselves only with the following data categories which are the major mechanism on which the MVSS™ strategy thrives - the P/E, EPS, Current Price, Year Low, Year High, Market Caps, Outstanding Shares, YTD % Change and current year marked-down price @ closure date. I call these data categories the Ultimate Wealth Codes™
-continues on my next post.
ABOUT ME!
Written by OKOYE OKECHUKWU PIUS.
Mr Okoye Pius is a Maverick, Investment Consultant/Stock Market Analyst And Publisher ‘Ultimate Investors Edge’ Online Newsletter with a mission to:
“Help you make better investment decisions possible"
Developed and Originated the 'MVSS' Stock Trading Strategy.
An Author, Internet Marketer, Seminar Speaker and Host
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Email:ultimatewealthmastermind@gmail.com
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