Wednesday, November 30, 2016

My simple stock market buying and selling plan

I have used Excel spreadsheet to list a few listed companies in the Singapore stock exchange.

My selection criteria are very simple.

I choose those companies that pay consistent dividend, and I know the business well enough.

After I have selected my stocks of about 10 companies, I list down the buying price, holding price and selling price.

This is very simple to do.

I will buy when the dividend yield is 7%, sell when the dividend yield is 3% and hold when the dividend yield is 5%.  However for large banks, I am comfortable with buying at an yield of 5%, hold at 4%, and sell at 2.5%.

That means when the average dividend for the past 5 years is 7 cents, I will buy the stock at $1, sell when the share price reaches $2.33 and hold the stock when the share price is $1.40.

The reason I buy at $1 is because the dividend is 7 cents, and that means 7% return.

The reason I sell at $2.33 is because the dividend is still 7 cents, and that means I get only 3% return.

The reason I hold when the price is $1.40 is because the dividend yield is 5%.

That means I buy the shares at $1, and when the share price keeps on going up until $2.33, I will sell.

If there is a change in business environment, then I will sell at any price, even at a loss.

This simple and clear stock market strategy contains both entry and exit price. 

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