1.
In bank, they used "book value" to determine if a bank is over value
or not. Some also used "return on equity" and RE growth for
prediction of future growth. In banks, PE is hovering around 10.
2. Low P/E is also a good factor. However each company was tied to a common PE
in the sector. For example, P/E for a tech company could be 30, and they said
it's normal because its peer had PE=60.
3. They argued for high PE company with "forward PE would be lower"
as future profits. However if the company missed profit delivery, they would
dump shares.
4. Some calculation showed RE / Price * 100 = your interest earns from a
company. However market has never increased share price in proportional to an
increase in RE, i.e. sometimes more sometimes less.
5. Some investors sold stocks that have been underperforming market or sliding
down 10% or 20% in a year. They didn't even say anything about fundamental
changes, i.e. others sold shares, so did we.
6. Some liked to buy stocks, which were sky rocketing. This is similar to
momentum investors. Those stocks could be over value, and waited for a
correction.
7. Publicity also played a key role. Well known stocks have usually been
performed better than unrecognized stocks. However, when unrecognized stocks
surfaced like under Wall Street focus, those stocks would jump up
substantially, e.g. multi-baggers.
8. Penny stocks were easily manipulated by others, because low volume and
market capitals. These stocks are riskier. Mutual fund companies didn't like
those.
9. They like surprised RE or upward revision of RE. Some companies lower their
profits/revenues guidance, thus they would beat the targets. These stocks moved
up quickly after the financial report issued.
10. Speculated stocks by traders in order to buy shares at lower price or sold
at higher price - stay away from those. Some said that buying boring companies
with steady returns were better.
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