Currently, about 700 company stocks are listed on the Indonesian Stock Exchange, comprising companies in various sectors. Of course, among the 700 stocks, some are good, some are bad. Some are expensive and some are cheap. Good stocks are expensive. Bad stocks are cheap? How to choose good stocks for investment are as follows:
1. Choose stocks from groups that benefit from economic conditions.
The first step is to select stocks from groups that benefit from domestic and international economic conditions. This method requires you to stay up-to-date with the latest economic news.
After the meeting on favorable macroeconomic conditions Now is the time for you to assess whether this macroeconomic support will last until your investments reach your goals. Then it’s time to check each other’s facts. Indonesia Stock Index (IDX).
A stock index is a combination of stocks in a certain category after calculating by mathematical methods. Currently, there are dozens of indices listed on the Indonesian stock exchange. One of which is the sector index.
In this index datasheet You will find stocks among the outstanding and leaders in their field. This index and whitepaper will be revised within a period of time, so make sure you are up-to-date with the latest revisions.
2. Analysis of fundamental stock conditions
The second step after you find out which stocks are the champions in that sector is that you stock fundamental analysis at. Check financial reports. annual report and news about the issuing company to ensure that the company’s financial and business conditions are in good condition.
To analyze this fundamental condition You can pay attention to several financial metrics such as Return on Assets (ROA), Debt to Equity Ratio (DER), Debt to Asset Ratio (DAR), Return on Investment (ROI), Price to Income Ratio (PER). ). ) and so on. Analysis of these financial matrices must be carried out over a period of time. So that the analysis you do can create a comprehensive story.
3. Stock Technical Analysis
The next way to pick a good stock is to look at the stock’s price movement history. in long-term analysis You will see roughly What economic story can cause the price of these securities to go up or down? knowing this can prepare to deal with the same phenomenon again
Technical analysis of stocks is important in determining when you should buy an instrument and when you can sell it again. This type of analysis can also help you. indicate stock underestimate Whether or not it depends on the technical and fundamental analysis available. As you know, global investor Warren Buffett recommends investing in instruments that underestimate.
as well as fundamental analysis Technical analysis must be conducted over multiple time periods to create a comprehensive story, for example 5 years, 6 years, etc. This is especially important for those who want to invest in the long term.
4. Choose according to your budget.
The minimum number of shares to buy is 1 lot, or 100 shares, so if the price of Share A is Rp 5000 per share, You need at least Rs 500,000 to buy stocks.
Instead of buying market leaders or blue chip stocks, but not enough. You can choose the minor stocks or the stocks that still rank in their group. There are good basic and technical conditions. But it’s still affordable for your income.
Secondary stocks are instruments that are as liquid as blue chip stocks. but has a low market value This means that the price is relatively cheap or the related companies issue as few shares as possible.
To select this second level stock You can check the IDX SMC Liquid Index and the IDX Composite Index as well. sector indexThese two indices will be continuously updated as well. So make sure you are always up to date.
5. Don’t be in a hurry to choose stocks that are exaggerated.
One of the challenges facing novice investors is buying the stocks that are being directly discussed or those that are priced higher. Stocks like this need to be careful. Because it is possible that these instruments are fries or pom poms.
Fried stocks are a tool by which some individuals raise their prices for personal gain. There are several ways to add it. from collaborating with influencers spreading fake news to hiding behind bookies
Stock prices like this tend to go up fast and fall fast as well. to overcome this The Indonesian Stock Exchange has used the system of Top Auto Reject (Figure) and even a suspension to prevent any unusual market activity or unusual marketing activities and for the transparency of the capital market in Indonesia
The existence of ARA or its suspension will certainly harm investors. Although this is only temporary, the reason is that trading on these assets will be paused. Therefore, there is a trading time that should be exhausted.
6. Make a good plan.
It is possible for you to buy multiple stocks for different purposes. both short term and long term Choosing multiple instruments at the same time can help reduce risk. However, some stocks may not be suitable for the short, medium or long term due to various factors.
The fix is that you can have a good investment plan. Write down which stocks you will use for long-term investments. Which is a medium-term stock and which is a short-term investment?
Note the reasons why you choose the stocks to be included in the relevant classification. Be sure to note when you need to buy. When to sell to profit or cut losses
That’s how to choose a good stock. The method above uses either a top-down or macro-economic stock selection method first and then individual stocks. top-down wayThere is also a bottom-up approach that first starts choosing stocks based on their condition. Then, by sector and macroeconomics.