I'm overwhelmed with information. I have to narrow the field of choice to invest. I say Invest because speculating is risky at this stage. I start my research by sorting out the winners from the losers - I buy the newspaper AFN, and highlight all the shares on the ASX that have a high % price change increase.
I create a spreadsheet sorting the companies into sectors.
I proceed with a further cull, based on the dividend yield i.e A $1.00 share paying a 5 cents - dividend has a yield of 5%. My benchmark is anything higher than the current interest rate available on fixed term deposits for 3 years or more 3.6% Rabobank. I'm not really interested in high yielding shares that are at the highest they have been for the past 52 weeks. I remind myself that I am investing not speculating. I need to buy low and sell high. My intention is to create an income for the future.
I look at the P/E ratio of the companies that are left - in basic terms how much money you are paying for $1 of the company's earnings. For example if a company is reporting a profit of $2 per share and the stock is selling for $20 per share, the P/E ratio is 10. In other words you are paying ten-times the earnings. PROFIT/EARNINGS=P/E RATIO. I split my spreadsheet into 2 sheets - the first - Investment shares the 2nd sheet Speculative, the resource companies in my spreadsheet that don't pay any dividends but have increased in value.
