Quality stock or investment is very subjective and relative.
Traditional Quality definition is
- Earning Growth over period of time : Industry structure and future environment
- Certainty of earning: : Ability to differentiate
- Management Value system - to share earning and be fair and transparent to all stake holders
But quality by itself is useless unless it accompanied with price equation . Price + Quality defines value and that reduces risk or craziness investing
Traditional Price Quality equation has emerged PE , PEG etc as ratio . These ratios reduces risk but does not tell whether this quality is right for me ( relative )
Time Dimension
The next dimension of investment is Time , which again along with quality and price reduces risk and makes investment more relevant and rewarding. Some interesting factors are
- Investor age
- Investor earning life cycle
- Investment time duration
The next dimension is investor EQ .. A every subjective , but essential dimension that needs to be understood and factor in investment .
In next few articles we will explore all 4 dimension of investments
No comments:
Post a Comment