What are the important financial indicators of stock selection?

Stock selection and timing are the two most important aspects of investors' investment ability. For investors, the best choice is that both are excellent, and the worst choice is that both are poor. If you can only choose one of the two, the author will firmly answer that stock selection is more important than timing.

Why?

First, from the perspective of importance, stock selection is to choose a good stock, and timing is to choose a good trading opportunity. If investors choose a bad stock, no matter how they choose the right time, they can't get excess profits and share the fruits of the growth of a good enterprise. What is a good stock? In the long run, it is a good enterprise. Buffett, a famous master of stock investment, said that he can't accurately predict the position of the stock, but he is a very good business analyst who makes trading strategies by analyzing the intrinsic value of the enterprise and the valuation of the market. His success shows that it is very important to choose a good enterprise. To say the least, if the timing is not right, as long as it is a good enterprise and the time is long enough, the stock of this enterprise will definitely rise.

Secondly, from the operational point of view, stock selection has a set of mature theories and models. The focus of stock selection should be to choose a good enterprise, and there are a series of mature and effective theories and models to evaluate the quality of an enterprise, such as financial management, enterprise wealth management and securities valuation theory. Through the study of this series of theories, combined with the financial indicators and valuation indicators of listed companies, investors can evaluate the intrinsic value of this enterprise well, and then formulate investment strategies. Timing needs technical analysis theory. According to statistics, the probability of success in investing according to value investment is much greater than that in technical analysis. In other words, few people succeed only by technical analysis, and the successful ones are often the value investors who choose a good enterprise. In addition, there is another characteristic of technical analysis, which is lag. Generally speaking, technical indicators lag behind the stock price, and the prediction effect of technical indicators is not very good. Generally speaking, technical analysis is easy to learn and difficult to master, and it is difficult for ordinary investors to succeed by it alone.

To sum up, the author thinks that stock selection is more important than timing. Of course, we oppose the opposition between stock selection and timing, because they are an organic whole, and the success of investment is often the excellent use of these two abilities.