How to invest in the falling market. Part 4
Earlier: part 1, part 2, part 3.
Prospection: prospects of domestic blue chips - are necessary whether they but are insufficient
the blue chip Is susceptible
to technological changes Now we will talk about where to invest in the future. We said that strategy of averaging of the price of the acquired shares can be built and on domestic blue chips - to take their shares at the price close to a market bottom, and then to enjoy their growth during an economic recovery.
Future development will be based on the companies of even more technological
However all our blue chips are, so to say, heritage of raw economy while the new round of economic development of humanity will be based on the companies of much more technological, with higher extent of processing of raw materials and, so providing big added by cost. Therefore it is necessary to look at the domestic companies from the point of view of their susceptibility to technological innovations. And those from them which not only vigilantly watch compliance of the efficiency universal will be considered the best, but also become legislators of branch on indicators of productivity and quality, forcing already western competitors to equal on our standards. Here the investor can also take such companies with himself in the future.
The companies not susceptible to technologies will fade into the background
the Same part of blue domestic chips which are not susceptible to technological innovations, will be under pressure from more progressive competitors offering cheaper and at the same time better goods over time - substitutes. Consumption of production of such unreceptive domestic companies will be reduced by unit of final goods, and their situation in world corporate hierarchy will go down. And this process will take place in new realities of the technological future with a much bigger speed than now. Such companies from branches of the past often conceal in themselves more risks, than it seems. In the USA the company which was one of the world`s largest the most part of the second half of the 20th century went bankrupt, - General Motors. In it hundreds of thousands of people, but its structure of expenses, social payments worked, a product line became noncompetitive. The investor has to steer clear of the similar companies.
The companies of sector to the utility - a guaranteed demand
It is possible, of course, and not to bother with examination which of our domestic blue chips is more technological, and just to acquire shares of the companies of sector to the utility, that is that which are engaged in water, gas, coal and electricity. In the forthcoming times, vague for world economy, production of these companies will be in a guaranteed demand, so actions, as well as the companies, can serve as a reliable shelter of purchasing power of your money. It can be the following companies OGK - 2/5/6, Rosgidro, Mosenergo, Gazprom, Novatek, Raspadskaya.
We choose those which stock price is closest to book value or to current assets
By the way as all these companies treat “old“ economy and force them consists in large volume of physical, but not material assets, the most desired for the investor will be those from these companies which are on sale at the price, the closest to them, the first, book value or, the second, to working capital of the issuer.
- the book value of an action (in the absence of the bond and preference shares) is a share capital of the company from which subtracted the cost of soft assets (cost of a trademark and other intangible assets), divided into the number of the issued stocks. Also when calculating book value reserves of the company can be considered, then the formula of book value of an action takes the following form: [The share capital + Surplus (reserves) - the Book value of intangible assets] / the Stake - in common stocks. All necessary values of the indicators used in a formula can be found in annual financial statements of the company.
- = the Current (reverse) assets - the Current obligations
However should remember working capital of the company, the working capital or net current assets that actions do not become attractive object for investments, only because they can be bought at the price slightly different from their book value or current assets. Satisfactory values of coefficient P/E (the action price relation to an earning per share), rather strong financial position and confidence that the company will remain profitable and in the future are also important for the investor.
Branches of the future which companies will hypnotize us rates of the growth
However will hypnotize us growth rates of rates of the stocks of the company of the new, recently arisen branches. Now it is branches of a computer orientation, the software and the Internet - services. The most successful representatives of these branches for a long time very famous - IBM, Hewlett - Packard, Microsoft, Google, Facebook, Oracle and td. What branches will appear in the future - we will look, however already now futurists will allocate the following:
- branches of alternative energy sources: energy production from wind force, waters and the sun;
- production of environmentally friendly products, without use of pesticides, hormones and antibiotics;
- production, cleaning and pure sale are perspective in connection with gradual exhaustion of natural reserves of fresh water. By the way in Russia it is concentrated near ¼ fresh water in the world that is a basis for development in us of the respective sphere of business;
- production of nutritious elements for cars - already now many hope that the car on hydrogen fuel will be banality by 2020;
- branch of circular processing of waste which companies turn garbage into goods and useful things;
- well where without nano - technological branches;
- branches of superfast material streams. The demand of their production and services is caused by a critical gap between the speed of information and material movements which slows down development of world economy.
The perspective branch yet does not mean prospects of the company
When we speak about investments in these or those branches, it is always necessary to mean that prospects of these branches do not mean prospects of their companies at all. Even the most successful branch will not be able to provide you benefit at an investment in her inefficient company. Therefore at investment even to the new, promising magnificent profits sphere of business, it is necessary, all - to make efforts for search of really standing companies. We will not consider selection criteria of the company because of limitation on time here. To it we devoted a separate seminar “How to look for the companies for long-term investment“.
What will be in Russia
in recent years the economy of Russia worked for four segments: raw, retail trade, construction, finance. The capitals were also invested in these directions. However today the designated segments do not give those high profits any more that were earlier. And in this regard the understanding comes that it is necessary to earn from something another. However other spheres can seem boring and even dirty and unpleasant, for example, production of a brick, paper and other nonsense which brings only 35% per annum. And for such profitability it is necessary to work, plow still really to the seventh sweat. But as there are no other concrete directions, money will go also to these spheres.
On this wave it is possible to expect quite worthy development of not so large companies as blue chips, but, all - deserving attention rates of the growth.
On it all.
of Good luck to you and financial wellbeing.