Property stocks are usually highly cyclic as it is subjected to political economy (eg. government cooling measures), project duration (TOP) and economy cycles (demand vs supply). At the same time, property market has gradual growth of about 2-4% over the decades, supporting the growth of property stocks. More importantly, passive incomes through dividend from property rental is a bonus.
There are 5 main strategies in Property Stock Investing or Trading:
1) Cyclic Investing (Buy Low Sell High)
– Suitable for cyclic property stocks, especially for penny stocks or small cap stocks which are more volatile. The capital gains could be tremendous.
2) Dividend Investing (Buy Low & Hold Long Term)
– Suitable for passive income through regular dividend payment, similar to landlord of a property, collecting monthly rental consistently despite the up and down in property price. The key is to buy low to maximize the dividend yield (for property stocks) or rental yield (for property).
3) Growth Investing (Buy Low & Hold Long Term)
– Suitable for growth property stocks, usually are blue chips with strong fundamentals to support the long term growth.
4) Momentum Trading (Buy High Sell Higher)
– Suitable for short term trading of property stocks during bullish economy but full compliance of exit strategy is required when uptrend has ended.
5) Undervalue Investing (Buy Cheap Sell expensive)
– Suitable for value investor who view property stocks as asset, buying at price much below the net asset value, selling when price is above valuation in future. Patience is required for this conservative strategy.
For all the 5 strategies in property stock investing to perform well, the common requirement is to buy only giant property stock which has strong fundamental.
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