I need you assistance/ Saudi Stock Market

[Kareem Hamza]

I am MBA student in KFUPM, Dhahran. I am working to build a portfolio to select the best companies in order to invest a certain amount of money. I am not familiar with some stock terms and which better measures used to depict the profitability power and risk for Saudi companies.



The objective of the project is to maximize the profit or minimize the risk (optimization problem). I found a website which called Bakheet financial advisors (http://www.bfasaudi.com (http://www.bfasaudi.com/)). This website provides detailed information on Saudi stock market. They daily update its contents.



I found some measures used to show the company performance. What is the best measure used if I am planning to maximize the profit?

These measures are:


Earning per share (EPS)
Dividend (D)
Dividend Yield (DY)
Book Value
Price Earning Ratio (PER)
Payout Ratio (PR)
Price Book Ratio (PBR) (http://www.bfasaudi.com/SingleRatio.asp?Ratio_Code=F62)
Return on Asset (ROA) (http://www.bfasaudi.com/SingleRatio.asp?Ratio_Code=F63)
Return on Equity (ROE) (http://www.bfasaudi.com/SingleRatio.asp?Ratio_Code=F64)


In addition, I found four measures for market risk. What is the best measure used if I am planning to minimize the risk? These measures are:


Volatility
Correlation
Beta,
Standard Deviation


Your help is highly appreciated.



Thanks very much.

[Riyadh Knight]

Frist of all, I'd like to welcome you to the world of stock investment. And allow me to congratulate you for choosing the right way for investing in stocks (stock analysis). I argue you to learn about stock analysis (technical & fundamental) as much as you can and this will help you to make smart investment decisions.



Learning stock analysis is not an easy task. You'll need to spend plenty of time and effort to achieve your goals.



Before answering your questions allow me to give you this piece of advice. Now, you want to learn how to invest in the stock market you need to now if what you understood as you go on is right on not. I'd advise you to create a portfolio through www.tadawul.com.sa (http://www.tadawul.com.sa/)



And see how it goes.



Now you are expecting me to tell you what these terms mean!! That would be just too easy wouldn't it?

LOL

Well I'll tell you where to start

HERE

Make this section as your investment 101

There are some very good articles here by professional investors. When you feel that you need to learn more



Here's some useful sites



http://stockcharts.com/education/index.html (http://stockcharts.com/education/index.html)





http://beginnersinvest.about.com/cs/investing101/f/?terms=penny+stock (http://beginnersinvest.about.com/cs/investing101/f/?terms=penny+stock)







http://biz.yahoo.com/f/g/g.html



I wish you happy investing

[Kareem Hamza]

Thank you very much for the quick promptness and invaluable information. But I am really lost. I am not real investor. I just selected Saudi Stock Market to conduct a study as a prerequisite to finish a course in my MBA program. The problem is to find the best solution (optimization problem). The problem is divided into 2 parts: first problem, I want to maximize the profit by selecting the best companies whose profits are high. Second problem, I want to minimize the risk by selecting the companies whose risks are lower. Then I will compare both solutions to get a clear picture on how the process goes. I have already collected the data needed form Bakheet website.



I appreciate the way you helped me. It is the right way to learn. But I feel that I need to take some advanced courses especially in finance to understand all things related to the stock market.



What I need is just to know the best measure used to reflect the profitability and the best measure for risk (list in my email above).



Let me explain what I am planning to do (it is just an example):



1) for maximization the profit the objective function will be as follows:

Max 22X1 + 34X2 + 89X3…..Xn

X1,…Xn are number of shares for the companies. 22,34, ..are the profit.

Subject to:

Some constraint should be added .

e.g. 500X1+ 300X2<= 50000

500, 300 are the cost per share.

If I have 5,000,000 to invest.



2) The same thing applies the risk minimization’s problem.



Should you need more details, please let me know.



Again thanks for your usual cooperation.



Have a nice day.