My readers always ask me if there are any free platforms for stock research and portfolio monitoring. As you can imagine, the free ones always have limited features unless you are a paid subscriber. However, people tend to overlook that they can get useful data for free via their stock trading platform.
But if you have traded stocks before, you know most Singapore traditional brokers are not up to the game. A clumsy interface and exorbitant fees are the common complaints. That is why online brokers such as Interactive Broker, Tiger Broker and moomoo app are gaining traction.
My favourite app is moomoo. Its convenience, market access, user interface, features and trade commissions are miles ahead in comparison to traditional brokerages. Many bloggers have talked about the wonderful things about moomoo’s free commission, free SGX Level 1 real-time data and free US level 2 market data, but these are of little interest to me.
For me, I find the moomoo app to be a very handy tool for stock research. In this article, I will share with you what I look for when buying a stock and practically, how I use the moomoo app to quickly evaluate a stock.
Who is moomoo?
Moomoo belongs to Futu Holdings Limited (FUTU) which is a digitized brokerage and wealth management platform. It is a U.S.-based financial services company headquartered in Palo Alto, California. Moomoo is an advanced trading platform, one that I had hoped to have years ago. If you are concerned about safety due to unfamiliarity, please note the following:
- FUTU’s stock is listed in the Nasdaq with ticker FUTU.
- FUTU raised $90 million in an initial public offering on the Nasdaq on March 8, 2019.
- In Singapore, FUTU is registered as Futu Singapore Pte. Ltd. (FUTU SG) and it is licensed by MAS (Licence No. CMS101000)
- It is backed by Tencent.
There is no shortage of advertising for moomoo powered by FUTU lately. After all, who can resist the temptation of 1 FREE Apple Share by just opening an account?
But if you are only focusing on the promotion, you are missing the big potential of having a FUTU SG Securities account in the moomoo app. FUTU provides very valuable data and information to you via the moomoo app, for which we investment professionals used to pay thousands of dollars. And now you can get it for FREE by just opening an account.
My investment philosophy
There are many schools of thought about stock investing. People have been fighting for decades over their favourite strategies. For example, you may have heard about these strategies: value investing, index investing, day trading, swing trading, fundamental analysis, technical analysis, etc.
Ultimately, you need to find one strategy that suits your life stage and your personality. To me, any strategy is a good strategy as long as it makes money for a particular time. I do not think there is one true long-term investment strategy that works in all economic situations.
Of course, given a long enough time, almost all investments will appreciate. It doesn’t matter whether you hold a stock, a property, a stock index fund, a unit trust, gold and probably even a cryptocurrency, the price of the asset will likely be substantially higher after 30 to 40 years. But this is just a function of the “time value of money”. In other words, all asset prices go up because money depreciates over time. But the big question with an investment strategy is, “Do you have the patience, courage and commitment to wait for 30 to 40 years?”
Additional Reading: Is Bitcoin a good long term investment?
Lots of people will tell you that investing is as easy as buy and hold. But in real life, buy and hold doesn’t work well even if you strike a pot of gold.
The truth is, from the day you click the “buy” button, nobody wants to lose money, even if the stock price goes up 3-fold in 5 years. How confident are you to hold the same stock through the inevitable peaks and troughs? You want to make money from the day you start investing, don’t you?
That is why stock investing is so hard and you need a system to invest. The system doesn’t have to work all the time, but it will help you make rational decisions to stay invested and yet avoid catastrophic losses.
What I look for when buying a stock
If you enter the financial market without information, it would be the same thing as if you entered a battlefield without a weapon. But the even bigger issue is that there is too much information and noise in the market. Therefore, you need to be selective in what you look for.
I typically focus on 3 aspects and then I organize the information around the answers to the following questions:
- Fundamentals – Is the company worth investing in?
- Technical Charts – Is it the right time to buy the stock or is it time to sell?
- Money Flows – Do other market participants agree with what I think?
To put things into perspective, I use Bloomberg terminal for most of my stock research and it certainly helps a lot. But on the financial battlefield, Bloomberg is a tank. And most of the time, I just need to carry a gun to move around. moomoo app is just the right tool for me.
I will use Tesla (data as of 15 June 2021) as an example since many people are interested in this stock.
Disclaimer: The information and examples used in this article serve an educational purpose only and are not intended to be investment advice. You should always do your due diligence and consider your financial goals before embarking on any investments or purchasing any investment products. The link for the moomoo website is a referral link.
When I investigate the fundamentals of a stock, I always start with the financials. Financial statements are super complex stuff. But for most people, you really just have to look at it from a helicopter view.
Moomoo app helps give me a very good overview of the financial data. What you need is to have a good feeling about how well the company did in the past and what is likely to happen in the near future. Here are the questions I use:
- Is the company making money?
- Are they getting more sales?
- Do they have enough margin to survive in tough times?
From the screenshot below, you can see that some of Tesla’s financial indicators, such as EPS (earnings per share), ROE (return on equity) and Net Margin, are improving. But FCF (free cash flow) has dropped to negative in the last quarter
Discovering these answers is helpful. Next, we can zoom into the Cash Flow Statement to see where the cash went.
We can see that CFO (cash flow from operations) is still positive but CFI (cash flow from investments ) is bleeding. Then you can use your knowledge and experiences to determine what this means.
How about the valuation? We can compare Tesla with other car manufacturers such as BMW and Volkswagon. The Price to Book ratio (PB ratio) is substantially higher than any other car manufacturers. However, what is even more interesting is that the market capitalization (stock price x number of shares) is stunning US $575.30 billion. Yes, this is not a typo. The infographic below shows how Tesla’s market capitalization compares to other car manufacturers. The value of Tesla’s share is more than the combined market capitalization of all the other major car manufacturers!
But of course, you can say that Tesla is a different animal because of its focus on electric vehicles (EVs). And so, you can also easily compare with other electric car players such as NIO and XPeng using moomoo’s platform. These are powerful functions.
Next, we want to see how the market looks at the price.
Telsa seems to be trading at some support level and still consolidating. It may be a make or break scenario at some points in the future. I want to bring your attention to the big volume spike found on Dec 18 2020 (the high green volume bar in the middle of the chart) when Tesla was to be included in the S&P 500 on Dec 21st, 2020. That was the price where many passive index fund managers were “forced” to purchase Tesla’s share simply because it was now included in the index.
The current price is just around that price. It seems to me that the market is rather indecisive about the direction of the stock price.
Lastly, I want to investigate if investors or shareholders are pouring more money into this stock.
What you can do is to first take a look at the summary of the company, which contains information you may or may not know, such as
- Which indexes or ETFs include the share?
- Who are the biggest shareholders?
- What are the recent dividend and other corporate actions?
I am particularly interested in knowing if the shareholders have “strong hands”. I want to know who are the main shareholders. Are they
- speculators who gamble the share prices,
- passive managers who buy it as a mandate, or
- active managers who use it as a tactical play.
We can see from the chart that besides Elon Musk, the second and third largest shareholders are Vanguard and BlackRock. This is because their passive ETFs have to include Tesla. So whether you like Tesla or not, you probably have already bought some shares if you are invested in US ETFs. You can also sense that most fund managers are not as enthusiastic as ARK’s manager Cathie Woods.
You can also check out what other investors and analysts think about Tesla by clicking on the “Comment” and “News” sections.
Of course, if you are more advanced, you can look at Options pricing to see if there are any heavy positions in Call (bullish) or Put (bearish).
The other tool I find very useful is “Capital Trend”. It is FUTU’s calculation based on the historical transactions and they chart it nicely. FUTU defines Capital Trend as:
If a trade is done at the ask price or higher, the transaction amount is an instance of capital inflow; if a trade is done at the bid price or lower, the transaction is an instance of capital outflow; the other trades are regarded as neutral. Net Inflow = inflow – outflow.
Of course, you need to look at this data in conjunction with other information. But from the chart below, you can tell why the price has been under pressure, the sellers are probably on average more eager than buyers.
Let me summarize
So by now, you should have developed some basic opinions of Tesla.
- Tesla’s earnings and profitability have increased over the past few quarters.
- Its cash flow from operations has increased but bleeding from financing costs.
- Its share price is not cheap compared to other traditional automobile players and electric vehicle players.
- The share price is under pressure since the beginning of the year after a stellar run in 2020.
- The enthusiasm of the market participants is weak in the past few months, judging from the capital trend.
This is not saying it is a good time to buy or sell the stock, but I want to show you how you can quickly find useful information about a stock in a few minutes with the help of the moomoo app.
Whether you like it or not will depend on which “investment school” you subscribe to, and there is a saying:
Every stock transaction has a buyer and a seller, and both of them think they are smarter than the other person.
I hope this article gives you a new perspective about how to look at stock investment and practically, how you can use the free moomoo trading platform to help with your research.
As I said earlier, moomoo powered by FUTU, is a robust trading platform that comes with free data and information which investment professionals have to pay “a bomb” to get. It is not only a powerful trading platform to transact stocks, but also an excellent research tool as well.
How to get moomoo app
You can click this link to sign up a moomoo account. Everything can be done via mobile. You can use your Singpass to verify your identity and no paperwork is needed.
If you open a FUTU SG Securities account via the moomoo app by Feb 28, 2022, and deposit S$2,700, you will receive $50 cash, 1 Free Apple Share and many other perks.
There are many other things that I like about the moomoo app. I will discuss them in the future. For now, you can click this link to sign up and explore it by yourself.
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