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Love your enemies. And pray for those who persecute. –Matthew 5:44

3 Sep 2018

STOCK MARKET--What is your little known investing trick that you are willing to share for free?

I am a not a trained fundamental and technical analyst of stocks, And I have been experimenting with different Investment techniques in Indian stock market for the last thirty years.
The techniques mentioned below are so simple that it may seem too good to be true, but believe me they have given higher returns than some of my thoroughly analysed and bought shares.
1.       STOP hunting for multibaggers  in penny/cheaper stocks, Instead invest in well known large companies, even if their price seems higher.
2.      Observe around you and see which companies come up with new and innovative products that you or your family and friends use often, Shortlist 3 to 5 such companies from different sectors. Try to stay away from commodities such as gold, silver etc.,

3.      If you have two companies identified from the same sector, go with the one with lower PE and lower PEG ratios.
4.      Don’t be worried if the share price when you buy are around its 52 week high or low, over long term this doesn’t matter much.
5.      Invest sizeable amount in each of the identified companies
6.      Have 10% to 20% of your entire portfolio value in your trading account, to top up your investments, when the prices fall.
7.      Then you start monitoring them regularly for the price fluctuations, and follow the below strategy:
a.      If you observe the stock price start falling due to some bad news or global or local incidents, don’t panic and sell off.
b.      Wait until the price fall settles down, and top up your investment in that company, make sure the price drop is at least 10% from its previous high or your purchase price.
c.       If the price drops agian, make sure the price drop is at least 10% from its previous high or your last purchase price to buy more shares.
8.      Every quarter, see if the sales and revenues are going higher for all the invested companies. They need not go high considerably, they may even be range bound for few quarters, in such case you need not worry.
9.      However, if you see constant decline in sales and revenue for last 4 or more  years. Quarters, check if the company fundamentals are in tact( new product line, debt, promoters holding, etc.), if not exit before the prices plummet. But this is very very rare for a well known large Cap, but you have to have an exit strategy to cut your losses.
10.   Don’t get into Stock market investment for quick money. Never invest the money which is meant for something very important such as education, marriage, medical purposes in hope of a quick buck.
11.    To see the power of compounding, one has to stay invested for a very long period (10+ years at least).
12.   Buy more shares from the same 3 to 5 Shortlisted companies, from all the dividends that are paid out.
13.   Verify equity/F/V, PE, ROE, ROCE, debt equity ratio, pledging of share, dividend history, bonus history , quarterly result for the last 10 quarters.
Stay focused and stay invested, this portfolio of stocks will definitely give better returns than know government financial instruments such as PPF, NSC, FD, RD etc.,
Wish you good luck.

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