Best Forex Trading Expert For Investment Guidance in great businesses at fair valuations: One should by no means compromise with Quality for Valuations. A company which has huge debtor pledged shares may seem to be available at a very cheap price, but unless you are 95% sure that the situation of the company is actually going to improve in future, you should never buy such a company.
1. Never go with the promoter’s or prominent Analysts’ word. To know more about how to determine whether a company is a great business to invest in, Read answer to How do I analyze the stock before investing?.Investing should be a long term commitment. If you buy and sell too frequently, you are playing a loser’s game because the costs would add up in the form of taxes and brokerages. Always remember, all the analysts and brokers would want you to trade as frequently as possible because that’s the only way they make money out of you.
2. Avoid too much leverage: Never buy a stock with money that is not yours. That is the only way you can face the test of time. There will be times when things will go against your expectations. At that time, you will be in trouble if you are having the huge amount of debt. Also, avoid companies that have too much debt. When things don`t go as per expectations, these are the stocks that fall the most.
3. Look for companies which have the competitive edge: Always look for the reasons why you think this company will be profitable for a long time. Also look for how the company will manage to keep competitors from invading into the company’s market share. A business which can maintain its moat for a long time is the one which can grow manifolds over the years.
4. Invest in the business which you understand thoroughly: If you don`t completely understand the business you are investing in, then you may be unaware of the impact of the upcoming changes in the Market or the company. That’s why it is very important to invest in Easy to understand businesses that have passed the test of time.Avoid Over-Optimism it is important to be conservative while estimating the growth potential of the company. Therefore, avoid over-optimism and always take all the optimistic stories with a pinch of salt. When all the analysts agree toward something, then things always go in the opposite direction. The Reliance Power IPO story is one such example.Look for Management Integrity a business is run by the people and thus it is as good as the people running it. If the promoters have a bad track record of forgery and cheating, always stay away from such businesses.
No comments:
Post a Comment