There is a business beneath every stock, if the business does well, so does the stock.
Know what you don’t want in a stock.
Diversify your portfolio to various sectors. Generally 20-30 stocks would do.
Invest only the excess unless, your profession is investing do less.
Build an emergency fund which can cover you for at least a year.
200, its the number of days it takes to recover from a recession.Based on the data of previous recoveries.
The business holds the value, not the charts.
A good company usually increases dividend every year. Not every profiting company increases every year, an increasing trend pattern can be observed in its dividend.
If the company diversifies outside of its core business, its time to exit. Together they fall or together they rise. The former part is well known.
Understand the reason for past growth in sales. Whether it’s still there?, What are the other factors being implemented?, helps you form a good judgement for the sales to grow or continue.
Develop a story before you own a stock and continuously update it often. If the story starts to detour or bore you end it unless you aren’t expecting a fun element to show up.
Since stocks are slaves of earning, observe the graph of earning and stock prices. If something is abnormal you are not buying it.
If you know what you own, the risk part can be eliminated and you enjoy the rewards.
Invest in what you know and nothing more than that.
Recessions, Depressions don’t happen all the time, until then build your war chest.
Get into investing in stocks only after you own your first house, built an emergency fund, getting a life cover.
Instead of predicting, prepare.
The information available on penny stocks is too less to trust your gut.
If you observe abnormal dividend trends, there is something you don’t know.
If the company doesn’t meet your personal quality criteria, don’t compromise. Find out what all are the possible actions that will bring the business into your criteria like buybacks, dividend raise, Quality of Management, reorganizing the senior power.
Every negative circular about the business is an opportunity to accumulate stock which you have analyzed to the core.
If you think the condition of buying a stock which is trading below third of book value and at a low PE is going to profit you. They have failed long back.
If you decide to buy a stock, plan to hold it forever.
If the personal probability of choosing a multibagger is 1:10. Remember how worse it can get because of diversification.
If you are betting on hot businesses, you will miss the boring multi baggers.
Warren Buffet emphasis more on cash flow, which tells everything about capital allocation vis a vis the Management.
In theory there’s no difference between theory and practical, but in practice there is.
For investing to be reliably successful, an accurate estimate of intrinsic value is the indispensable starting point. Without it, any hope for consistent success as an investor is just that: hope.
Investment success doesn’t come from “buying good things,” but rather from “buying things well.”
Risk means more things can happen than will happen.
My belief is that because the system is now more stable, we’ll make it less stable through more leverage, more risk taking.
The received wisdom is that risk increases in the recessions and falls in booms. In contrast, it may be more helpful to think of risk as increasing during upswings, as financial imbalances build up, and materializing in recessions.
No matter how good fundamentals may be, humans exercising their greed and propensity to err have the ability to screw things up.
It’s not supposed to be easy. Anyone who finds it easy is Stupid.
The art of investment has one characteristic that is not generally appreciated. A creditable, if unspectacular, result can be achieved by the lay investor with a minimum of effort and capability; but to improve this easily attainable standard requires much application and more than a trace of wisdom.
One of the biggest mistakes chess players make is trying to ‘undo’ a bad move,when in reality, once a bad move is played,it’s already a whole new game and an entirely fresh mindset is required. It struck me that investors make the exact same mistake.
You can read many books, but nothing will match with practicality.
Don’t follow a strategy just because a legend says it. Create your own pattern, Who know you might be a legend tomorrow.
success is a lousy teacher – it seduces smart people into thinking they can’t lose.
Ships don’t sink because of water around them but because of water in them. Your wealth too doesn’t sink due to volatility in the market but because of volatility in your head. When market teaches you a lesson and takes your money, the choice is yours whether you use it as motivation or an excuse to give up.
In my initial days, it took me quite a few years to realize that just 1-2 solid stock ideas a year is more than enough,only if we bet big,average up those winning ideas”. With time,most things would fall in place.
Deferring your consumption in luxury and investing in equities in the first 10 years of your earning life, would give you an unassailable lead in wealth building. Also, All great companies started as small companies. Find them.
Future multi-baggers are going to come from those companies who solve climate change,or precision medicine to cure cancer. Water purification and anything related to organic or anything, where there is scope of value added products, should do great too. Anything which is doing innovations in the IOT / ML arena will have gala days ahead. Am also high on the API-Pharma and manufacturing theme.
While selecting companies for long term investments-Look out for companies which can grow at 15% for next 10-20 years instead which can grow 50% for next 1-2 years. Consistency is more important than speed of growth. Market is very fond of such companies and rewards handsomely.
99% of your focus should be on research and 1% of the price. Most of us do the opposite and this is what makes all the difference in your Portfolio..:)) Happy investing guys.
You’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more. You aren’t investing when you do that, you’re speculating.
Among the various propositions offered to you, if you invested in a very low cost index fund — where you don’t put the money in at one time, but average in over 10 years — you’ll do better than 90% of people who start investing at the same time.
One thing that could help would be to write down the reason you are buying a stock before your purchase. Write down “I am buying Microsoft at $300 billion because…” Force yourself to write this down. It clarifies your mind and discipline.
The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.
You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ
Don’t get caught up with what other people are doing. Being a contrarian isn’t the key, but being a crowd follower isn’t either. You need to detach yourself emotionally.
What we learn from history is that people don’t learn from history.
You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.
There is nothing wrong with a ‘know nothing’ investor who realizes it. The problem is when you are a ‘know nothing’ investor, but you think you know something.
I believe in giving my kids enough so they can do anything, but not so much that they can do nothing.
Games are won by players who focus on the playing field –- not by those whose eyes are glued to the scoreboard.Warren Buffett
The stock market is filled with individuals who know the price of everything, but the value of nothing.Phillip fisher