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Stock Investment – 13 things to keep in mind

Last Updated Date - Mar 22, 2023

Let us review the 13 necessary points before any stock investment. The stock market can be volatile in the short term, but historically, it has provided strong returns over the long term.

Investing is more like watching paint dry or watching the tree grow. If you want excitement, better take a bet on IPL or go to Casino. Stock Investment is an art rewarded to those who have patience.

13 things to look for before stock investment

1) a low P/E proportion is for the most part superior to a high P/E proportion, your portfolio ought to be enhanced over numerous segments

2) an organization with a ton of money on its accounting report is better than one exorbitantly loaded with obligation

3) Low price to cash flow ratio of stocks

4) Look for book to market ratio as well

5) Debt not more than 110% of net current assets

6) Current price close to 1.5 times of book value

7) Adequate size of the company

8) Continued dividend for at least 20 years

9) No earning deficit in the past 20 years

10) 10-year growth of at least one-third in EPS

13 Things to keep in mind before stock investment


11) Warren’s way of stock investment – Warren Buffet looks for companies with strong consumer brand ( Example- Coco Cola, Apple Computers, etc), a business that is easily understandable, robust financial health (example-Ford Motors), and near monopoly in their markets (example- Krafts food, Texas Airlines, etc). Warren Buffet snaps up a company if when a scandal, big loss, or other bad news passes over. He wants to see managers, set up and meet realistic goals, and builds up a business from within rather than acquisition

12) Look for earning and growth of a company- while analyzing the quarterly report of a company asks just two simple questions: (a) is the income repeatable and (b) Is controllable income ie ability to cut down production cost and selling inventory at higher price year on year.

13) Be informed and take an informed decision- “An investment in knowledge pays the best interest.” – Benjamin Franklin. Since you have every one of the essentials of contributing aced, and maybe even concentrated the more convoluted ideas of specialized examination, you are prepared to pick stocks. Be that as it may, hold up!

Decide Your Goals

“Keep Your Eyes Open. Close the doors. Be fearful when others get greedy but be greedy when others around the world are fearful.”
The following stage in the stock investment process includes finding the organizations with which you might be conceivably intrigued. There are three straightforward methods for approaching this errand:

1. Discover the ETFs which track the execution of the business and look at their property. This can be as simple as quite recently hunting down “Industry X ETF”; the official ETF page will uncover either all or just the best possessions of the reserve.

2. Utilize a screener to channel stocks in view of particular criteria, for example, segment and industry. Screeners offer clients extra highlights, for example, arranging organizations in light of market top, profit yield and other valuable speculation measurements.

3. Keep looking through the blogosphere, stock examination articles, and money-related news discharges for thoughts on organizations.

The three previously mentioned strategies are in no way, shape or form the main routes on the best way to pick an organization, yet they do offer a simple approach to begin. There are additionally evident points of interest and burdens related to every methodology that speculators should observe.

Swing to Corporate Presentations

When you are persuaded that “Industry X” is a strong speculation and you know about the significant players, the time has come to turn your consideration regarding speculator introductions. Despite the fact that introductions are less far-reaching than budgetary articulations, they give a general outline of how firms profit and are considerably less demanding to peruse through than 10-Q and 10-K reports. Furthermore, introduction reports will, as a rule, have forward-looking data on the normal heading of the organization and its industry.

The data of a financial specialist introduction report incorporates such material as monetary record/wage proclamation/income articulation execution, operational features, future development openings, and a general industry diagram. Breaking down introductions includes more inside and out examination of the genuine organization keeping in mind the end goal to choose why a specific stock is probably going to beat one of its rivals.

The Bottom Line

Now you could be left with just a solitary speculation prospect or a rundown of at least 10 organizations. It could be, even after all the time you put into concluding a stock investment, you choose that this industry is wrong for you. This kind of choice is indispensable to the specialty of stock picking since your exploration has kept a conceivably acrid venture.

At the end choosing the right stock is all about eliminating the wrong stock.

Keeping your Money in the bank account is just like letting you ship rust without sailing it through the ocean even for a single day.
What number of tycoons do you know who have turned out to be rich by putting resources into savings accounts? I know you know the right answer.

Happy Investing!

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