Seven Thumb Rules That Can Help You Pick Right Stocks In Market
Wealth creates many nuances. Shares are definitely one of them. The nature of stock investing can always let the mind rub the head. If you are not familiar with stocks, do not worry. We have a handy guide in place to help navigate this uncertain world.
The rule of thumb is that one has been sound in the fundamental before funneling hard-earned money in stocks. Consider these seven things to have.
1. Nature and business prospects
Examine the true nature of the business along with the company’s past financial records and see if current policies and projects create value-added machines for the future. The final investment decision is made based on current industry prospects. Also, do not pursue the blind stocks that have given you multi-extractive profits in a short time. Study appropriate before proceeding any further steps.
G Chokkalingam, founder and MD, Equinomics Research & Advisory, said: “Many early investors lose money by pursuing stocks that have risen several times in a year or two.” In these cases, they need to check and ensure the valuation of the valuation model remains attractive and not foreign currency against its current or peer valuation values, Chokkalingam said. more.
2. Unique in the business model
A unique business model that makes a profit is a very good sign. Vinod Nair, Head of Research at Geojit Financial Services, adds, “Cyclicality is less with a diversified business base, which is a good thing.
Direct knowledge of the company’s bottom line, growth and debt load is imperative. You need to read the company’s quarterly and annual earnings reports. Also, you should look at long term market.
4. Quality management
Get some perspective on the quality of management of the company. If you can not get a preliminary look, go to time management boards rather than buy stocks of unknown managers, especially when the pricing is not cheap.
5. Debt / Equity Ratio
This rate is important because it will help us understand the debt that a company carries over the number of shareholders. In general, the debt / equity ratio is lower than industry average, less risky.
Valuation is another important indicator used to determine whether a stock is expensive, attractive or fair. Companies are calibrated on a parity basis to determine whether they are under-valued in the industry. The most commonly used rate is P / E (Price / Income). For banks, it’s best to use a peer-to-peer (P / B) ratio while companies using capital can use EV / EBITDA.
7. Control your anxiety
One should keep one’s anxiety in check while tracking the stock for rumors and rumors. Do not rush to buy a stock based on such fame without properly testing the value of new developments, Chokkalingam added. Once the trade is done, it can not be reversed for mistakes made on the valuation. It is better to leave the “opportunity”, which seems to have been created by rumors and speculation, instead of burning your savings, he tel .. tell you more.