Must Read Before Investing

* If you get the conviction to invest Rs.1 lakh in a stock, then only invest in that stock, else forget that stock. Do not invest just for the sake of investing or to try your luck.

* Before buying any stock, write down the reasons why you are buying that stock and before selling review those points that you have noted down, then take a decision to sell.

* The trick of successful investors is to sell when they want to, not when they have to...

* One quick test is to imagine that you had to give a presentation on a stock that you want to buy to a room full of savvy industry veterans and then take their questions. If you could not do it, may be the purchase is not such a great idea.

Saturday, December 3, 2011

Keep in mind While Studying about a company

Keep in mind While Studying about a company

  • See how the company can make its profits and see if it can make the same profits in future too.
  • Compare the Sales growth in the past 5 or 10 years. and their annual Growth rate.
  • Compare the Net Profit growth in the past 5 or 10 years. and their annual Growth rate.
  • Compare the EPS growth in the past 5 or 10 years. and its annual Growth rate.
  • How the Debt is reduced in the 5 years
  • Lessons from Jim Rogers and Warren Buffett on How to Research a Company
  • Suggested (minimum) checklist for thoroughly researching a company:

    1. Annual reports / 10-K’s – five years (including those of competitors). Read the footnotes.

    2. 10-Q’s and Proxy Statements – one year, including transcripts of earnings calls (include those of competitors). Seeking Alpha is a good source of transcripts.

    3. Build a 10-year spreadsheet on the company, by operating segment if applicable (see Rogers’ spreadsheet for a model). Don’t rely on third party sources for anything more than preliminary research. Going to primary sources will not only ensure the data’s accuracy, but also force you to think about the numbers and what they mean.

    4. All available relevant articles in the business trades and press. In addition to the general Internet (Google, Bing, etc.), many libraries offer excellent free online databases, such as Proquest.

    5. Build a database of all relevant private market transactions (minimum 5 years).

    6. Compare relevant valuation metrics for company to those of competitors (P/S, P/B, P/E, EV/EBIT, EV/EBITA, P/(Owner Earnings). Include an analysis of any industry specific metric, for example, ROA for banks.

    7. Study who owns the stock (and who doesn't). (You may be able to find information on the company in reports and letters of quality institutional investors that own the stock.) Are insiders buying or selling? Do they have "skin in the game"? What about the directors?

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1 comment:

  1. Sonal JainJanuary 2, 2017 at 12:53 AM

    • NYMEX crude gains in holiday-thinned Asian trade.
    • Gold prices decline on Friday.
    Crude Intraday Tips

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