If you buy a farm, you'd say “I'm buying this because I expect it to produce 120 bushels per acre, etc…from your calculations, not based on what you saw on television that day or what a neighbor said. It should be the same thing with stock. Take a yellow pad, and say I'm going to buy GM for $18 billion, and here's why. And if you cant write a good essay on the subject, you have no business buying one share.
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.
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