Saturday, June 7, 2008

TOP 10 DO’S FOR FUNDAMENTAL INVESTORS

  1. Never invest in tips and rumours.
  2. Look at the products which you use and like. The companies making these products could prove to be very good investments.
  3. Be on the lookout for solid businesses which are presently out of favour. Check the 52 week lows columns of newspapers. They make for good contrarian bets.
  4. If the market capitalisation of a company is near its net current assets, it could be a good value pick.
  5. Keep the business cycle in mind. Some businesses are cyclical in nature. Aim to invest at the bottom of a business cycle.
  6. The market may know something that you don't about a stock. Check this out when you buy at rock bottom valuations.
  7. Keep an investment timeframe of at least 2 years.
  8. Do not panic in a market downturn. Review your reasons for buying and see if they remain intact.
  9. Conversely be aware of changing fundamentals. If basic reasons for buying no longer remain valid, sell.
  10. Remember the old adage " Buy when others are fearful, sell when others are greedy".

6 comments:

Uma said...

Excellent points....Buy companies that you believe in, but don't overpay for them... and take profits off the table periodically...that's the essence of successful investing. I learned these lessons at a heavy price. The market first tempts you with profits, then it frustrates you with losses. It's very hard to find a balance.

Mahendra Naik said...

I think everyone has to go through that learning process. My personal experience is that you focus on fundamentals and use a bit of technicals to time your decisions.

Uma said...

yea, true....Pharma went up again I wonder if it's a long-term trend....or they're just pumping it up for Nifty's sake.

Mahendra Naik said...

I'm bullish on Pharma, but play this thru MF'. You don't know which leg of the sector will perform. Whether it will be CRAMS, R&D, API or MNC'. But I believe the winner will win big. So it is best to diversify via MF'.

professional investment ideas said...

I agree with your views. The stock market is so dynamic that one really need to understand it and the reason you are buying into it.With good investment ideas, one can make a real fortune from the stock market.

Eze.
http:investmentpicks08.blogspot.com

QUALITY STOCKS BELOW FIVE DOLLARS said...

I am a value investor. My advice to value investors that want to succeed is buy stocks that have very low price to sales ratios.