1 Feb 2016

Stock Picking: 10 Key Ideas


Before picking stocks,You must check below things and take calculated risk within a diversified portfolio.

1.How the company and sector performs in real market? Is their product or services deliver superior quality and having satisfied clients?

2.Check stock valuation.Compare it with competitors and  sector average.Over valued stocks may face huge correction any time.
3.Is your stock's interest coverage ratios denote less or zero debt ? Company should be able to manage interest payments and other expenses.
4.Profitability ratios of the stock must be strong enough to create extra returns to all stake holders and overcome entire debt level.
5.Major trend of the stock is important.If major trend is positive,you can buy at dips.but,if major trend is uncertain and volatile, share price will be same.
6.Buying a stock in major negative trend is like jumping into a sea in the bad climate.
7.Prediction of trend reversal    should be based on breakout shown in any technical indicator- whether it is EMA,Trendline or support/ resistance.
8.Invest in sectors with positive bias and allocate weightage  for different sectors in your portfolio.
9.keep a stop loss to cut your loss and prevent further downfall. If stock break Low, continuous support and ranges ,it will lose market demand.
10.Market is a mass psychology. If any share lose demand in real market and stock market,it will become a disaster irrespective of size and brand.

Disclaimer: Equities are high risky instruments with volatility.Any wrong  investment decision may lead to uncertainty and loss.

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