Mar 29, 2011|
An investor's 3 best friends
Operating in the Indian stock market since over a decade, we have had the opportunity to study various trading strategies. One strategy which tends to stand out is trading on the tip of a "friend". Now we don't have anything against listening to friends provided they give sound and logical advice. However, we have observed that in 9 cases out of 10, listening to friends is a sure shot way of losing one's hard earned money. So we have decided to introduce you to our friends. These friends of ours have helped us advise our subscribers how to make money and hope they can help you too.
Annual reports: This is the most important tool for an investor. The annual report is a comprehensive report of a company's activity over the course of the year. It contains details of the company's profit and loss account, balance sheet and cash flow statement. The annual report also contains discussion of the company's performance by the management as well as future plans for the business. One should take care to study the notes to accounts section to properly understand the company's financial reporting. But studying just the latest report for a company is a pitfall one must avoid. It is advisable to study not only the previous 3-5 year history of a company but also of its major competitors to gain a perspective of the industry a company operates in.
Websites: An often neglected source of information about a company is the company's own website. A company's website gives information on the company's history, its key personnel, products and various financial information and media reports which are helpful for investors. A company's website provides comprehensive information on the company at one place. This can help an investor understand the company better.
Local knowledge: Peter Lynch, one of the great investment gurus found many of his investments when not in office. He found them when he was out driving with his family or making a purchase at the mall. His advice to investors was "Invest in what you know". This is because he believed that an individual investor is more capable of making money from stocks than a fund manager. The reason behind this is that an individual investor can spot good investments in their day-to-day lives before Wall Street analysts can.
This view was further vindicated by Warren Buffett when he stated that there are all kinds of businesses that Charlie Munger and he don't understand. But that doesn't cause them to stay up at night. Instead they just go on to the next one, and that's what the individual investor should do.
What they mean is that one should know what one invests in. Investing in the stock market is just like putting one's money in a business. And like one knows about the business one invests in, one must also know about the business of the company whose stocks one buys.
More Views on News
Jun 14, 2017
Should you subscribe to the IPO of Tejas Networks Ltd?
May 26, 2017
Don't be surprised to come across some Super Investors there!
May 19, 2017
Not all small-cap investors see themselves as traders. Some see themselves as business owners.
Jul 31, 2017
Should you subscribe to the IPO of Securities & Intelligence Services Ltd?
Jul 8, 2017
If Super Investors can wait for the right pitch, so can you.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 4, 2017
The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407