Monday, December 25, 2017

Investment or Trading : How ?



This one a compiled post bringing essence of two previous articles, publishing again on specific demand by few clients. In short, I have explained the minimum level of awareness we must have, before jumping for an Investment or Trading in “Equities”.

Thousands of investors are joining with the market at this high valuation through various channels whether Mutual funds, Stocks or any other Equity formats. Most of them are involved in Trading, some of them planning Short / Mid Term investment with high level of aspirations, but without clear perception. I would like to stress on some important points which may help you out in the long run.
For Investors

The basic researches which lead us to making decision or select stocks to invest, demanding intense study which includes several factors.

Just think…did you ever hear directly or indirectly about the Company/Stock or about their Products/Services etc.., If you never heard… simply forget them..!

Even if you heard, still you need to investigate about the company before putting money on them, about their assets, liabilities, earnings, Promoters, Management, competitors, the nature of business, sale figures, the amount of debt etc.. etc.. You can find many of these information your own with various financial web sites including NSE/BSE sites.

If you have done your homework in a legitimate manner and you have some patience, you should be rewarded with unbelievable high returns. It is not much the conventional or practical way of investing that the majority adopts. But I believe in this system and it is proved as the best strategy in the long run.

Full or partial of the following factors should be considered while selecting each stock for Investment.

(a) The fundamentals
(b) Sales/Profit CAGRs
(c) The product trend and applicability issues
(d) The future scope of products/Services
(e) The Management
(f) Assets/Infrastructure of the Company
(g) Certifications and Awards
(h) Market Response
(j) Previous Products/Projects Performances
(k) Investor relations
(l) Dividend History
m) Promoter’s holding
n) Product/service demand

For Traders

The basic theory of demand and supply is the driving force which fluctuate the share prices. The propensity to boost in price of a share means augmented demand whether it is for short term or in long term. The long lasting demand of a stock depends on various factors, which we will discuss later. But for now, what all the factors which amplify the demand of a particular stock in short term? Simply, something is happened or happening behind the screen or certain positive news sparked on the company/scrip like any of the following:-

a) Positive Mergers, Acquisitions etc..

b) Positive company results.

c) Fresh and commendable orders bagged by the company.

d) Tie ups , collaborations with heavy players in the industry.

e) Significant Awards/recognitions/approvals/patents to the company or to their products.

f) Chairing of well known professionals/intellectuals to the board key posts or as Directors.

g) New or sensitive product launches.

h) Heavy insider buying or promoter’s accumulation from open market/Buy backs.

i) Heavy corporate Interventions/HNIs/MFs/Investor legends/other Financial services.

j) Sometimes, bad news on major competitors, :-)

k) Increasing of assets by the company.

l) Positive media reports/Survey/research results.

m) Dividend declarations.

n) Positive technology advancements in the sector.

o) Favorable Govt decisions/rules/stands to the industry.

p) Positive Industry growth charts/figures.

q) Baseless but temporary positive rumors.

r) Favorable court verdicts in disputes involved.

I have tried to include most of the reasons whatever I remembers right now, please suggest if I left anything.

What basically an intelligent Intraday / short term trader have to do is, grab such positive but genuine news threads  (in kind of listed above) as earliest or much before the public get aware,   and prepare the strategy. 

So, whether you go for a long term investment or for trading, you must do some homework prior… the homework done by the others, surely better for their homes especially in trading format. 

Merry X’Mas and Happy New Year.



The blog is associated with information on Indian stock market and author’s investment view points on various emerging stocks/sectors. The contents discussed in this blog are purely my own personal opinion and in no case weigh it as any kind of recommendation for stock market investment. The sheer purpose of this blog is to educate the interested community on market related subjects based on my experience and I am, in no way, responsible for investment decisions based on the contents described in this blog.

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