Golden rules for Stock market investingsteemCreated with Sketch.

in #investing7 years ago

Golden rules for Stock market investing

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Wait for the a Bear Market

Buy good business which have bear running for at least 20-30 years

Avoid companies like IT which you do not know what the future is 10 years down the line

Be greedy when others are fearful and vice versa

Pick stocks from uninteresting, old fashioned industries (Medical and Funeral stocks have a good future)

Use market capitalization rather than P/E as a guaze

Buy using charts to get in at a point when stocks is not overborgh

Wait for it to get down to its trendlines

Only buy when the price is above 200 day moving average, market & sector is bullish

Don’t get caught up in media noisel comments from experts

Pick up as few stocks as possible < 20

Make sure you know even thing about the business

Assume you can only pick 20 stocks in you lifetime

Invest at least 10-20% in out of favour industries (Mining)

Look for companies that buy back their own stock

Investing without research is like gambling

Don`t time/predict markets with too much confidence

The lower the % of institutional ownership, the better

Buy companies managed by vigilant leaders

Purchase stocks which will increase cash flow from next month

Invest in companies in which the switching costs are high

Avoid stocks twice or thrice book value

Earnings should grow as the same rate as sales

Look for companies with strong brand, high barriers to entry

If insiders are buying, it is a good sigh

Buy companies with a good, honest management

When the do not do well, they talk about it in the annual report

Don’t buy stocks which have easy barriers to entry (unless it is a big brand)

Don’t focus on temporary results/events

Avoid business which go\ to the capital markets again & again

Avoid companies capitalizing all the costs

Check if the CEO has a good track record

Avoid companies that invest heavily in derivatives

Each company selected should be large, prominent

Growth in earnings is the most important parameter for growth stocks

Value investing is you buy low and sell high

Investing is the intersection of investing and psychology

Need independent thinking and emotional stability

Cash is a very important parameter

Keen understanding of both human & institutional behavior

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Do people Win, Yes. Do some Win Big, Heck Yeah. Talking about Las Vegas, not Wall Street. Some people win big and some lose big, but no one talks about their loses, only their victories.

Most folks should avoid the Wall Street Casino. Unless you are an insider and know when crashes are coming, all your little profits will mean nothing in a correction.

The average return for the S&P 500 is around 9% over the last 90 years. Hardly stellar. The average annualized total return for the S&P 500 index over the past 90 years is 9.8 percent. Yet from 1928 to 2016, only six years finished with a gain within 5 and 10 percent, according to LPL Financial.

http://www.cnbc.com/2017/06/18/the-sp-500-has-already-met-its-average-return-for-a-full-year.html

Account for inflation and the capital gains taxes and the profit picture is even more dismal.

Gold

Gold Bugs have fared little better in annual returns, except that they actually are in physical possession of their assets and have paid zero taxes on their gains, unless they sell and declare their Gold "profits", no one knows they have it.

http://awealthofcommonsense.com/2015/07/a-history-of-gold-returns/

Gold prices have been artificially held down by the issuance of "Phony Gold", the form of Paper Gold Certificates of ETFs. The ratio of real Gold in the World vs. Paper Gold is 200:1. So not only is Paper Gold a criminal scheme, the actual market demand is 200 greater then the amount of real physical Gold. Meeting this demand with worthless paper, keeps the price of Gold depressed.

http://heartlandpreciousmetals.com/new-record-comex-paper-leverage-ratio-go-paper/

If you are not in direct control of your money and how it is used, you are taking a leap of faith that the stock, 401k, IRA is going to do well. For the majority the returns are lucky to keep up with inflation.

Also plan on being double taxed, first when you earn the money to invest and secondly when you pull it out as a capital gain.

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