Golden rules for Stock market investing

Golden rules for Stock market investing

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