Apr 17, 2010

Long-term, Value Investing: What matters and What Doesn't

Long-term and value investing has nothing to do with…
  • Whether or not how many times your stock is featured on biz channels.
  • Weather of not how newspapers, pink papers give research report on it or not.
  • Neither if your stock is recommended by brokerage houses or so-called star analysts.
  • How frequently your company comes in lime-light for product launches, conferences, corporate actions and so on.
  • The increase or decrease in volume of shares on stock exchanges.
  • Weather FIIs are buying or selling and MF managers are adding or dumping it.
  • Weather no one is giving a tip about it.
  • Your neighbour or broker has never heard about the company. (Many never heard or know about P&G, Gillette, Wyeth etc.)
  • How frequently it announces corporate actions such as bonuses, splits, etc.
…But yes it matters…
  • That you have bought it at discounted valuation than what it is actually worth. It could be discount to assets, order book, cash-flow, EBIDTA etc.
  • You have measure your margin of safety.
  • That you have analyzed the 5 to 10 year financial results for the company.
  • The management is reliable, competitive and corporate governance is robust.
  • That you have determined to hold some piece of the company’s business (shares) for certain minimum longer duration.
  • That you have set your minimum realistic annual compounded return target from this investment.
  • That you have gone farther than checking merely EPS, PE and debt-equity ratio; and thought of Cash EPS, working capital per share, long term viability of the sector, economic moat of the company’s business.
Posted on Saturday, April 17, 2010 | Categories:

7 Habits Of A Successful Trader

             Successful trading requires more than fluke or luck. Luck is always there, always was and always will remain. One shouldn't give more than 10% weightage to luck or what I say better word for us "Random result of Uncertainty". So the rule is to learn and grow. I have also mentioned earlier to cut the competition. There are suckers, brokers, intelligent people, investors, traders, jobbers, arbitrageurs, insiders, promoters, punters, fiis, mfs, and now even quant machines rivaling you in this game of market. You can easily outsmart the fools and the sucker class. They either don't remain in the market for long time. Yes, more keep on coming. But you will have to come across the competition from the above-mentioned non-sucker and smart class of participants.