The RBI has again cut repo rates by 25 basis points which makes it easier for companies to borrow money and then invest and grow. The union budget declared last week was also visionary and well received. All this creates an atmosphere full of good investment opportunities. Even the foreign institutional investors realize that. That is the reason they are pouring in money in our stock market, But it should be diligently done. So coming to our last rule of investing in stock market, THE SEVENTH RULE.
While previously I discussed about the quantitative aspects that one should consider while investing in a company by evaluating its P/E ratio, P/Book value ratio, debt etc, one can never commit a mistake of overlooking the qualitative aspects of a stock. So what entails qualitative aspects.
When studying a company , one should see who is the owner of the company, who is the CEO, CFO and who are the people handling important portfolios. What are their credentials. If a company appoints a CEO who was in the past responsible for making a company or business hit, isn't it likely he will bring good to this company also! But at the same time do not ignore what the company pays its top employees. Are they being too generous in giving themselves hefty remuneration or buying swanky jet planes for their CEO. Or are they reasonable in spending money.
What is their consumer base? Do they have a significant monopoly in certain segments. Are some of their brands known worldwide. Is the product or service they provide in any kind of danger due to upcoming technologies! In case of pharmaceutical companies, do they spend enough money in their research and developmental activities and are their scientists coming up with new drugs for which they have exclusive patents.
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If you are thinking of investing in a stock of a bank, visit one of its branches. How was the service that was provided to you by the employees. Ask your chemist friends what pharmaceutical companies' drugs are preferred by doctors. Go to a grocery store, see what durable items are more common, which is the company making them.
All these and many more factors decide what will be the future of that company. What we see in the balance sheet is the past.Aa lot depends on these qualitative aspects for the balance sheet to produce consistent and better results.
But that does not mean that the company which is very famous or has a good qualitative aspect is ideal for investing. The previous six rules discussed shows whether the stock is overpriced or under-priced and you got to look for the latter ones, but with the qualitative aspect added to it.
PICK OF THE WEEK: There is no pick of the week. the market is jubilant with a good budget and rate cut by RBI due to the good sentiments, the market is slightly overpriced . So wait for a slight correction and then i will suggest you some more stocks. Till that time have a look at the stocks discussed previously. Some have done good, some are still there. It has been only couple of weeks. money does not grow on trees. so check out those stocks. We will come up with new interesting stocks later. Watch out for our article on how this budget affects different stocks.
While previously I discussed about the quantitative aspects that one should consider while investing in a company by evaluating its P/E ratio, P/Book value ratio, debt etc, one can never commit a mistake of overlooking the qualitative aspects of a stock. So what entails qualitative aspects.
When studying a company , one should see who is the owner of the company, who is the CEO, CFO and who are the people handling important portfolios. What are their credentials. If a company appoints a CEO who was in the past responsible for making a company or business hit, isn't it likely he will bring good to this company also! But at the same time do not ignore what the company pays its top employees. Are they being too generous in giving themselves hefty remuneration or buying swanky jet planes for their CEO. Or are they reasonable in spending money.
What is their consumer base? Do they have a significant monopoly in certain segments. Are some of their brands known worldwide. Is the product or service they provide in any kind of danger due to upcoming technologies! In case of pharmaceutical companies, do they spend enough money in their research and developmental activities and are their scientists coming up with new drugs for which they have exclusive patents.
If you are thinking of investing in a stock of a bank, visit one of its branches. How was the service that was provided to you by the employees. Ask your chemist friends what pharmaceutical companies' drugs are preferred by doctors. Go to a grocery store, see what durable items are more common, which is the company making them.
All these and many more factors decide what will be the future of that company. What we see in the balance sheet is the past.Aa lot depends on these qualitative aspects for the balance sheet to produce consistent and better results.
But that does not mean that the company which is very famous or has a good qualitative aspect is ideal for investing. The previous six rules discussed shows whether the stock is overpriced or under-priced and you got to look for the latter ones, but with the qualitative aspect added to it.
PICK OF THE WEEK: There is no pick of the week. the market is jubilant with a good budget and rate cut by RBI due to the good sentiments, the market is slightly overpriced . So wait for a slight correction and then i will suggest you some more stocks. Till that time have a look at the stocks discussed previously. Some have done good, some are still there. It has been only couple of weeks. money does not grow on trees. so check out those stocks. We will come up with new interesting stocks later. Watch out for our article on how this budget affects different stocks.
