"Simple" Investment Strategies

"It is so simple to be successful but too difficult to be simple"

Some of our blog readers asked about investment books or web site which can give information about muti-bagger stocks. I am very much sure that there no such web site which can make people billionaire. But there are some simple guide lines which are well proven and time tested. Warren Buffett and Radhakishan Damani are the great investors of the world and India, respectively. They have followed very simple investment strategy and become very successful. Several small investors like me have followed the same and got desired results. If anyone will follow the same than definitely he will also become successful investor. Some important points are given below.

1. Stock Investment is like planting Tree 

It will take time to grow but it will give shadow and fruits for life even for next generation. Initially it require much care but once it get grown than very little effort required. 

We should not expect mango by sowing the seed of potato. Never make short cut for huge gain in short period. Buying stocks of any company is giving us an ownership interest in its actual business, with an underlying value that does not depend on its share price. Stock price will rise once market will realize its valuation. 

 


2. Knowledge & Skills

It is available in plenty of webs like BSE, NSE, TV channels, investment books, newspapers and companies websites. Reading is good habit and always need to give some time to study about facts and figures of the companies.

3. Investment Attitude

It is the rare and deciding factor between success and failure. Need to develop good investment habits by controlling our emotions, temperament, discipline, beliefs, conviction and patience. Ability will come with time and practice of above habits.

4. Never miss an opportunity

In deep falling market or some crises in good companies will create panic and fear in the market. These situations are providing us the best buying
opportunity. Same way the highly inflated market giving us best opportunity to sell the stocks. The legend of Radhakishan Damani has made best use of the opportunity in 1992, when Harshad Mehta, the Big Bull of that time, was ramping up the share prices and Damani has sold his holding on every rise. Again he bought in huge quantities once market got crashed. 


5. Keep looking for good stocks

There are probably more than 100 stocks available which can become multi-bagger. Look for low debt small growing companies with good cash flow, profits, EPS, PE, dividend record, future expansion plans with good ability and credibility of promoters.


6. Buy sufficient quantity of big opportunity giving stocks

Some time we hold the multi -bagger stock but very small quantity. Scattered portfolio will not serve the purpose. Fairly concentrated can give huge gains in these cases. For example Warren's holding in American Express and Damani's holding in VST Industries. 

7. Investment Timing and Price

If any good stock with huge growth potential is identified than buy it early because future value of every investment is a function of its present price. The higher the price you pay, the lower your return will get and your time targets will move away. Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.

8. Market Condition

The market is like a pendulum that forever swings between high - low -high. It makes stocks too expensive and unjustified. Same way it makes them too cheap and attractive valuation. The intelligent investors are those who sells at high and buys at low. Any investor with sound stocks in his portfolio should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. One should never buy a stock because it has gone up or sell one because it has gone down. 


9. Moral Values

Need to develop ethical values, mutual respect, understanding, social, responsible and helping nature.


Above mentioned nine points are very simple but one time reading is not enough, when ever you will read it again you will find new thing which is missed last time or not in practice.


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In the series of Best Stock Picks next stock will be posted on 26.09.2015. It is decent stock with huge growth potential and trading at attractive valuation.