The Power Of Growth : Exploring 100X
Here are 14 simple rules to help you get a better understanding of how to approach share market and earn successfully; points which every investor should know:-
1. Aim for 100X, Identify stocks that can multiply by many folds in the long run
Identify stocks that can multiply by many folds (say 20/100 times) in long run. There have been many stocks which multiplied investors' wealth by more than 25/50/100/500 folds in a span of few years. You can see such list in our E-Book - HOW TO ACHIEVE 25-100X FOR WEALTH MULTIPLICATION. (Page No. 3)
2. Decide a strategy and follow it with confidence
Different people use different styles to buy stocks and fulfil investing goals. There are many ways to be successful. However, once you decide your style, stick to it. An investor who flounders between different stock-picking strategies will probably experience the worst, rather than the best, of each style. Buffett's value-oriented strategy had worked for him for decades, and - despite criticism from the media - it prevented him from getting sucked into tech start-ups that had no earnings and eventually crashed.
Neither investing style is necessarily better than the other - both have their pros and cons. But active trading can be wrong for someone without the appropriate time, financial resources, education and desire.
3. Have two types of portfolios
Let there be 2 portfolios one Core portfolio for long term multiplications & second Satellite portfolio for taking advantage of trading opportunities in the same share.
4. Future (growth) matters the most
It's important to understand that what happens in the future matters the most.
A quote from Peter Lynch's book "One Up on Wall Street": "If I'd bothered to ask myself, 'How can this stock go any higher?' I would have never bought it as stock price already went up twenty fold. But I checked the fundamentals, realized that company was still cheap, bought the stock, and made seven fold after that."
Decide based on future potential, rather than just on what has already happened in the past.
5. Go with winners, have courage to dump losers
Mostly investors book profits by fully selling their appreciated investments, but they hold onto shares that have declined in the hope of a rebound. Rather, regularly monitor quarterly results of your stocks and firm up your views, after few similar quarterly results.
Similarly investor should know when is time to get out of poorly performing, hopeless stocks, or be prepared to see that the stock sinks to the point where it's value becomes almost worthless.
6. Fully ride the winners
Fully ride the winners, else you will never realise the potential of multibaggers. If you have a policy to fully sell after a stock has increased by a certain multiple - say 40%, for instance - you may never fully ride out a winner which may be a great multibagger. Though, partial profit booking can be done. But never sell off a great, growth oriented stock completely.
7. Avoid running after hot tips blindly
It is a type of gambling. To be successful in stock market, understand the reasons of your investment in the company's stock. Find out what you should pay attention to - and what you should ignore.
8. Do not get disturbed due to market ups and downs
You shouldn't get panicky when your investments experience short-term movements. You should FOCUS on the big picture, once you have chosen the right stocks.
9. P/E ratio is not everything.
A low P/E ratio doesn't necessarily mean a security is undervalued, nor does a high P/E ratio necessarily mean a company is overvalued. Growing companies will ultimately command a high P/E ratio. It is one, among many important criteria.
10. Avoid penny stocks
A penny stock is riskier than a company with a higher share price. High priced share may have valid reasons for its valuation and future.
A common misconception is that one would lose lesser in a low-priced stock. But whether you buy a Rs. 5 stock that plunges to Rs.0 or a Rs.75 stock that becomes 0, either way you've lost full value of your initial investment. A lousy Rs. 5 company has just as much downside risk as a lousy Rs.75 company. And understand the reasons of poor market valuation, which is due to poor prospects of revival/ growth of penny stock company. Some/ many of penny stock companies may completely collapse.
11. Diversify your equity portfolio
it's always beneficial to have stocks from different sectors and Industries. It is wise to stay diversified with your stock investments.
12. Stagger your buying as well as selling
Never buy the desired quantity in one shot, stagger it. Similarly, do not sell entire quantity in one shot.
13. Review performance of your stocks at least once after quarterly results are declared
One cannot predict a 100X stock and simply sit tight on it without being alert, hence relentless search for a good company, continuous review of company's performance, news, expansion and other future plans, aggressiveness, changes in economic & technological environment etc. will be key to remain with the right stocks.
14. Build up a portfolio for your children
Stock Market gives golden opportunity to build up a portfolio for your children. Whenever you invest for long-term, the stocks turn out to be good even in short-term.