Which is the best time to buy stock…..??? Don’t you have this question in mind…??? The answer is very simple today or this moment is the right time to buy the stock. If you have a look at stock market graph of last 5 to 10 years, you can see that the trend is upward, there can be downfalls in between but over a period of time the share price will increase. This is the common logic of investing but there are some other factors to be considered such as why do we invest in stock? How to invest in stocks? Which stocks to buy? etc.
Most people do not do the required analysis before making their investment decision. They generally follow the traditional principle i.e. follow the crowd and buy what others are buying. This is the biggest mistake you can ever make while investing your hard earned money. Studies have proved that retail investors generally invest when market is already pretty high or over-valued. They feel that since the market is touching new heights this is the right time to buy, think for a moment while doing this. If something is valued the most, will it touch the new heights….? Answer is a BIG NO…!!!
Don’t be mistaken that only normal and non-finance guys make such mistakes. Even highly trained school business graduates end up doing the same thing! Successful investment is both an art and science. One needs to do the required technical (financial analysis) of the stock before buying or selling it. When to buy or sell probably is an art that comes with age and experience. In this article we have tried to help you understand the things you need to keep in mind while doing your research and number crunching. Remember there is no short cut to the investment.
Steps to Find the Best Stock:-
Step-1: Find out how the company makes money
Step-2: Do a Sector Analysis of the Company
Step-3: Examine the recent & historical performance of the Stock
Step-4: Perform competitive analysis of the firm with its Competitors
Step-5: Read and evaluate company’s Financial statements
Step-6: Buy or Sell
Step-1: Find out how the company makes money:-
Before you decide to invest in a company’s stock, find out how the company makes money. This is probably the easiest of all the steps. Read company’s annual and quarterly reports, newspapers and business magazines to understand the various revenue streams of the firm. Stock price reflects the firm’s ability to generate consistent or above expectation profits/earnings from its ongoing/core operations. Any income from unrelated activities should not affect the stock price. Investors will pay for its earnings from its core operations, which is its strength and stable operation, and not from unrelated activities. Thus, you need to find out which operations of the firm are generating revenues and profits. If you do not know that you are bound to get a hit in future.
Source:- http://www.indianmoney.com/article-display.php?cat_id=1&sub_id=12&aid=885&ahead=Invesing%20in%20Stocks%20-%20Article%20of%20the%20Year....!!!
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