What Stock to Buy and at What Stock Price?

Though many stocks tips providers put this up in their website’s page, many sites conform to the success of their tips by so called “data editing”. Well, Fancy numbers like 500% returns in a month play with newbie investor’s mind and greed.

Give it a thought, if they could make so much money or if astrology can predict a stock’s future why on the earth they will be posting their tips on a website. Certainly they would be investing themselves or be a billionaire by now and generously giving away their valuable tips.

If you like to be an investor, you got to be an analyst first. Let’s be aware, Stock price is proportional (with certain factors, inversely) to the fundamentals of company and market trends and fluctuations at that point of time.

Luck plays a role too but not over the calculated risks and supporting information you have collected.

My thought on above question is, do your market study, don’t hurry to enter any stock. Give your own time so see a company’s profile, fundamentals before you invest in it.

When I say fundamentals of a company it is not just limited to how much its stock has rose in last week or gained in last couple of months. It is little beyond that; it is the collection of factors that are expected to impact the value of stock in current market situations.

Few of them might be,

1. Assets of the company
2. Company performance over the years and past financial quarters
3. Debts and profit retention
4. News about the company in near future
5. Projects that company is planning to take up(This is quite tricky because many such news turns out be just rumours at the end market session. But believe they have some impact)
6. EPS, don’t really give a serious note for it but partly yes. Most people suggest going by EPS but know what is EPS and its significance before relying on that number. I will write EPS later on may be in next articles.
7. Volume of shares, bulk deals: Demand alters the price accordingly. This would be the basic fundamental anyone will be keen to see at before investing.
8. Income statement, revenue, balance sheet, competitor market breadth – These are few things which are not straight forward to understand for the ones who are from financial background. But yes, if you can understand it better, safe is your investment.

I re-iterate, just by going through company fundamentals will not assure you profit. It is the pre study you need to be doing to see your investment safe in that company stock.

Now questions that would flash before us are what other factors might impact apart from fundamentals of a company? Forget not about market itself, market fluctuations, turbulence in country economy, politics or for anything that matter.

Picking the gaining stock when the trend of market is up does not make us smart investors. Money you gain is to be retained not to be lost when trend starts downwards. Money we gain is also ours, which is our asset for our next investments. We tend to think like profit as money which flowed in by some luck and we tend to play without cautions. Last on this article, don’t get carried away by the fluctuations or emotions!