Fundamental Analysis is a study of factors (company specific and external environment) that affect the value of stock. This program will help you to understand the impact of factors on the valuation of the stock, analysis of the environment and interpretation of financial statement.
For more information visit : https://simplehai.axisdirect.in/learn/eclasses
Meaning of Ratios
Objective of ratio analysis
Advantage or uses of Accounting Ratios
Limitations of Accounting Ratios
Classification of ratios :
i). Liquidity Ratio
ii). Solvency Ratio
iii). Activity/Turnover Ratio
iv). Profitability/Income Ratio
Meaning of Ratios
Objective of ratio analysis
Advantage or uses of Accounting Ratios
Limitations of Accounting Ratios
Classification of ratios :
i). Liquidity Ratio
ii). Solvency Ratio
iii). Activity/Turnover Ratio
iv). Profitability/Income Ratio
DuPont analysis is a useful technique to break down the different return on equity (ROE) generators. The ROE decomposition helps investors to concentrate separately on key indicators of financial success to define strengths and weaknesses.
Three main financial metrics drive equity return (ROE): operating performance, asset usage performance, and financial leverage. Operating output is a net profit margin or a net income separated by overall revenue or profits.
The efficiency of asset usage is determined by the turnover ratio of the assets. Leverage is calculated by the equity multiplier, equal to average assets divided by average equities.
The component parts of a firm's return on equity (ROE) are calculated using a DuPont analysis. This allows an investor to assess, which financial activities contribute the most to the ROE changes
Marginal costing is a costing technique wherein the marginal cost, i.e. variable cost is charged to units of cost, while the fixed cost for the period is completely written off against the contribution.
DuPont analysis is a useful technique to break down the different return on equity (ROE) generators. The ROE decomposition helps investors to concentrate separately on key indicators of financial success to define strengths and weaknesses.
Three main financial metrics drive equity return (ROE): operating performance, asset usage performance, and financial leverage. Operating output is a net profit margin or a net income separated by overall revenue or profits.
The efficiency of asset usage is determined by the turnover ratio of the assets. Leverage is calculated by the equity multiplier, equal to average assets divided by average equities.
The component parts of a firm's return on equity (ROE) are calculated using a DuPont analysis. This allows an investor to assess, which financial activities contribute the most to the ROE changes
Marginal costing is a costing technique wherein the marginal cost, i.e. variable cost is charged to units of cost, while the fixed cost for the period is completely written off against the contribution.
Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets.
9 Important Things To Consider In Quarterly Results Before Investing In Stock...ZyloStar
The Global exchange-listed companies must file their quarterly results with the stock market for the four quarters ending in June, September, December, and March. The March results also will include the annual results of the corporate.
COMPANY ANALYSIS-HINDUSTAN UNILEVER LTDSaiLakshmi115
Introduction to company analysis# About the company in short # vision # mission # Standard of conduct # culture and value # business model of HUL # swot analysis of HUL # management and its structure # corporate culture and governance # Quantitative analysis of the company- HUL: Earnings, Leverages, competitive edge, production efficiency, financial analysis, cash flow, Ratio analysis # conclusion
Similar to Fundamental Analysis by Vivek Srivastava (20)
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
Axis Direct presents daily derivatives report presenting recommendations based on technical analysis. For trading in derivatives visit https://simplehai.axisdirect.in/offerings/products/derivatives
The Jamstack Revolution: Building Dynamic Websites with Static Site Generator...Softradix Technologies
In this infographic, the Jamstack architecture emphasizes pre-rendered content and decoupling the frontend from the backend. It leverages static site generators (SSGs) to create fast-loading HTML files and APIs for dynamic functionality. Benefits include improved performance, enhanced security, scalability, and ease of deployment. Real-world examples include Netlify, Gatsby, and Contentful. https://softradix.com/web-development/
Are Seamless Gutters Worth It? Explore nowacadiaborton
Seamless gutters live up to their name: they are uncomplicated gutters that flow freely without needless joins or seams. They do have seams, but they are limited to the downspouts and corners. Painted metal is used to make seamless gutters. If you're wondering why seamless gutters could be preferable to traditional ones, keep reading this ppt for the advantages.
BEst VASHIKARAN SPECIALIST 9463629203 in UK Baba ji Love Marriage problem sol...gitapress3
TOP No AsTro 1 black magic SpecialiSt UK baba ji +91-9463629203 VashIkaRan blaCk maGiC specialist in uSA Uk England Luxembourg CanAdA America BEst VASHIKARAN SPECIALIST 9463629203 in UK Baba ji Love Marriage problem solution Uk USA america england LonDon Divorce problem solution astroloGer
Office Business Furnishings | Office EquipmentOFWD
OFWD is Edmonton’s Newest and most cost-effective source for Office Furnishings. Conveniently located on 170 street and 114 Avenue in Edmonton’s West End. We take pride in servicing a client base of over 500 corporations throughout the Edmonton and Alberta area. OFWD is in the business of satisfying the home or corporate office environment needs of our clients, from individual pieces of furniture for the home user to the implementation of complete turn-key projects on much larger scales. We supply only quality products from reputable manufacturers. It is our intention to continue to earn the trust of our clients by dealing with honesty and integrity and by providing service and after sales follow-up second to none.
Business Solutions with .NET Development in Quantum Computing.pdfQServices Inc.
Unlock the power of quantum computing with QServices. Our .NET experts deliver cutting-edge solutions to drive your business forward. Experience the future of computing and gain a competitive edge today.
A Bulgarian work permit is valid for up to one year, after which it can be renewed as long as the conditions of employment have not changed. After obtaining a work permit, the employee will need to apply for a Type D visa at the Bulgarian embassy or consulate in their country. Urgent requirement for Bulgaria 🇧🇬🇧🇬work D Category National Permit Visa ( Indian /Nepali Nationality only) Visa Validity - 3 to 6 months on renewables basis. Job category - General worker/ Helper Salary - 800 Euro @ 8 hrs.+ Over time extra Age- 20- 40 years Total processing time -4-5 Months
Delightful Finds: Unveiling the Power of Gifts Under 100JoyTree Global
Stretch your budget and spread joy! This guide explores the world of gifts under 100, proving thoughtful gestures don't require a hefty price tag. Discover unique and practical options for birthdays, holidays, or simply showing someone you care. Find inspiration for every occasion within your budget!
Looking for the Reliable Logistics Solutions in India? Discover unparalleled efficiency and reliability with our top-rated logistics services. We specialize in streamlining supply chains, ensuring timely deliveries, and providing cutting-edge tracking solutions. Our platform caters to businesses of all sizes, offering customizable logistics solutions to meet your unique needs. With a focus on innovation and customer satisfaction, we are your trusted partner in navigating the complexities of logistics in India. Choose us for seamless, cost-effective, and scalable logistics solutions. Experience the best in Indian logistics with our expert team by your side.
SMS2ORBIT | launched in 2022 in Mumbai's Andheri area, aims to be the most reliable Bulk SMS Service Provider in Mumbai.
If More Information About The SMS Service Provided By SMS2ORBIT Is Desired, Please Don’t Hesitate To Contact The Business Team. They Can Be Reached At
business@sms2orbit.com Or By Calling 97248 55877.
Experience the breathtaking beauty of a Waikiki sunset aboard the MAITAI Catamaran. Sail along the stunning coastline as the sun dips below the horizon, casting vibrant hues across the sky. Enjoy the gentle ocean breeze, refreshing drinks, and a relaxed atmosphere. This unforgettable voyage offers panoramic views of Diamond Head and the Waikiki skyline, making it the perfect way to end your day in paradise. Join us for a memorable sunset cruise you won't forget. Please visit our website: https://www.maitaicatamaran.net/ and call us at 808-922-5665 for additional information.
Unlock the potential of Ruby on Rails for your next project. Hire RoR Developers from Semiosis for scalable and efficient web solutions. With expertise in RoR development, our team crafts robust applications to meet your business goals. Dial +1 9177322215 to collaborate with us and elevate your online presence.
Are Gutters Necessary? Explore the details now!AmeliaLauren3
Gutters are typically installed at a slight downward slope to allow water to flow freely towards downspouts or drains – the downspout being the vertical pipe attached to the gutters. The water is subsequently transported by the downspout to either the ground or an underground drainage system. Maintaining a gutter system that is free of blockages and functional requires regular maintenance.
But, many wonder in what situations gutters are required and not required. In this ppt we will discuss in detail the matter, ‘Are Gutters Necessary?’
Upvc Bathroom Doors Price and Designs In Keralabpshafeeque
UPVC Bathroom Doors Price in Kerala
When renovating or designing a bathroom, the choice of doors plays a pivotal role in ensuring both functionality and aesthetics. In Kerala, UPVC (Unplasticized Polyvinyl Chloride) bathroom doors have gained popularity for their durability, water resistance, and modern designs. This article delves into the pricing of UPVC bathroom doors in Kerala and why they are a preferred choice for homeowners.
#### Benefits of UPVC Bathroom Doors
UPVC bathroom doors offer several advantages, making them an ideal choice for the humid climate of Kerala:
1. **Water Resistance**: Unlike wooden doors, UPVC doors do not swell or warp when exposed to moisture, making them perfect for bathrooms.
2. **Durability**: These doors are resistant to termites and corrosion, ensuring a long lifespan.
3. **Low Maintenance**: UPVC doors require minimal upkeep, saving homeowners time and effort.
4. **Energy Efficiency**: They provide good insulation, helping maintain a comfortable bathroom temperature and reducing energy costs.
5. **Aesthetic Variety**: Available in various colors and designs, UPVC doors can complement any bathroom decor, from modern to traditional.
#### Price Range of UPVC Bathroom Doors in Kerala
The cost of UPVC bathroom doors in Kerala varies depending on factors such as size, design, and additional features. Here's a general overview of the price range:
- **Basic Models**: Simple UPVC bathroom doors start from ₹2,500 to ₹5,000. These doors are functional and offer essential benefits like water resistance and durability.
- **Mid-Range Models**: For more intricate designs or additional features such as frosted glass panels or metallic handles, prices range between ₹5,000 and ₹10,000.
- **Premium Models**: High-end UPVC bathroom doors, which may include custom designs, advanced locking systems, and superior finishes, can cost anywhere from ₹10,000 to ₹20,000 or more.
#### Conclusion
UPVC bathroom doors are an excellent investment for homes in Kerala, offering a blend of practicality and style. With a wide range of prices and designs available, homeowners can easily find a UPVC door that fits their budget and enhances their bathroom’s aesthetic appeal. When choosing a UPVC bathroom door, consider the specific needs of your space and the long-term benefits these doors provide. Investing in a quality UPVC bathroom door ensures a durable, low-maintenance, and stylish addition to your home.
Elevate Your Brand with Digital Marketing for Fashion IndustryMatebiz Pvt. Ltd
Matebiz Pvt. Ltd. specializes in providing cutting-edge digital marketing for Fashion Industry. Our comprehensive strategies ensure that your brand stands out in the competitive fashion landscape. From targeted social media campaigns to search engine optimization tailored for fashion keywords, we cover it all. With a deep understanding of industry trends and consumer behavior, we craft compelling content and engaging visuals to enhance your online presence. Trust Matebiz Pvt. Ltd. to elevate your fashion brand through strategic digital marketing initiatives.
SECUREX UK FOR SECURITY SERVICES AND MOBILE PATROLsecurexukweb
At Securex UK Ltd we are dedicated to providing top-rated security solutions tailored to your specific needs. With a team of highly trained professionals and cutting-edge technology, we prioritize your safety and peace of mind.
Our commitment to excellence extends beyond traditional security measures. We understand the dynamic nature of security challenges, and our personalized approach ensures that every client receives a bespoke protection plan.
Comprehensive Water Damage Restoration Serviceskleenupdisaster
Find out how Disaster Kleenup's professional water damage restoration services can quickly and efficiently restore your property. Find more about our advanced techniques and quick action plans. Visit here: https://iddk.com/disaster-cleanup-services/flood-damage/
What Are the Latest Trends in Endpoint Security for 2024?VRS Technologies
In this PDF, Discover the top 2024 endpoint security trends, including zero trust, AI integration, XDR, cloud security, and enhanced mobile protection. VRS Technologies LLC supplies the top level Endpoint Security Service Dubai. For More Info Contact us: +971 56 7029840 Visit us: https://www.vrstech.com/endpoint-security-solutions.html
BesT panDit Ji LoVe problem solution 9463629203 UK uSA California New Zealand...gitapress3
love problem solution astrologer
best love problem solution astrologer
online love problem solution astrologer
love problem solution astrologer in india
love problem solution astrologer in kolkata
love problem solution astrologer near me
love problem solution astrologer in ludhiana
love problem solution astrologer acharya ji
love problem solution astrologer in delhi
love problem solution astrologer amritsar
astrologer love problem solution
astrologer for love problem
astrology love problem solution
love solution astrologer
love problem solution specialist astrologer
love problem solution by astrologer
astrology love problem solution baba ji
love problem solve astrologer
love problem solution usa
love problem solution expert astrologer
astrologer for love marriage problem solution
love problem solution astrologer in mumbai
love problem solution muslim astrologer
love marriage specialist astrologer problem solution
famous love astrologer
love problem solution astrologer specialist
love problem solution astrologer tantrikBesT panDit Ji LoVe problem solution 9463629203 UK uSA California New Zealand baba ji LoVe marriage specialist Uk USA LonDOn panDit ji
Colors of Wall Paint and Their Mentally Properties.pptxBrendon Jonathan
Discover how different wall paint colors can influence your mood and mental well-being. Learn the psychological effects of colors and find the perfect hue for every room in your home.
3. Why to invest in Equity?
Returns
Long Term Investment
Flexibility and Liquidity
Tax Benefits
No Minimum Investment
Diversification
Cumulative Annualized Returns
5. How to invest in Equity?
Primary
market(IPO)
Secondary Market
(NSE/BSE)
Mutual Funds
Portfolio
Management
Services
Direct
Investments
Indirect
Investments
Investment
Equities
6. How to invest in Equity?
IPO: Is the first stage when the company initially issues securities to the public to raise
money for the business. Investors or traders generally buy the shares in the primary
market and resell them in the secondary market.
Secondary Market: Once listed the shares are available for trading for the investors. Like
any other marketplace, there are buyers and sellers of shares in the market. There is no
interaction between them, as the orders are placed online and is settled by the stock
exchange. The buying and selling of shares is done through a stock brokers.
Mutual Funds: Investing in shares directly in the stock markets is certainly exciting but
not every one may have knack of choosing right stocks. For those people, investing in an
equity fund is the answer. Investors give their money to the experts (fund managers) to
invest on their behalf. These funds are split into 'units' and an investor can purchase as
many units at the current Net Asset Value (NAV) as he or she requires.
Portfolio Management Services (PMS): PMS allows you to delegate the responsibility of
managing your investments to a team of experts who understand your investment
objectives and work towards achieving them. They will take complete responsibility for
managing your investments and take investment decisions in your best interests.
7. Investment Horizons
Intraday trading: Buying and selling of stocks to square off on the same day is called day
trading this is also called as Intra day trading.
Short Term Trading: Stock trading done from one week to couple of months is called
short term. Companies or sectors having some breaking news will be used for short term
trading.
Mid term Trading: Stock trading done from one month to couple of months, say six to
eight months is called mid term trading. Companies announcements of quarterly results
or some big foreign acquisitions will be used for mid term trading.
Long term trading: Stock trading done form couple of months to couple of years is called
long term trading. Companies whose fundamentals are good and have good future plans
then the stocks of these companies are used for long term trading. Generally traders
having good capital go for long term trading.
8. Importance of stock picking
By becoming a good stock-picker, you can protect/increase your personal
wealth
For example :- Eicher Motor from 2001 to 2017
Fundamental analysis is often a great starting point to picking good companies
9. What is fundamental analysis
Fundamental analysis is the process of determining a stock or company’s
intrinsic value. Intrinsic value of a stock represents the company's actual value .
The actual value is often different from the share price.
Helps you Pick the Right Stocks.
For Long Term Investing.
Gives the True Value of the company.
10. How to do Fundamental Analysis….
There are two type of approaches :-
Top-down and bottom-up approaches
Investors using fundamental analysis can use either a top-down or bottom-up approach.
The top-down investor starts their analysis with global economics, including both
international and national Indicators. These may include GDP growth rates, Inflation
Interest Rates, Exchange Rates.
The bottom-up investor starts with specific businesses, regardless of their
industry/region, and the proceeds in reverse of the top-down approach.
Fundamental Analysis thus involves 3 steps
Economic analysis
Industry analysis
Company analysis
11. Economic analysis
GDP
Savings And Investment
Inflation
Agriculture
Rates Of Interest
Govt. Revenue, Expenditure & Deficits
Infrastructure
Political Stability
15. When to buy and when to sell
The objective of uncovering a stock or company’s intrinsic value is to make one of the
following decisions:
Hold or Not to Sell: When the market price of a stock equals the intrinsic value of a
business, the value investor may buy it.
Buy: When the market price of a stock is less than the intrinsic value of a business, the
value investor should buy the stocks.
Sell or Not Buy: When the price of the stocks soars well beyond the value of the
company, the investor should sell or simply avoids such stocks.
In other words:
– Intrinsic Value > Market Value Buy
– Intrinsic Value < Market Value Sell
– Intrinsic Value = Market Value Hold/Buy
16. Key fundamental parameters
EPS (Earnings Per Share)
P/E Ratio (Price/ EPS)
PEG (Price to future growth ratio)
Dividend yield
Price/ Book value
Return on equity
17. Key parameters - Earnings per share
EPS (Earnings Per Share) : The portion of a company's profit allocated to each
outstanding share of. The amount is computed by dividing net earnings by the number
of outstanding shares of common stock.
For example, a company that earned Rs. 10 Crs net profit after minority interest and has
1 Crs shares outstanding would report earnings per share of Rs. 10.
PAT / No. Of shares= 10,00,00,000/ 100,00,000 = Rs. 10
18. Key parameters - Price/ EPS
P/E Ratio (Price/ EPS) : Also called "earnings multiple", current price of a stock divided by
its earnings per share.
For example, a company is trading at CMP of Rs. 350 and has EPS of Rs. 15 , then its P/E
is 23.33
CMP/EPS = 350/15 = 23.3 times
The P/E ratio may either use the reported earnings from the latest (trailing earnings)
year or use an analyst's forecast of next year's earnings (forward earnings).
P/E gives investors an idea of how much they are paying for a company's earning power.
It is to be noted that the P/E ratio should not be used in isolation; a high P/E ratio might
show an overvalued stock, but it might reflect a company with high growth potential.
P/E is usually dependent on the industry you are analyzing, for example, a utility
company will probably have a lower PE ratio generally, than tech companies.
19. Key parameters - PEG (Price to future growth ratio)
The market is more concerned about the future than the present, A ratio that will help
you look at future earnings growth is called the PEG ratio.
You calculate the PEG by taking the P/E and dividing it by the projected growth in
earnings.
– PEG = (P/E) / projected growth in earnings
For example, a stock with a P/E of 40 and projected earning growth next year of 20%
would have a PEG of 40 / 20 = 2.
The lower the PEG number, the less you pay for each unit of future earnings growth. So
even a stock with a high P/E, but high projected earning growth may be a good value.
Important note: You must understand that the PEG ratio relies on the projected %
earnings. These earnings are not always accurate and so the PEG ratio is not always
accurate.
From value investing perspective PEG should be less than one.
20. Key parameters - Dividend yield
Company A Company B
CMP Rs. 350 250
Dividend Rs. 5 5
Dividend Yield 1.4% 2%
Dividend is an amount of the profits that a company pays to its share holders.
When a company earns a profit, some of this money is reinvested in the business and
called retained earnings, and some of it can be paid to its shareholders as a dividend.
In the absence of any positive movement in share price, the dividend yield is the return
on investment for a stock.
Dividend yield is calculated as
In an example below, if all other things are equal an investor should invest in stock B as it
has higher dividend yield
21. Key parameters - Price/ Book value
Book Value: It is the total value of the company's assets that shareholders
would theoretically receive if a company were liquidated
By being compared to the company's market value, the book value can indicate
whether a stock is under or overpriced. A lower P/B ratio could mean that the
stock is undervalued. However, it could also mean that something is
fundamentally wrong with the company.
A ratio used to compare a stock's market value to its book value. It is calculated
by dividing the current closing price of the stock by the latest quarter's book
value per share.
From value investing perspectives stock price should be no more than tangible
book value
22. Key parameters - Return on equity
Return on equity measures a company’s profitability by revealing how much profit a
company generates with the money shareholders have invested.
ROE is calculated as = Net Income/Shareholder's Equity
The ROE is useful for comparing the profitability of a company to that of other firms in
the same industry.
23. Risk involved in Investing Equities
Investing in stocks is a risky business. There are some risks you have some control over and
others that you can only guard against.
Types of Risk :- Unsystematic And systematic Risk
Unsystematic risk/ Specific risk / Diversifiable risk/ Residual risk :- is the type of
uncertainty that comes with the company or industry you invest in. Unsystematic risk
can be reduced through diversification.
Systematic risk/market risk/ un-diversifiable risk :- is the uncertainty inherent to the
entire market or entire market segment.
24. Risk involved in Investing Equities
Company Risk: The risk that is specific to the company, its management and internal
working which may affect the growth and share price of the company.
Industry Risk: The changes in technology, regulations, fashions, etc. will affect the
performance of an industry and hence the company directly.
Market Risk: Change in stock prices due to change in investor’s preferences, bear
market, political and economic instability, exchange rate fluctuations are covered in
market risk.
Social/Political Risk: Risk associated with the possibility of unfavorable government
action or social changes resulting in a loss of value is called social or political risk.
Interest Rate Risk: Change in interest rate directly affects the prices of the company’s
share. Companies with higher debt or heavy expansion plans may get impacted due to
higher interest rates.
Concentration Risk: when you invest in single company or single fund you are actually
taking a huge risk.
25. Overcoming the investment risk
Diversification: Diversify your portfolio across various sectors and stocks. So if there is
adverse environment for any stock or sector the impact will be limited on over all
portfolio.
Value Investing: One should invest in stocks which are available at attractive valuations
and have good growth prospects. Unless confident about the growth prospects of a
company investor should avoid over valued stocks.
Invest with Discipline: Invest in tranches on regular basis to overcome market volatility.
Promoter's Shareholding: Avoid investing in stocks where promoter’s holding less. Less
promoters holding indicates less commitment on part of promoters.
26. Common mistakes
Lack of Strategy: You should know when to buy a stock, what is selling price and how
long you will hold the shares. When choose a strategy follow its principles.
Not taking the Profit: When a reasonable profit has already been made, overcome
greed and sell the stock fully or partially for taking the profit.
Trading with money you can't afford to lose: Don't use money that you really can't
afford to lose.
Falling in love with a Stock: Some people stick to a stock because they believe it is a
good stock. They even lose much money, but don't sell it.
Don't even consider "tips" that tell you about "hot stocks”: Do not invest on tips of
some one, he might have a vested interest. Take guidance from the trusted experts.
Always use your own judgment: You must always use your own brain. Relying on the
advice of others, no matter how well intentioned it may be, is always a complete
disaster.