Stock Selection

Be opportunist. Be a Hunter.

Mere falling in love with a particular set of scrips does not help always.

These rules will help in developing the vision for successful market participation.

1. Select growth stock.

These stocks generally have high p/e ratio. These companies are new in market with new concept of business, new products. For example; Reliance power, Cairn India ltd,  etc. There is high probability of Reliance power, when compared to Reliance industries, to grow 10 times more in next 5 to 8 years.

2. Avoid last Bull run’s heroes.

Of course last bull run’s heroes can give you better returns when compared to the bank F.D.; but these stock may not be heroes in next bull run, due to selling pressure by the investors who are stuck near last bull run’s top.

3. Look for high relative performance.

Select stocks/ sector which show higher % of rise  in price than % of rise  in Sensex for buying.

For example in the current rally from March 09 to December 09, the Sensex has moved from 8000 to 17000, showing approx. 120% growth; whereas Cairn India has moved from 80 to 300, showing more than 300 % growth in price. Reliance industries from 490  to 1200, showing 140% growth.

So, Cairn India has given a relatively better performance than RIL & the Sensex.

This same logic can be used to detect the poor performers in the market. Have poor performers in the list of stocks for short selling.

4. Public participation

It is not the fundamentals of the company that move the stock price, but what the market participants feels about the  the price of the stock.Human emotions can go to extreme. Price is representation of that. So trade in stocks having more than 3  lacs volume everyday.

5. Equilibrium

Market cannot sustain for long with extreme emotions. It gets attracted to equilibrium.

So start making investment when everybody, even professionals are fearing to invest and start unloading your portfolio when every Tom, Dick and Harry suddenly starts to talk about the stocks, Nifti, Market confidently! (who else is left to buy now?)

Protecting 70% of total profit is the best strategy followed by many traders. It assures your market participation & Profit protection.

At last, I will say this market is for those who agree that they are competing with hundreds of superior brains & those who have devoted their blood and bone in listening to the Market’s messages.

I WHISH EVERYBODY A HAPPY MARKET PARTICIPATION.

Be opportunist. Be a Hunter.
Mere falling in love with a particular set of scrips does not help always.
These rules will help in developing the vision for successful market participation.
1. Select growth stock.
These stocks generally have high p/e ratio. These companies are new in market with new concept of business, new products. For example; Reliance power, Cairn India ltd,  etc. There is high probability of Reliance power, when compared to Reliance industries, to grow 10 times more in next 5 to 8 years.
2. Avoid last Bull run’s heroes.
Of course last bull run’s heroes can give you better returns when compared to the bank F.D.; but these stock may not be heroes in next bull run, due to selling pressure by the investors who are stuck near last bull run’s top.
3. Look for high relative performance.
Select stocks/ sector which show higher % of rise  in price than % of rise  in Sensex for buying.
For example in the current rally from March 09 to December 09, the Sensex has moved from 8000 to 17000, showing approx. 120% growth; whereas Cairn India has moved from 80 to 300, showing more than 300 % growth in price. Reliance industries from 490  to 1200, showing 140% growth.
So, Cairn India has given a relatively better performance than RIL & the Sensex.
This same logic can be used to detect the poor performers in the market. Have poor performers in the list of stocks for short selling.
4. Public participation
It is not the fundamentals of the company that move the stock price, but what the market participants feels about the  the price of the stock.Human emotions can go to extreme. Price is representation of that. So trade in stocks having more than 3  lacs volume everyday.
5. Equilibrium
Market cannot sustain for long with extreme emotions. It gets attracted to equilibrium.
So start making investment when everybody, even professionals are fearing to invest and start unloading your portfolio when every Tom, Dick and Harry suddenly starts to talk about the stocks, Nifti, Market confidently! (who else is left to buy now?)
Protecting 70% of total profit is the best strategy followed by many traders. It assures your market participation & Profit protection.
At last, I will say this market is for those who agree that they are competing with hundreds of superior brains & those who have devoted their blood and bone in listening to the Market’s messages.
I WHISH EVERYBODY A HAPPY MARKET PARTICIPATION.

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This entry was posted on Tuesday, August 18th, 2009 at 11:33 am and is filed under Articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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