Golden rules for Stock market investing
Wait for the a Bear Market
Buy good business which have bear running for at least 20-30 years
Avoid companies like IT which you do not know what the future is 10 years down the line
Be greedy when others are fearful and vice versa
Pick stocks from uninteresting, old fashioned industries (Medical and Funeral stocks have a good future)
Use market capitalization rather than P/E as a guaze
Buy using charts to get in at a point when stocks is not overborgh
Wait for it to get down to its trendlines
Only buy when the price is above 200 day moving average, market & sector is bullish
Don’t get caught up in media noisel comments from experts
Pick up as few stocks as possible < 20
Make sure you know even thing about the business
Assume you can only pick 20 stocks in you lifetime
Invest at least 10-20% in out of favour industries (Mining)
Look for companies that buy back their own stock
Investing without research is like gambling
Don`t time/predict markets with too much confidence
The lower the % of institutional ownership, the better
Buy companies managed by vigilant leaders
Purchase stocks which will increase cash flow from next month
Invest in companies in which the switching costs are high
Avoid stocks twice or thrice book value
Earnings should grow as the same rate as sales
Look for companies with strong brand, high barriers to entry
If insiders are buying, it is a good sigh
Buy companies with a good, honest management
When the do not do well, they talk about it in the annual report
Don’t buy stocks which have easy barriers to entry (unless it is a big brand)
Don’t focus on temporary results/events
Avoid business which go\ to the capital markets again & again
Avoid companies capitalizing all the costs
Check if the CEO has a good track record
Avoid companies that invest heavily in derivatives
Each company selected should be large, prominent
Growth in earnings is the most important parameter for growth stocks
Value investing is you buy low and sell high
Investing is the intersection of investing and psychology
Need independent thinking and emotional stability
Cash is a very important parameter
Keen understanding of both human & institutional behavior