Whenever I sit with my friends or meet new friends, since they slightly know that I have stock market background, I frequently get important and similar questions like, “how to select stocks “, “can you share some TIPS” etc.
Usually in market, people find this as a tough question but I feel this is very simple and basicquestion. I just answer them and further wait and see if you ask me about tips…!!
If one does ask me for TIPS, I clearly answer them that they are mistakenand asking the wrong person. I don’t encourage TIPS and I myself don’t now how to give tips because the stock market does not work on TIPS.
There are few artificial players in the market to make easy money but the risk appetite is very heavy. 90% people lose money in the market, because if you understand the market, or at least the basics of the market, you can find stocks and create your own portfolio. Always believe in gaining knowledge and skills in the market than money. Once you are geared up with the proper skillset and in-depth knowledge about the market nothing can defeat you in making profits.
It is very simple to identify stocks. Before you identify stocks for the day first identify your regular habits like early in the morning what do you do? What all products you use right from tooth paste, tooth brush, tea,morning snacks, clothes, watch, car,banketc., and further which company owns these brands. You should further think that you are ready to use a particular company’s product on daily basis and just imagine how many people are using the same.
With these thoughts and calculations, at least, you will come to knows about the state of the company, how much it is alive and how much revenue it is making. Now list down the products you personally have used in the market and their respected companies and identify the stocks and derive their sectors.
Once the sector allocation is done just go and visit the company website and check the balance sheets and see the valuations of the stock. Further see whether the company is making profit or not, what is the sales revenue and company borrowings etc. Once you get the valuation of the company precisely, go and buy stocks. Always remember to keep in mind your target and stop loss habit and use this habit on regular basis on all stocks so that you can make minimum profit or minimum loss,
Also, you should never be aggressive on market until and unless you understand the market completely.