SALE
SALE SALE
It is a SALE you don't want to miss!
Come every
January or every June, we get very excited. It is the season of SALES!
Let us face it.
As any good
retail shopper, we all love good deals. Comes festive seasons, we look for good
discounts on electronic goods, on cars and we live to bargain on everything
from furniture to vegetables. From Sales on last season's clothes, to ones with
that barely noticeable damage to Export Surpluses, we visit them all!
Getting what we
want at rock bottom prices, is a sense of achievement that we cherish. The
lower the price and the higher the quality, the greater is our satisfaction. So why aren't we making the most
of the BIGGEST SALE that is currently happening?
It is tendency
of all human beings that when we see the SALE
or DISCOUNT OFFER , we tend to or get tempted to buy that product, weather we
want it or not or weather it will be
useful or Not. We First grab it and satisfy our EGO of buying something cheeper
isn’t it.
Which one you
ask?
Well, we are
referring to the SALE that is currently going on in the Indian Equity Markets -
Blue chip, solid stocks at their lowest prices.
As Warren
Buffet puts it - As an investor, you must look for Good stocks at Fair Prices
rather than buying Fair Stocks at a Good Price. What he means to say, is that,
the golden rule for any investor should be to buy Equity when stock prices are
at a low, so that you can sell them when they rise in value and book reasonable
profit. However, as with any good Sale, you must focus on quality of the
products or stock in this case before you buy.
So what all do
you look for?
Consider a
stock's history and performance record to determine its Valuation. Bear in
mind, that the stock's current market value, P/E Ratio (Price to Earnings) and
EPS (Earnings Per Share computed by dividing a company’s net profit by its
total number of issued equity shares or paid up capital) need to also showcase
strong performance for a stock to climb up from its current low in the future.
A good stock
would currently be at its lowest pricing but would showcase a high return on
equity by reinforcing an Investor's faith in its ability to generate profits -
either now or sometime in the future.
When doing your
homework, check for a stock's book value which usually is the value of a share
should the Company liquidate its operations today. Compare that with the
performance of the Company and its prospects for future growth - does it have
adequate capital to expand operations, are any of its divisions profitable, is
the management capable and stable?
As buyers or
investors, it pays to remember that cost and worth do not mean the same thing.
While cost is what you pay, worth is what you get. When buying Equity at
historic lows, don't just consider price - Consider what will it be a few
months in the future. If by your
assessment you feel, that a stock has the potential to be more in worth and has
a propensity to grow, invest in it and strike a bargain, else keep looking till
you find one that is.
If the current
market volatility continues, don't be so worried. It is just an extended Sale.
The best strategy would be to buy as
many good quality stocks as you can while diversifying your portfolio. Buy them
and hold. Do not be panic at small dips or be lured with temporary highs. The
Markets will stabilize but till then, stop and think before you follow the rest
of the herd. Traders / Investors with a
long term horizon seldom lose money. Markets are cyclical - a low is by a high.
The Indian
markets are at their attractive best, especially if you are an Investor with a
long-term investment horizon. Almost all listed Companies have had their share
prices corrected post the last bull run and are now at their lowest valuations
till date. Analysts around the world, are advising clients to buy Indian stocks
given their low and worthwhile pricing.
If
You Do Not have Expertise to Select Best Quality Stock or time to Track it on
Regular basis we Advise you to Select Best Mutual Fund Diversified Equity
Scheme.