How to identify Multibagger Stocks?

Rakesh Junjunwala rightly defined the stocks markets as "Markets are like women always demanding, unpredictable and volatile." No one know whats next. For an instance take it - Does any one knows when this recession is going to end ? No, no can say it accurately, one can just predict but as all know that the future is uncertain.
But what one can do is spot out some value stocks in this badly beaten markets and think of long term investment in them. But a question comes here that which company to invest in?
The answer to the above question is invest in the company in which you have faith and confidence and more over of which you are aware of.

Here are few easy steps to identify Multibagger stocks.

1. Go for a company which gives regular dividend. Dividend paying stocks mostly lie in A group category.
2. Preferably go for a Mid cap stock which in future can become a large cap. Mid cap stock have a greater chance to move upwards and that to fast. Preferable a stock whose market cap is less than 1000 Crores.
3. Go for a stock in a particular sector which is in boom.
4. Look out for the companies financial. In this check out the companies profit f last 4-5 years and check it out that it is increasing every year. One can also check out EPS of the company.
5. Check out whats running these days, Say for example there is a invention of a new technology which will be in demand in a near future. An excellent example is invention of 3G. Even TATA Nano can be taken in consideration as it is only one of its kind being the cheapest car in the world.
6. Check out for a companies order value. There are various companies which have a good amount of orders for future which are of great importance to a company.
7. One can also look out for a company which has good amount of land / property. Unitech had a lot of lad which can in the eyesight by end of 2005. An investment of Rs 40,000 then would be worth over 1 crore by the end of 2007.
8. Last and not the least be confident in your stock.

Few don't s in selecting a multibagger stock.

1. Don't select a Penny Stock.
2. Don't loose hope in your company.
3. Don't depent on others , do your own research.

Happy Investing.

Common mistakes an investor makes in Stock Markets.

Many people loose money by investing in stock markets and then they curse the markets.
So a suggestion is invest sensibly. Invest Smartly !

Here are few common mistake which people make.

• No proper planning.
• Aggressive Buying without knowledge about the company.
• Aggressive Trading.
• People keep on Trading in fact over trading.
• No balance between various kinds of Investments.
• Not Investing for long Term.
• Speculative Trader.
• Sell even when a minor uptrend is seen.
• Taking loans to invest in Stocks.
• Borrowing money from Friends and Relatives.
  
• Only depended on Analyst views.
• Follow Tips what others give and not putting your own value inputs.
• Depending on an unreliable person for help.
• Investing full amount in Penny Stocks.

Among these the most common once are Depending on Tips by Analyst , Aggressive Trading and Investing in Penny Stocks.
During bull run we saw that people took loans for investing keep their house property as mortgage and lost a huge sum of money. Few people also borrowed money from Friends and Relatives.

TCS bonus issue 1:1

It seems TCS has not felt the pinch of recession as it is offering bonus issue during recession in a ratio of 1:1.
This is the second bonus issue by the company since it went public five years ago. It had announced a similar bonus in 2006.
Bearing the brunt of global slowdown, TCS battled price re-negotiations and drying up of new software development projects, but maintained operating profit margins by moving thousands of employees from expensive onsite locations to offshore sites, bringing down travel expenditure and other expenses. The company said more than 40-45% of its customers have been reporting decline in revenues and more than 50% were reporting decline in profits.
The company’s net profit grew 4.6% year- on-year to Rs 1,314 crore, while revenues grew 17.7% to Rs 7,171.8 crore in the fourth quarter of FY09. However, for the first time since it went public in 2004, TCS has recorded a quarter-on-quarter decline of 1.4% in revenue. via

In my view this is a good step by a Tata Group , providing relief to share holders during bad times. TATA group has always been ahead in a social cause.

What are the different kinds of Investment options available ?

Investments are of various types and are in various forms. Not all investments are profitable , a few of them may be and few may not be.
Few investments are based on fixed returns and few are based on market conditions and of whose future cannot be predicted. There should be a balance between suck kinds of investments. Not all of your money should go into one source of investments.

Various kinds of investments -

• Investing in Equity Markets (Stock Markets)
• Investing in Real Estates (Property Markets)
• Investing in GOLD
• Investing in Commodity Markets
• Investing in FOREX
• Investing in Mutual Funds
• Investing in Government Bonds
• Investing in Fixed Deposits
• Investing in FMP's (Fixed Maturity Plan's)
• Life Insurance
• A new version in investing in VRE (Virtual Real Estate)
• Another one is Investing in Art.
  

There should be a complete balance between the investments you choose.
Best investment would be defined as a investment which gives maximum returns over a period of time over other investments.

A Few stock market abbreviations you need to know.

These are few abbreviations used in the Indian Stock markets.

BSE - Bombay Stock Exchange. (Index - Sensex)
NSE - National Stock Exchange (Index - Nifty)
MF - Mutual Funds
SIP - Systematic Investment Plan
MCX - Multi Commodity Exchange
S&P - Standard & Poor
HNI - High net worth Individual
FII - Foreign Institutional Investor
DII - Domestic
EPS - Earning Per Share
PAT - Profit After Tax
PBT - Profit Before Tax
IPO - Initial Public Offerings
NAV - Net Asset Value
CAGR - Compounded Annual Growth Rate
P/E Ratio - Price Earning Ratio

If you know few more abbreviations then comment I will add them as soon as possible.

Is Stock Market Investing Gambling.

One of the biggest myth among many people is that they think stock market investing is just like gambling.
I have mentioned this in my earlier list.
People shy off from investing as they think it is gambling.
Many of our parents and grand parents didn't invest as they thought investing is just like gambling otherwise all of them have been just like Warren Buffet. If not at lest multi-millionaire.

Meaning of Investing and Gambling.
Merriam-Webster's first definition for "invest" is : "to commit (money) in order to earn a financial return." And the second definition is "to make use of for future benefits or advantages."

What about "gamble"? The first meaning is "to play a game for money or property" and the second is "to stake something on a contingency."

Some say it (Investing) is very much like gambling. While some say its myth comparing stock markets with gambling.
What I feel - In true sense if you go and see investing is buying the stock buy predicting the future (fundamentally or technically)with a sole aim to earn a profit. While in gambling you cant predict any future , people blindly put money without knowing the future.

There are some important differences here, though. Investment brokers may live off salaries or commissions, but the day trader depends directly on the market for income. The gambler may have a lot of good days, but the bad week will sap the earnings from a few good days. There is no doubt that the psychology behind gambling and active trading seems alarmingly similar, while gambling is considered illegal and illicit in many parts of the world, or at least looked down upon, day trading is mysterious and high sounding.

My point is that if you study the trends of the stock market, you can always gain with minimal (if any) loss. Gambling precludes some level of loss (and hopefully gain) -- even the best poker players have lost money, although they feel that their skills can outwit most casual players.

The other difference is the expectation. Gamblers don't go to Las Vegas with $100 hoping to come back with $115. They want to double or triple their money quickly. Investing is slower. You hope to double or triple your money, but over decades, not minutes or hours.

Markets depend on trends . Gambling is to go by flow.
Study and knowledge in markets is essential. In gambling a good knowledge base is not required , it depends on luck.

At the end I won't say stock market is not gambling , a bit of it is gambling i.e. Day trading. There are speculators (gamblers) in stock markets who may act as a bear or even a bull which affects the price of the stock on a high level on routine basis.
Take for an instance a few week ago rumors for ICICI bank becoming bankrupt were spread by a broker in Mumbai. So he speculated the stock price.

Shying of investing in Stock is not done. Warren Buffet became rich by investing. So can you.

Happy Investing.

Common Myths and Excuses in investing

Many shy off investing as they think its a waste of time and they can loose their hard earned money in no time as markets are volatile.

Common Myths and Excuses

• Its Gambling
• There are many speculators.
  
• I don't have time to invest.
• I'm too young to invest.
• People only loose money in Stocks.
• Its too late to invest now.
• I don't know how to start investing in the stocks
• I'm a girl, and girls don't invest
• My spouse does the investing
• Stocks don't give good returns
• Investing in stocks is useless, I only invest in FD's
• I invest in Gov Bonds.
• My dad has lost money in Stock Markets and so I dont want to invest.
• Bad times (Recession) phase in Stock market are longer than a bull run.

I suggest forget all this and start investing as recession period is the best time to pick up value stocks and become like Warren Buffet.
Warren Buffet now the worlds richest person and he has made his billions just by investing in stocks. You can be one like him. He never hesitated while investing.

I invest and I am happy to do so.

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