Always try to protect the downside first.
- Check operating cash flow and debt
- Then check valuation parameters which depends on either book value or sales as a vast majority of companies are cyclical
If both parameters follow then check technical and previous results. If previous results are constantly bad and technical is bad do not buy. If previous results are bad but technical is good then do more research. If previous results are good but technical is bad then wait for rounding bottom up. If results and technical are both good but if cheap.
A lot of it depends on mindset also, navigation through share up and down is like navigation through life. Read Gita by (Swami Chinamayanada - VHP founder) or buy his video cassette to learn this. Chandrakant Sampath and his disciples like RK damani all attest to this truth
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