Shares , Stocks and Retail Investors

In this era of very high liqidity flowing from FII's and Institutional investors which has taken the Indian Share Market to its three year peak again the retail investor is stuck out of the rally the indian markets have seen.

It has been the trend were all the so called equity advisors keep telling the retail crowd the market is at its peak but the market never stops moving up and when they say the market is in over sold trritory the market continues to fall. So is it the market behaves in opposite of what they predict or the retail investors are misguided with bad intentions of making money for themselves and their so called high wealth clients.

The Retail investors are in a dillema of being profitable or being a loser in the market.So here I guide you with a few points to note before venture out in jungles to catch a Tiger on the advice of a old man sitting in the bushes.

Let me first tell you nobody wants to make money for you but many wants to take money out of your pocket. So whenever you listen to any advice from any member even from your own family think on the points how you can lose than how you can gain. since this will let you know the correct price to be paid to buy that Tiger.

So here I mean the first step is to pay correct price for buying a share of a company as per its valuations. The best way to do that is compare the share of 5 companies for there business prospects, management turnover, profits , and other factors like (Govt regulations, geographic prescense and so on).

1. Business :- It is very important to know the business you are buying and how the prospects of that business in your eyes are. What you observe in your day to day life. Since if a customer is no more using x product then it is no meaning buying the shares of that company at the lowest share price also since it will deppreciate its profits and wealth of investors slowly and steadily as it progresses with time.

2.Management:-
Secondly it is very important to know with whom you are going to run your company in terms of their understnading of the Business, their experience in delivering results rather than just speaking in projections and reports. Backgrownd of the promoter holder since these are the people who takes decisions for your business to progress and if they are faulty or without good intentions or inexperinced or effected by personal rivalry or no innovative attitude will steadily make their company decline along with the wrong decisions they take. So however good the business may be they will make losses due to the wrong business decisions executed. due to which you are also going to suffer.

3. Turnover: Thirdly it is important to know how big is the sales of the enterprise you are buying. In some cases if the turnover is small there is a risk of business falling apart due to un-controllable sequesces arising out of that area of business or client or changes in the market and also it is dangerous to buy very big business trunover where you don't see any way for it to increase further and also carries the risk of declining sales gradually due to cut throat competion and other factors.

4.Profits:- Profits is the most important factor for anybody to start a business so even after looking into all the above parameters your final objective should be to understand the profitability of a company or its business model. Since no company can withstand its efforts without gaining profits. Its something like a employee is working without salary which cannot continue for long. So find out how the companies profits are generated and how it can be effected positively or negatively due to the external factors in future.

Profits is one factor if you are able predict properly and your wealth making ability will be very high even if markets go down your share price will not.

Regulations, Geographic presense etc:-

Even though the regulations and the geographic effect on the business is litlle un-predictable it is always better to read and understand the history of the market they operate in since partly it can be repeated. Regulations are one thing due to which the businesses closed and companies wind up due to sudden changes in regulations could impact companies profits due to which they go in red or even some times close the operations of that busniess.

To give a little idea of the bussiness which can be looked for future even if the markets are high are
Power sector:-

Due to shortage of power the states will be compelled to buy the commodity at a high price as well and demand will never reduce by the way the usage is driven from local consumption. But this sector is highly volatile to govt regulations on pricing. Specially the renewable energy has good future since many countries wants to get tag of producing green energy to gain carbon credits. And the companies operating in this field which are better bet are Suzlon in renewable sources of power, Indiabulls Power for Power etc..

Technology:-

Even though this sector is at high valuations I would predict better future for this area of bussiness since no field or company can progress without the latest and advanced technology. And the public is ready to pay higher price for better comforts arising out of innovation and creativity. This will just drive the profits of this sector.

Will be regularly updating on more such opportunities do write in your feedback about your understanding of the above post.