WHICH TYPES OF STOCK WE HAVE TO AVOID?
HOTTEST STOCK OF HOTTEST INDUSTRIES
NO DOUBT THAT IS A HIGH GROWTH INDUSTRY, BUT AS COMPANY GROW, TOO MANY OTHER COMPANIES COME INTO PICTURE, WHICH CAUSES EARNINGS REMAIN CONSTANT FOR ALL THE COMPANIES. BECAUSE THEY HAVE TO DECREASE THE PRICE TO COMPETE WITH EACH OTHER.
“THESE COMPANIES STOCKS RISE RAPIDLY AND ALSO FALLS RAPIDLY.”
BE AWARE OF NEXT SOMETHING
AVOID THE STOCKS THAT ARE CONSIDERED NEXT RELIANCE, BAJAJ FINANCE, IBM, APPLE
AVOID DIVERSIFICATION
WHEN THE COMPANY IS TOO PROFITABLE, THEY BURN THEIR CAPITAL BY DIVERSIFICATION
IF A COMPANY ACQUIRE SOMETHING:
THEN IT SHOULD BE RELATABLE BUSINESS
EXAMPLE: GILLETTE, THE LEADING MANUFACTURER OF RAZOR BLADES ACQUIRE THE FOAMY SHAVING CREAM LINE.
BE AWARE OF WHISPER STOCKS
THE COMPANIES WHICH MAKE IMMAGINARY PROMISES FOR EARNINGS AND GROWTH SHOULD BE AVOIDED. WE CAN ALSO INVEST IN THESE COMPANIES WHEN THEY PROVE THEMSELVES.
BE AWARE OF MIDDLEMAN
THE COMPANIES THAT ARE SUPPLIERS TO BIGGER COMPANIES LIKE SOME DIGITAL PARTS TO WIPRO CAN BE WIPED OUT WHEN WIPRO STARTS MAKING THAT PARTS THEMSELVES.
DON’T ONLY READ THIS POST. BUT ALSO APPLY THESE PRINCIPLES WHILE INVEST.
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