Dhirendra Kumar explains what all an investor should do before buying stocks
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How to identify stocks worth buying during a market fall?
- Shweta Sawant
You should not go about identifying a company when the market starts falling. Investing in a company requires rigorous effort. Broadly three-four things that one should keep in mind are; if the company is growing, has had a good return on equity for shareholders, is not leveraged, i.e., it has not borrowed much money and is resilient. You should make sure it is managed by a bunch of good people who will not steal money. You are effectively entrusting your money to somebody else to manage it, and you empower him with a lot of authority, so in that sense, look for trusted people.
If you have all these things in place, make sure you buy that company's share at an attractive price. Because you can spot a great company, and you can buy it at a fancy price and never make money.
Once you have done these things, make your list. Have your watch list, set it up on Value Research Online, and keep looking at it. When the markets fall, you will be in a situation to pounce on that. You have to be ready with your list of things you would like to pounce on, like spotting prey, so look at your investment alternatives like that.
I think this should prove to be rewarding, and this requires a very unusual characteristic for very successful investors. It requires patience because you can often have your list of companies, and they can remain very pricey for a prolonged period, and that is when you should be waiting with your money not invested.
We are always told your money should be at work all the time, or you have to do something. No, equity investment requires patience. And it's more about temperament.