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3 Important Questions to Ask Before Investing in Any Stock

Discussion in 'Fundamental Analysis' started by shabbir, Aug 29, 2016.

  1. shabbir

    shabbir Administrator Staff Member

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    3 questions are my first line of rejection for any business. It is not based on sales, PE ratio, earnings, EPS, management efficiency, debt or even chart patterns.

    Continue reading...
     
    shabbir, Aug 29, 2016
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  2. sridharans1953

    sridharans1953 Member

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    Dear Shabbir:

    Seen your email and to certain extent, it is alright.

    Please note that there are 9 parameters that should satisfy an Investor to invest in a particular Company.

    I have learnt it through a hard way.

    For your information, I will reveal some points:
    1. The Company should have "0" Debt.
    2. The Company should not pledge their Shares.
    3. The Promoters' Holding should be more than 50%, so that the Promoters will definitely take interest in the improvement / growth of the Company.
    4. The Company should pay good dividend, year after year.
    For your info. please.
    Regards.
     
    sridharans1953, Aug 31, 2016
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  3. shabbir

    shabbir Administrator Staff Member

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    I agree with your points to an extent but not completely. To gain substantial returns, you may have to invest in companies when they are on the right track and path and not when they have reached the destinations of 0 debt,

    So let me share with you what I think is about each of your points
    1. I prefer Debt free companies but if the debt is decreasing and is nominal I don't mind either. Low debt can always be made to vanish if the book value of the company is good ewith good profit margin.
    2. Completely agree.
    3. I don't think 50% is a criteria but then it should not be minor stake as well.
    4. Quite ok but I think if company is not paying dividend and there is a reason for it like they are working on reducing the debt or they are on acquisition spree where the money invested will fetch better return than returning money back to the shareholders then I am ok with it. Just to note Berkshire Hathaway the company by Warren Buffet has never paid dividend in the last 50 years.
     
    shabbir, Aug 31, 2016
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