Thread by @2ayush

******What not to buy *******

Don’t buy psu stocks - Govt does charity, not for profits

Don’t buy low PE stocks - Market give low PE for some reason (cyclical, CG, low growth, poor mgmt, unscalable, sector headwinds, etc.)
(1/n)

#Lessons #StockMarkets

Don’t buy infra stocks - market leader L&T gave negligible returns in last decade, low margins, sector headwinds

Don’t buy commodities stocks - it is for traders, cyclical, hard to buy at bottom and sell at top

(2/n)

#sensex #nifty

Don’t buy high dividend yields stocks - if the company is paying all profits as cash, it implies that they don’t want to invest in company due to low growth

Don’t buy stocks where promoter holding is quite less - it should be minimum 50 to 60% if not 75%

#nifty #stocks

Don’t buy companies from rouge group/promoters irrespective of sector/business they are in

Bad ones - Ambani, Adani, Biyani
Good ones - Hdfc, Bajaj, Larsen

Don’t buy companies who frequently announces corporate action like split, bonus, rights etc. These actions are taken to lure investors and don’t help in growing business.

Don’t buy small price ticket companies also called penny stocks.

Don’t buy the company if the company is not in the top 2-3 leaders of the sector. The leader must be growing faster then the avg sector growth. #nifty50 #WhatNotToBuy

Don’t buy the company who is constantly touching upper or lower circuits. These are generally operated by traders and one may loose significantly when the tide turns

Don’t buy companies with huge debt (banking and nbfc is exception)

The companies with high debt face issues when the economy is not well, rising interest rates, sector headwinds etc.

Always prefer companies with no debt and optimum level of cash in books.
#Debt #Lessons

Don’t buy stocks on the basis of sms tips, friends tips, brokers tips, whatsapp forwards, TV channel recommendation, newsletters, tweets,etc.

One must study the company before investing hard earned money. The recommendations from above channels is mostly biased.

#lessonslearnt

Don’t buy companies where key personnel like auditors, CxOs, company secretary leave or asked to leave without reason. That may be business as usual but keep an eye 👁 on as some fraud or any negative news may unfold shortly

Don’t buy companies with low ROE(Return on equity) , This metric represents companies efficiency in handling shareholders contribution and management ability to generate income and growth from equity financing

Ideally, A company should have minimum ROE as 20%

#StockMarket

Don’t buy companies that are near 52 week low. It is better to see them bounce back from lows and then buy otherwise chances are they will fall further.

Again there can be exceptions, and 52 week low stock can give #multibagger returns with change in mgmt and business scenario