How to pick the Right stock in Stock market Jungle

                                     How to pick the Right stock in stock market Jungle

                                          Before starting the post just wanted to remind you a Two rules  by Warren Buffett on stock market investment.
                                   
                      “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1”

Always remember the above quote while investing in a particular stock or maybe thinking of investing.Always don't invest in any stock as some analyst has given advice or some famous personality has invested in the stock.

                                    Check the below parameters carefully before investing in a company.

• Try and understand what does the company Do.(Go to the company site and see what does it do and what are the products and think may be after 15-20 years will the products be relevant ).
• Main thing is to try and invest in a Debt Free Company.(Where there is no Debt and they generate cash each and every quarter).Example for this is Infosys which is sitting on a Cash of 30000 Crores(This is huge amount of money).
• Check if the company is  the market leader (If so then it makes sense to invest if it is less expensive).how to find out the Company is expensive or not.This might be the question you might have come across.There is P/E( price to Earning) if the price to earning is more then the stock is expensive.But Market leaders like Asian paints are expensive see the below Details to figure it out yourselves.

The P/E ratio at which Asian Paints are trading is 58 which is very high.But generally market leaders have pricing power through which they can maintain margins.They can just increase and pass on the Price hikes and still be making huge profits.We should chose such companies but when the P/E is a a bit or else we might end up losing money.

When Speaking about P/E I would like to quote about Warren Buffets Quote on it

The Market Can Price Things Wrong

“Price is what you pay. Value is what you get.”

There is a lot of inherent meaning in the above Quote... Market can price the stock ruthlessly high but it doesn't mean that you go there and buy it.Wait and watch approach works out sometimes.

You should check for the financials of the company carefully and see how is it performing before investing.See the snap shot of the financials of infosys for example.See the total Debt of the company is 0. Net profit is also constant and it keeps on adding cash to the kitty of the company so the company can pay dividend to the investors.

                    The last and the most important advice to first time investors is If you want to invest 100 rupees in a particular stock then don't invest it at once.Invest in a staggered manner.