Category:
Comments:
0 
View:
199 /* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:”";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:”Calibri”,”sans-serif”;
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-fareast-font-family:”Times New Roman”;
mso-fareast-theme-font:minor-fareast;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;
mso-bidi-font-family:”Times New Roman”;
mso-bidi-theme-font:minor-bidi;}
Everyone is shouting that this stock is going to rise tenfold. Let’s buy it. But wait!! Who is the one selling it? And why is he doing so? Is he a fool? Does he not know that it is going to rise tenfold? Or is he in the market to loose money so that others can make it (innovative Philanthropy ha!!)
If a stock’s price has to rise tenfold, the underlying business has to be capable of giving returns which are at least worth the tenfold price. There is no other way this can happen. This emphasizes the importance of Fundamental Stock research. Fundamental Stock research essentially means relating the stock price to its underlying business. Will an empty can of coke sell for the price printed on it? Surely not, because even though the price is written on the can (not on the coke, as it can’t be), it is the price of the coke inside it. Similarly the price of a stock is the price of a small part of the business which the stock represents. Thus, you should know what you are buying when you invest in a stock. The way to do that is Fundamental Research. You must be thinking “But why should I do it? Isn’t there anyone who can do it for me? I have heard of high pay stock analysts. I can hire their services.” Sure you can. But whose services will you choose? There are so many of them (all the more difficult in a developing country like India.) This is precisely why you yourself need to be in the driver’s seat. So that you can understand what kind of advice an equity analyst is giving. When you understand Fundamental Research, you can make out what a piece of information means.
Here lies the answer, a fundamental investor can make out what a business is worth, so he sells when greedy investors want to buy it at a very high price; and he buys when fear-stricken investors want to sell it at ridiculously low prices. As far as you are concerned, the decision lies with you? Take responsibility and make money for yourself, or depend on tips and recommendations blindly and be a philanthropist.
The first step towards this could be to browse through our educational blog Stock Shastra, which aims at imparting education on principles of value investing, fundamental investing and overall investor behaviour. Also at MoneyWorks4me.com, we provide valuable information in an understandable form, with the MRP. (intrinsic value) for stocks trading in India… Happy investing..
Contact Us:
Tel: 020-67210600
Email customercare@moneyworks4me.com
Related posts:
Article's Source: 
By:
Posted On: August 12, 2011 
Published articles: 2 
Level: Indefine