• Invest in stocks for long term. When to exit? When you need the money or when the company is not performing.
• You cannot time it rite, try but never wait for the ideal time. Ideal time doesn’t exist. Good enough is always good enough, some of your good enough picks may turn out to be good timed picks in the future. Din’t understand financials, leave it. If you believe in the company’s growth story stick to it.
• The company should be a Indian growth story, shouldn’t be a MNC Subsidiary, shouldn’t be PSU (I don’t care about Navaratna, Maharathna. Govt companies may have lot of slackness and bureaucracy and corruption). The company should be Ethical .
• Shouldn’t be in a cut throat market, like FMCG, Telecom
• If you believe in a sector but can’t identity the companies or if that sector is having cut throat market then invest in a sector MF
• Never invest in a sector or company if you don’t understand them. Energy is a good sector with large good stocks, you don’t understand then leave it. There are many many good sectors and many more good stocks to pick up.
• Shouldn’t be easily duplicated by competitors, egs of easily duplicated FMCG, Telecom, Bank
• Good brand image, less need for advt. Conditions equaling monopoly
• Shouldn’t have flamboyant CEOs (what happens if this CEO goes, how good will be the other CEO, we are investing for a long time rite?). Shouldn’t be first generation entrepreneurs.
• Never invest in IPO
• You cannot invest and forget, have a stop loss I have currently set to 10% trailing stop loss. I also monitor a stop loss of my avg price, so if I newly buy a share, I focus more on the stop loss and if it is been some time then in trailing stop loss. When the stock goes low you've 2 options, buy them or sell you stocks. If you buy you create a fresh stop loss from the avg prize. But you shouldn't keep on buying. You should get out of anchor, if you are proven wrong by the stock market time and again.
Well ofcourse there will be exceptions to these rule, because what is fun in sticking to your principles :)
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