- Millionaire Mindset
- Buy Low and Sell High
- Don't lose money
- Have patience and believe in principle of compounding
- Know or try to know industry you intend to invest in : Business Owner
Principles to Process
Millionarie Mindset
Condition Mind to Attract and Retain Money & happiness
Millionarie Mindset
Condition Mind to Attract and Retain Money & happiness
- Define Networth and Happiness Goals : Long term ( 5 /10/ 20 years ) + Year goals
- List why you want to be rich and what you will do with wealth
- Focus on Yearly defined investment goals : what gets focus : Expands including Money
- Opportunity . Growth and Rewards are key words and need to be defined what it means in your style of investing
- Action is always better than Inaction : Start the investment process rather than only reading and getting inspired .
- Identify niches in investment structure in which you can have edge & Focus on it.
Buy low and sell high : Benjamin Graham method
Two key question what is entry price and holding time period ( Buy to sell time )
- Evaluate business worth : if you cannot do it yourself leverage brokerage report (ICICI Direct . Motilal Oswal and many others)
- Buy when it is at 50% Discount to above stated price . This is called Margin of safety and sell when it is 50% higher than above stated price or 4 years whichever is earlier.
- Use value indicators Price earning ratio, Price to sales ratio and Price to Book ratio for relative selection within a sector
- Diversification depends upon on your own confidence in research and experience in stock market . Low confidence and experience means it is better to diversify by buying Index ETF rather than directly investing in stocks
- Always keep Min 25% in Bonds and Min 25% in Equity irrespective of business cycle
- Market crisis is a norm and if you keep emotion under control you can gain expotentially
- Avoid companies with Debt equity ratio > = 1
Don't lose money : Teddy Browne Methods
Buy only if ..
- If PE and book value to share prices is lower than last 5 year historical averages
- If share price is at 2-3 year low without equivalent impact in sales or market share
- Regular Insider Purchase is evident
- Market Cap is so low that it is a good take over target
Sell if
- PE ratios are at historical high
- Prices are 2 -3 year high without significant change in sales or market share
- Insider are selling
Have patience and believe in principle of compounding : Warren Buffet Methods
Buy only if
- You would have loved to be business owner of company
- Industry should be profitable with sensible competition
- Market leader share should be stable & segment should be growing at 15%
- Is not impacted by technology or advertising
- Huge switching or learning cost for customers
- Profits are consistent and 10 year growth is Min 15%
Sell
- Never
- Only if changes are observed in above states buy condition
Know or try to know industry you intend to invest in : Basic Process
- Never buy a stock whose business you don't understand
- Best to buy in sectors related to your or spouse current or past day job
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