One of the common mistakes that people tend to equate with when it comes to purchasing stocks is which one to buy. Yes SBI card share price will give you inputs on the type of stocks you can purchase, but it is not as easy a task as it seems. A simple business that turns out to be easy to understand may turn out to be a wealth creator in the long run. The onus has to be on quality over quantity at any point in time as the choice of quality stocks is bound to emerge through elimination. Before you are picking a stock there are a few pointers you need to ask yourself
- Do you think the company innovates? – A company has to enhance its technology in order to boost its efficiency. Nokia is an example of a company that failed to innovate as it ignored the power of technology. When better products emerged in the market, these companies suffered as they did not innovate according to the latest trends in the market.
- The size of the company- the key is to avoid small fish in a big pond. In a big pond, you need to prefer large companies as the possibility of growth would be better.
- Is the value of the stock falling? It does not make sense if you are putting your money in a stock where the value is falling. This is going to ensure that you do not fall into further losses.
- Are the shares liquid enough- when the stock value falls you panic and end up selling. But you cannot as the liquidity is on the lower side. Lower volume along with liquidity will prevent buyers when you are looking to sell a stock and vice versa.
- How transparent is the company? It is necessary that the companies should disclose all their financial information so that there is no lack of transparency part. There have been numerous instances when such situations have emerged to the fore. It is better to check out the reports of a qualified auditor as this will give you an idea about the financial state of the company.
- Is it necessary that you look out for cyclical plays? Certain stocks like sugar, or cement may turn out to be a loss-making exercise if you pick them during the off-season. Timing is everything in such cases as it requires proper action at your end. Hence a secular company turns out to be a better option than a cyclical company
- Do you think it is a penny stock? High risk may fetch you high returns but it can also lead to loss if the company suffers from the finance-related mishap. Hence it is suggested that you avoid penny stock.
Platforms like 5paisa provide inputs on which company to choose and which are the ones to avoid. By following the tips you can reduce losses to a considerable extent.
