Read on Twitter
How To Find, Select and Invest In MultiBagger Stocks.
(A beginner& #39;s guide to profitable investing)
//THREAD
(A beginner& #39;s guide to profitable investing)
//THREAD
Rather than jumpin straight into how to make dem stacks, let& #39;s start with the basics.
What are stocks?
Why do we invest in them?
and When do we invest in them?
Why do we invest in them?
and When do we invest in them?
What are stocks?
" A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price. "
- The Intelligent Investor by Benjamin Graham
" A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price. "
- The Intelligent Investor by Benjamin Graham
Why do we invest in them?
Well, assuming y& #39;all are quite new, you probably saw wolf of wall street and said to yourself yo I need to make some cream and bang hookers left-right.
Well, assuming y& #39;all are quite new, you probably saw wolf of wall street and said to yourself yo I need to make some cream and bang hookers left-right.
well in essence yes, the basic goal of investing in stocks as a type of security is to earn profitable returns on your investment or watch your net worth grow as your holdings increase in value.
When Do we invest in stocks?
Before answering that we need to know what are bull and bear markets?
Bull Market - A bull market is a market that is on the rise and where the economy is sound. Basically, most of the stock prices are quite high during the bull market
Bear Market - while a bear market exists in an economy that is receding, where most stocks are declining in value. The stocks are cheap during the bear market.
Now, our goal is to maximize profits, how do we do that, we buy stocks when it is cheap and sell them when they& #39;re high, easy.
So buy during the bear market and sell during the bull market.
That& #39;s the basic concept.
So buy during the bear market and sell during the bull market.
That& #39;s the basic concept.
This thread is all about value investing. You& #39;ll need extreme patience, there& #39;s no fuckin thing as easy money, nobody gets rich quick.
investing is a form of art and successful investing requires intellectual superiority and critical thinking free from emotions and opinions.
investing is a form of art and successful investing requires intellectual superiority and critical thinking free from emotions and opinions.
you buy a stock for a reason and you hold it till the reason is valid
if a stock has a profitable business with good management you hold it even after it gives 200% fuckin returns, period.
example: Apple
You don& #39;t sell it unless it fucks up somewhere.
if a stock has a profitable business with good management you hold it even after it gives 200% fuckin returns, period.
example: Apple
You don& #39;t sell it unless it fucks up somewhere.
Let& #39;s understand a few terms first to understand the factors on which we& #39;ll be selecting stocks on:
The terms used in the financial world are really simple, wall street makes it sound complicated to scare the pussies away. I& #39;m gonna try to make it as simple as possible.
The terms used in the financial world are really simple, wall street makes it sound complicated to scare the pussies away. I& #39;m gonna try to make it as simple as possible.
1. Return on Capital Employed (ROCE)
ROCE is a financial ratio that can be used in assessing a company& #39;s profitability and capital efficiency. In other words, the ratio can help to understand how well a company is generating profits from its capital.
ROCE is a financial ratio that can be used in assessing a company& #39;s profitability and capital efficiency. In other words, the ratio can help to understand how well a company is generating profits from its capital.
The greater the ROCE %, the better
for more info https://www.investopedia.com/terms/r/roce.asp">https://www.investopedia.com/terms/r/r...
for more info https://www.investopedia.com/terms/r/roce.asp">https://www.investopedia.com/terms/r/r...
2. Return on Equity (ROE)
It is a measure of the profitability of a business in relation to the equity.
It is a measure of the profitability of a business in relation to the equity.
ROE is a measure of financial performance calculated by dividing net income by shareholders& #39; equity. Because shareholders& #39; equity is equal to a company’s assets minus its debt, ROE is considered the return on net assets.
The greater the ROE %, the better
for more info
https://www.investopedia.com/terms/r/returnonequity.asp#:~:text=Return%20on%20equity%20(ROE)%20is,the%20return%20on%20net%20assets.">https://www.investopedia.com/terms/r/r...
for more info
https://www.investopedia.com/terms/r/returnonequity.asp#:~:text=Return%20on%20equity%20(ROE)%20is,the%20return%20on%20net%20assets.">https://www.investopedia.com/terms/r/r...
3. Debt To Equity Ratio (D/E)
The debt-to-equity (D/E) ratio is calculated by dividing a company’s total liabilities by its shareholder equity. These numbers are available on the balance sheet of a company’s financial statements.
The debt-to-equity (D/E) ratio is calculated by dividing a company’s total liabilities by its shareholder equity. These numbers are available on the balance sheet of a company’s financial statements.
The ratio is used to evaluate a company& #39;s financial leverage. The D/E ratio is an important metric used in corporate finance. It is a measure of the degree to which a company is financing its operations through debt versus wholly-owned funds.
High Debt can burn a company to its ground. So if a stock has a high debt to equity ratio, the chances of you and your money getting fucked increases drastically
Lower the Debt to Equity Ratio, the better
Low Debt companies stocks are a stable and safer bet.
Lower the Debt to Equity Ratio, the better
Low Debt companies stocks are a stable and safer bet.
4. Promoter Holding
Promoters are the ship captains and control the company’s direction. Along with institutional and mutual fund holdings, a change in their holdings can indicate performance outlook for the stock
Promoters are the ship captains and control the company’s direction. Along with institutional and mutual fund holdings, a change in their holdings can indicate performance outlook for the stock
Promoters and promoter groups are entities that have a significant influence on a company. They may have a major or even a controlling stake in the company.
Basically, they are the big league player which hold a significant stake in the company
Basically, they are the big league player which hold a significant stake in the company
More the promoter holding % in a company, the better as they have big leagues siding with them.
for more info https://investeek.com/promoter-holding-stock-picking/">https://investeek.com/promoter-...
for more info https://investeek.com/promoter-holding-stock-picking/">https://investeek.com/promoter-...
If the promoter holding has decreased in the last quarter, be sure to check for the reason cause it can mean two things
1. Promoters wanted to liquidate to cash in the current profit
2. The company is kinda slacking off so they wanted to bounce asap
1. Promoters wanted to liquidate to cash in the current profit
2. The company is kinda slacking off so they wanted to bounce asap
5. Pledged Percentage
Pledging of shares is one of the options that the promoters of companies use to secure loans to meet the working capital requirements, personal needs and fund other ventures or acquisitions. A promoter shareholding is used as collateral to avail a loan.
Pledging of shares is one of the options that the promoters of companies use to secure loans to meet the working capital requirements, personal needs and fund other ventures or acquisitions. A promoter shareholding is used as collateral to avail a loan.
This is bad cause if the company doesn& #39;t pay up the loan, they have a good probability of getting fucked.
The lesser the pledged percentage, the better
for more info https://tradebrains.in/pledging-of-shares-listed-companies/">https://tradebrains.in/pledging-...
The lesser the pledged percentage, the better
for more info https://tradebrains.in/pledging-of-shares-listed-companies/">https://tradebrains.in/pledging-...
6. Sales Growth and Profit Growth
Both are kinda self explanatory but still lemme put in the defs for OCD dudes out there
Both are kinda self explanatory but still lemme put in the defs for OCD dudes out there
Sales growth is the percent growth in the net sales of a business from one fiscal period to another. Net sales are total sales revenue returns, allowances and discounts.
Profitable Growth is the combination of profitability and growth, more precisely the combination of Economic Profitability and Growth of Free cash flows.
We need companies that making that constant dough and selling shit
So we need companies with respectable sales and profit growth.
So we need companies with respectable sales and profit growth.
7. Market Capitalisation
Market capitalization refers to the total dollar market value of a company& #39;s outstanding shares of stock.
Market capitalization refers to the total dollar market value of a company& #39;s outstanding shares of stock.
Commonly referred to as "market cap," it is calculated by multiplying the total number of a company& #39;s outstanding shares by the current market price of one share.
We need stocks of companies which have some clout
Stocks of businesses with high market cap are stable and good for the long term.
Stocks of businesses with high market cap are stable and good for the long term.
Now we know the factors on which we& #39;ll buy the stocks
But going through every stock and checking if it satisfies our condition is borderline retarded
Instead of doing that we filter the stocks based on our conditions
But going through every stock and checking if it satisfies our condition is borderline retarded
Instead of doing that we filter the stocks based on our conditions
Filtering of stocks can be done with a screener
Screener basically takes in out conditions and gives us the names of all the stocks that satisfy it, pretty easy huh
Screener basically takes in out conditions and gives us the names of all the stocks that satisfy it, pretty easy huh
We can use the http://investing.com"> http://investing.com screener cause it has screener for every country& #39;s stock exchange https://www.investing.com/stock-screener/?sp=country::5|sector::a|industry::a|equityType::a%3Ceq_market_cap;1">https://www.investing.com/stock-scr...
The ideal conditions you can input in the screener are :
Return on capital employed > 20%
Return on equity > 20%
Debt to equity < 1
Sales growth 3Years > 10%
Profit growth 3Years > 12%
Pledged percentage < 10%
Promoter holding > 50%
Market capitalisation > $10 B
Return on capital employed > 20%
Return on equity > 20%
Debt to equity < 1
Sales growth 3Years > 10%
Profit growth 3Years > 12%
Pledged percentage < 10%
Promoter holding > 50%
Market capitalisation > $10 B
After this, you& #39;ll get the list of companies that made of the cut after applying the conditions
Now you must be thinking, that& #39;s kinda easy now I invest in all the companies and get crazy rich. Nah, that& #39;s not how it works if it was that easy every dude on wall street would be the next Warren Buffet
That& #39;s not how investing works, you& #39;re buying a part of the company not just a fuckin electronic blip.
You& #39;ll still get negative returns on some of these stocks cause you just fuckin randomly bought them without knowing anything about it. IF you do that then you STOOPID
You& #39;ll still get negative returns on some of these stocks cause you just fuckin randomly bought them without knowing anything about it. IF you do that then you STOOPID
After screening, you need to go through the company financials that is income, balance sheets and check it& #39;s cash flow. You gotta learn how to read those
After that, you read it& #39;s annual reports and understand the business model and decide if the buy is worth it.
After that, you read it& #39;s annual reports and understand the business model and decide if the buy is worth it.
You also gotta choose companies with high dividend yield and diversify your portfolio to different industries to maintain stability during recessions and sometimes dollar-cost averaging is quite beneficial.
