Stocks To Buy Today.

First of all, understand that if someone wants to buy stock then on other hands there will be one wants to sell it.

When you analyze that this stock is a good deal at today’s price, be aware that someone on the other side played its strategy of the trade.

The art of investing is in figuring out how to determine that value. Stocks To Buy Today.

“Growth” investors tend to focus their analysis on a company’s potential for future profits and gravitate to those whose earnings are rising the fastest.

Often these stocks have a highly compelling story:

Maybe the company sells a hot new tech product or the next blockbuster drug or has found an innovative new way to sell fast-food burritos.

Since growth-oriented investors are interested in big future earnings, they are often willing to pay a high price for a stock relative to what it earns right now.

The price-to-earnings ratio, or P/E, is a common metric for valuing stocks; growth investors will often be willing to pay P/Es of 20 or more.

“Value” investors bank less on future potential. 

They’ll tend to hone in more than growth investors on the current value of a company’s assets (minus its debts) and look for stocks that are cheap compared to those assets.

And since they don’t want to count on the most optimistic forecasts for profits, they usually buy stocks with lower P/E ratios.

Intuitively, value sounds like a more conservative approach. 

But value stocks can go out of style for long stretches of time, and buying cheap comes with its own risks.

Often when a stock appears to be a bargain, that’s only because other investors correctly see that the business has serious problems.

Stocks To Buy Today

These may include securities listed on a public stock exchange as well as those only traded privately. Stocks To Buy Today.

Examples of the latter include shares of private companies which are sold to investors through equity crowdfunding platforms.

Stock exchanges list shares of common equity as well as other security types, e.g. corporate bonds and convertible bonds.

 

 

Types of stocks:

• Common Stocks.
• Preferred stock.

Common stocks–

When people talk about stocks they are usually referring to common stock. Stocks To Buy Today.

In fact, the great majority of stock is issued is in this form.

Common shares represent a claim on profits (dividends) and confer voting rights. Stocks To Buy Today.

Investors most often get one vote per share-owned to elect board members who oversee the major decisions made by management.

Preferred Stock–

Preferred stock functions similarly to bonds, and usually doesn’t come with the voting rights. Stocks To Buy Today.

This may vary depending on the company, but in many cases preferred shareholders do not have any voting rights).

With preferred shares, investors are usually guaranteed a fixed dividend in perpetuity. Stocks To Buy Today.

This is different from common stock which has variable dividends that are declared by the board of directors and never guaranteed.

In fact, many companies do not pay out dividends to common stock at all.

Stocks To Buy Today

Basic Stock Market Terms:

• Buy  –  Means to Take a Positions or to Buy shares in the company.                                                  
• Sell  – Getting rid of the shares that you purchased, either because you have achieved your goal or because you want to cut your loses.
• Bid – your bid is what you are willing to pay for a stock.
• Ask-In the context of stock trading on a stock exchange, the asking price is the lowest price a seller of a stock is willing to accept for a share of that given stock.
• For over-the-counter stocks, the asking price is the best quoted price at which a market maker is willing to sell a stock.
• Bid-Ask Spread – The bid-ask spread (also bid–offer or bid/ask and buy/sell in the case of a market maker), is the difference between the prices quoted.
• Either by a single market maker or in a limit order book) for an immediate sale (offer) and an immediate purchase (bid) for stocks, futures contracts, options, or currency pairs.
• Bull market –A bull market is a financial market of a group of securities in which prices are rising or are expected to rise.

• The term “bull market” is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, currencies, and commodities.
• Bear Market- A bear market is a general decline in the stock market over a period of time.
• It is a transition from high investor optimism to widespread investor fear and pessimism.

Limit Order-

A limit order is an order to buy or sell a stock at a specific price or better.

However, a buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.

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• Volatility can either be measured by using the standard deviation or variance between returns from that same security or market index.
• Commonly, the higher the volatility, the riskier the security.
  • Liquidity – Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset’s price.
  •  Market liquidity refers to the extent to which a market.
  • Such as a country’s stock market or a city’s real estate market.
  • Allows assets to be bought and sold at stable prices. Stocks To Buy Today.
  • Trading Volume-In the context of a single stock trading on a stock exchange, the volume is commonly reported as the number of shares that changed hands during a given day.

    • 

      • The average volume of a security over a longer period of time is the total amount traded in that period, divided by the length of the period.
        • Going Long –In terms of a security, such as a stock or a bond, or equivalently to belong in a security.
        • Means the holder of the position owns the security and will profit if the price of the security goes up.
        •  Going long a security is the more conventional practice of investing.
• Averaging Down- Average down (or averaging down) refers to the purchase of additional units of a stock already held by an investor after the price has dropped.
• Averaging down results in a decrease of the average price at which the investor purchased the stock.

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• Capitalisation- Market capitalization is just a fancy name for a straightforward concept: it is the market value of a company’s outstanding shares.
• This figure is found by taking the stock price and multiplying it by the total number of shares outstanding.
• Public Float- Public float or free float represents the portion of shares of a corporation that is in the hands of public investors.
• As opposed to locked-in stock held by promoters, company officers, controlling-interest investors, or government.
• Authorised shares- The authorized capital of a company (sometimes referred to as the authorized share capital.
• Registered capital or nominal capital, particularly in the United States) is the maximum amount of share capital.

• That the company is authorized by its constitutional documents to issue (allocate) to shareholders.
• IPO-Initial public offering ( IPO)  is the process by which a private company can go public with the sale of its stocks to the general public.
•  It could be a new, young company or an old company which decides to be listed on an exchange and hence goes public.
• Companies can raise equity capital with the help of an IPO by issuing new shares to the public. Stocks To Buy Today.
• Or the existing shareholders can sell their shares to the public without raising any fresh capital.

After IPO, the company’s shares are traded in an open market. Stocks To Buy Today.

Those shares can be further sold by investors through secondary market trading.

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• Secondary Offering-  A secondary offering is the sale of new or closely held shares by a company that has already made an initial public offering (IPO).
• There are two types of secondary offerings. Stocks To Buy Today.
• Blue chip Stocks- A blue-chip stock is the stock of a large, well-established and financially sound company that has operated for many years.
• A blue-chip stock typically has a market capitalization in the billions, is generally the market leader. Stocks To Buy Today.
• Or among the top three companies in its sector, and is more often than not a household name.
• Forex – In stocks the order execution is delayed. Stocks To Buy Today.
• Forex is an over the counter market which does not need a traditional exchange to trade.
• The Forex is the biggest financial market and the trading volume is very high in foreign currencies.

Source of Business Capital

Without stock markets, businesses would largely resort to borrowing huge loans – which must be repaid with interest- from banks or individuals with well-oiled pockets.

Fortunately, businesses in both the developed and developing world can issue share to the public. Stocks To Buy Today.

Raising vast amounts of cash that doesn’t come along with a repayment burden.

Public companies are under no obligation to pay dividends, especially when they incur losses.

When businesses have access to such capital, they can easily expand their operations and create more job opportunities.

From a national perspective, this will lower unemployment levels. Stocks To Buy Today.

And enable a government to earn more revenue from business taxes.

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Promotes Investment

Investments, whether in the financial markets or product markets (agriculture, real estate, manufacturing etc.).

Are a key driver for economic trade, growth, and prosperity. Stocks To Buy Today.

As governments focus on creating policies –like lowering interest rates – that promote a culture of investment. Stocks To Buy Today.

Thus, stock markets are gaining prominence as a top destination for investors.

Increasingly more people are looking to invest in companies with growth potential. Stocks To Buy Today.

You don’t have to look further than Warren Buffet, one of the richest men of our times, to know that stocks create billionaires.     

 Source of Government Funds

Stock markets provide a trading platform for governments too. Stocks To Buy Today.

Sometimes a local, state or national government may need more money to develop a community housing estate.

Build a water treatment plant or initiate any other public projects.

Instead of increasing taxes to raise the required revenue, it can issue bonds through the stock market.

When investors buy these bonds, the government is able to raise the money. Stocks To Buy Today.

It needs to launch various projects that can ease the cost of living or even create jobs for locals.

In the long run, this improves the economy.

Stocks To Buy Today

Which stocks can be considered as best?

These are such stocks which one can hold for long term.

Remember: Warren Buffet buys stocks to hold them “forever“. Stocks To Buy Today.

To a novice, it can be overwhelming to identify the best stocks to buy.

So how to pick the best stocks?

Best stocks are not available off the shelf. Stocks To Buy Today.

Best stocks are often hidden in the heap of other stocks.

One must learn to screen their best stocks from this heap. Stocks To Buy Today.

This is what is called as stock screening.

Why is stock screening essential? Because it helps us to identify the true value creators. Stocks To Buy Today.

We often remember the names of only superstars stocks like TCS, RIL, Infosys etc.

These are like Bollywood’s superstars.

They are popular but are also super expensive. Making a profit with them is not easy.

Hence the good movie producers of Bollywood has identified a second genre of actors.

Stocks To Buy Today

Stars like Irfan Khan, Rajkumar Rao etc are born. Oops, we started talking Bollywood!

I have always liked this analogy to understand the importance of stock screening. Stocks To Buy Today.

In movies, it is easy for producers to decipher “expensive starts” from “truly valuable” stars.

But it is slightly more difficult to establish this anomaly in stocks. Stocks To Buy Today.

Superstars of the stock market are TCS, Reliance Industries, Infosys etc.

No doubt these are good stocks, but most of the time they trade at overvalued price levels. Stocks To Buy Today.

The trick lies in identifying stocks of a great business which are also undervalued.

Keep watching not-so-popular stocks…  Stocks To Buy Today.

The big names like RIL, TCS, WIPRO are always in news.

But what about those stocks which are not so popular? Stocks To Buy Today.

Is it good to buy only popular stocks? On the contrary, experts buy less popular stocks. Why?

Because popular stocks generally trade at overvalued price levels. Stocks To Buy Today.

There are 5,000+ stocks currently trading in Indian stocks market (BSE).

Out of these, which are the best stocks? The answer is not easy.

 Stocks To Buy Today

In fact, the answer is so unique that people who can find this answer, become millionaires.

We common men can find this answer? Yes, it is possible. Stocks To Buy Today.

But we have to follow a procedure.

We can use two basic screening criteria’s. Stocks To Buy Today.

This will help to identify the best stocks among ordinary ones.          

Prepare your own list of best stocks

Success in life cannot be borrowed. Stocks To Buy Today.

The same theory is applicable to stock investing.

We cannot borrow others stock-advice and become successful.

Why does borrowing advice not help in stocks?

People who really can identify the best stocks, do not care about publishing it to the public.

People who publish are either not reliable or their news reaches us too late.

By the time we get access to this list, the value of those stocks already crossed its “fair value”.

 Stocks To Buy Today

So how a common man can buy the best stocks?

Do not wait for TV, Print media or internet to suggest you best stocks. Stocks To Buy Today.

If the best stock is gold, then investors are the gold-miners. They have to do some digging to extract the gold.

In this blog post, we will try to learn how to unearth this gold. Stocks To Buy Today.

We will learn to prepare our own list of best stocks.

Now the question is, doing this exercise will be worth the effort? Stocks To Buy Today.

I am sure it will be. This is the best way to play the stock market game.

Having one’s own list of best stocks is the best formula for success.

If one could copy others and make money.

Probably every stock trader in this world would have been a millionaire by now.

But the fact is, only the elite investors make money in the stock market. Stocks To Buy Today.

What makes an investor rise to the stature of an ELITE?

Their ability to screen best stocks from ordinary ones makes them elite. Stocks To Buy Today.

This should be the starting point.

Stocks To Buy Today

How often must one re-check the list of best stocks?

Companies business performance keeps changing from quarter to quarter (3 months). Stocks To Buy Today.

Performance of companies is declared in their financial statements (quarterly).

This is the time when we can recheck our list of best stocks. Stocks To Buy Today.

But if this is too frequent, updating one’s list at least once a year is also a good idea.

Best stocks will always have a wider moat…  Stocks To Buy Today.

What does it mean by a wider moat?

A moat is a term which is used extensively by Warren Buffet.

In the English language, a moat is a hole which is normally dug around the Forts, and it is filled with water.

Therefore, such an arrangement provides a protection to the fort from its invaders.

Any fort which has such a moat surrounding it will make it extremely difficult for the attackers to enter and capture the fort.

How this hole (moat) analogy makes sense in stock investing? Stocks To Buy Today.

A company enjoying wide moat means the future potential of its business is well protected.

Stocks To Buy Today

How to identify best stocks?

There is no shortcut to identify best stocks. Stocks To Buy Today.

I do it the harder way following the method of fundamental analysis.

It makes the job of fundamental analysis slightly easier. Stocks To Buy Today.

Though it is not a perfect tool, it does answer a few important questions about stocks.

 What financial ratios say about the stock.

The use of financial ratios helps me to comprehend the numbers of business rather easily.

Though the use of financial ratios alone says less about the stock, it helps us to make the first impression about it.

Financial ratios are a quick way of evaluating stocks. But it is not a detailed analysis.

The ratios that my worksheet highlights prominently are as below:

• Price Valuation
  • Price to Earnings Ratio (P/E).
  • The Price to Book Value Ratio (P/B).
  • Price to Sales Ratio (P/S).
  • Price to Free Cash Flow (P/FCF).
• Profitability
  • Return on Equity (ROE).
  • Return on Capital Employed (RoCE).
  • Cash Returned on Invested Capital (CROIC).

 Stocks To Buy Today                                                        

How the market price of stock behaved in the last 10 years?

Frankly speaking, price charts tell nothing about the stock’s business fundamentals.

But one must still give it a glance. Why? Stocks To Buy Today.

It gives an idea of how the current price is placed compared to last 10 years trend.

There can be few scenarios here:

• Firstly, if the price is only bullish – the current price can be overvalued.
• Secondly, if Price is remaining modest – poses a question about why the price is not growing fast enough?
• When the price is falling – the current price can be undervalued or business fundamentals may be weakening.      

What is the intrinsic value of the stock?

Intrinsic value estimation of any stock is the job of a scholar. Stocks To Buy Today.

I am no scholar. My stock analysis worksheet is also far from perfect.

But it does for me is good enough.

It attempts to estimate an approximate intrinsic value of stocks.

Its values may not be very accurate, but it still gives me a rough Idea of whether my stock is overvalued or undervalued.

 Stocks To Buy Today

When my worksheet tells me that my stock has a good business but is overvalued, I do the following:

• I include this stock in my portfolio tracker.
• When the price of my stock falls considerable (like 20%-30% dip), I buy it.

This is a very easy way for me to ensure that I buying stocks of good business, but not at overvalued price levels.

How good is the stock overall?

Intrinsic value estimation is like everything of stock investing. Stocks To Buy Today.

If one can perfectly master the art of intrinsic value estimation, they need not analyze anything else.

But not many know the art of intrinsic value estimation (accurately). Stocks To Buy Today.

Thus the people who know this art have become Warren Buffett’s & Peter Lynch’s of the world.

So for people like me, who are not even 0.000001% of Buffett; what they must do to ensure that they are buying the best stocks?

I prefer to get an overall impression of the stock based on the following parameters:

• Current price valuation.
• Future growth prospects.
• Management’s efficiency.
• Profitability of business.
• Financial health &
• The threat of company going financially bankrupt.

 Stocks To Buy Today                  

Regulation In India

Indian Capital Markets are regulated and monitored by the Ministry of Finance, The Securities and Exchange Board of India and The Reserve Bank of India.

The Ministry of Finance regulates through the Department of Economic Affairs – Capital Markets Division.

Also, The division is responsible for formulating the policies related to the orderly growth and development of the securities markets.

That is share, debt, and derivatives as well as protecting the interest of the investors. In particular, it is responsible for

• Firstly, institutional reforms in the securities markets.
• Secondly, building regulatory and market institutions.
• Thirdly, strengthening investor protection mechanism.
• Lastly, providing the efficient legislative framework for securities markets.

The Division administers legislations and rules made under the

• Depositories Act, 1996.
• Securities Contracts (Regulation) Act, 1956.
• Securities and Exchange Board of India Act, 1992.

REGULATORS

Securities & Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) is the regulatory authority established under. Stocks To Buy Today.

The SEBI Act 1992 and is the principal regulator for Stock Exchanges in India.

Stocks To Buy Today

SEBI’s primary functions include protecting investor interests, promoting and regulating the Indian securities markets.

All financial intermediaries permitted by their respective regulators to participate in the Indian securities markets are governed by SEBI regulations, whether domestic or foreign.

Reserve Bank of India (RBI)

The RBI is responsible for implementing monetary and credit policies, issuing currency notes. Stocks To Buy Today.

Thus, Being a banker to the government, the regulator of the banking system, manager of foreign exchange.

And regulator of payment & settlement systems while continuously working towards the development of Indian financial markets.

The RBI regulates financial markets and systems through different legislation.

Also, it regulates the foreign exchange markets through the Foreign Exchange Management Act, 1999.

Stocks To Buy Today

National Stock Exchange (NSE) – Rules and Regulations

In the role of a securities market participant, NSE is required to set out and implement rules and regulations to govern the securities market.

Therefore, these rules and regulations extend to member registration, securities listing. Stocks To Buy Today.

Transaction monitoring, compliance by members to SEBI / RBI regulations, investor protection etc.

Thus, NSE has a set of Rules and Regulations specifically applicable to each of its trading segments. Stocks To Buy Today.

NSE as an entity regulated by SEBI undergoes regular inspections by them to ensure compliance.

Also, movements in the stock market can have a profound economic impact on the economy and everyday people. Stocks To Buy Today.

Thus, A collapse in share prices has the potential to cause widespread economic disruption.

Most famously, the stock market crash of 1929 was a key factor in causing the great depression of the 1930s. Stocks To Buy Today.

Yet, daily movements in the stock market can also have less impact on the economy than we might imagine.

For example, the stock market crash of 1987, didn’t cause any lasting economic damage. Stocks To Buy Today.

Though it did influence monetary policy.

The UK cut interest rates in fear the stock market crash would cause a recession.

Instead, low-interest rates caused a boom.

Stocks To Buy Today

Plummeting share prices can make headline news.

But, how much should we worry when share prices fall? Stocks To Buy Today.

How does it impact on the average consumer?

And how does it affect the economy?  Stocks To Buy Today.

Economic effects of the stock market

• Wealth effect

Thus, the first impact is that people with shares will see a fall in their wealth.

Therefore, if the fall is significant it will affect their financial outlook. Stocks To Buy Today.

Thus, if they are losing money on shares they will be more hesitant to spend money; this can contribute to a fall in consumer spending.

Their spending patterns are usually independent of share prices, especially for short-term losses.

The wealth effect is more prominent in the housing market.

In Dec 2014, the value of the UK stock market was the US $6.06 trillion so it has a big impact on wealth.

Effect on pensions

Pension funds invest a significant part of their funds on the stock market. Stocks To Buy Today.

Therefore, if there is a serious fall in share prices, it reduces the value of pension funds.

Stocks To Buy Today

Which this means that future pension payouts will be lower.

Also, If share prices fall too much, pension funds can struggle to meet their promises.

Therefore, the important thing is the long-term movements in the share prices.

Thus, If share prices fall for a long time then it will definitely affect pension funds and future payouts. Stocks To Buy Today.

Confidence

Therefore, often share price movements are reflections of what is happening in the economy. Stocks To Buy Today.

E.g. a fear of a recession and a global slowdown could cause share prices to fall.

The stock market itself can affect consumer confidence. Stocks To Buy Today.

Bad headlines of falling share prices are another factor which discourages people from spending.

On its own, it may not have much effect, but combined with falling house prices, share prices can be a discouraging factor.

However, there are times when the stock market can appear out of step with the rest of the economy. Stocks To Buy Today.

Thus, in the depth of a recession, share prices may rise as investors look forward to a recovery two years in the future.

Investment

Thus, falling share prices can hamper firms ability to raise finance on the stock market. Stocks To Buy Today.

Thus, the Firms who are expanding and wish to borrow often do so by issuing more shares – it provides a low-cost way of borrowing more money.

However, with falling share prices it becomes much more difficult. Stocks To Buy Today.

Bond market

Also, a fall in the stock market makes other investments more attractive.

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Thus, People may move out of shares and into government bonds or gold.

Thus, these investments offer a better return in times of uncertainty. Stocks To Buy Today.

Though sometimes the stock market could be falling over concerns in government bond markets (e.g. Euro fiscal crisis)

Stock Markets are an important factor in the economy. Stocks To Buy Today.

Therefore, It is actually a mirror image of how an Economy is performing over the years.

Thus, if the Stock Exchange is performing considerably good.

Therefore, the economy is on a great path otherwise it is clearly growing at a slow pace growth rate.

People who Invest massively in Shares:

• Firstly, it affectsthe investor confidence in the country. Stocks To Buy Today.
• For eg; Overseas investors have pumped in investments of US$ 9.96 billion in Indian Equity markets via FII’s in the first half of the last year.
• Mainly on hopes of a stable and reform-oriented government at the Centre. Stocks To Buy Today.
• If due to instability and fringe elements, the Indian government fails to protect the Investor sentiment.
• Also, the investor may withdraw their massive investment, causing the stock market to fall.
• Next, which in turn creates the panic environment for both the government and the investors.
•  Therefore, this is the main reason you don’t see much investment in war-torn.
• And countries engaging in a civil war such as Afghanistan, Somalia and most recently Ukraine.
• Also, Firms who are expanding and wish to borrow often do so by issuing more shares. Stocks To Buy Today.
• Because it apparently provides a low-cost way of borrowing more money.
• But, with falling share prices it becomes much more difficult. Stocks To Buy Today.

Stocks To Buy Today

People who don’t invest heavily in shares.

Thus many believe that if you don’t invest in the stock market, a stock market crash doesn’t affect you.

However, any ordinary citizen loses money and opportunities all based on the stock market.

When the stock market begins to fluctuate, companies tend to cut the Employee Benefit by pulling back on their employees’ retirement, health care plans.

Also, it impacts Student University Education.

 As when money gets tight, people stop saving and this includes their children’s education savings

• Properties or real estate tends to get more expensive as interest rates rise. Stocks To Buy Today.
• Also, this creates a bone of contention as Income of-of people don’t show any momentum

And as a result, the property bubble may burst to cause property prices to fall intensively. Stocks To Buy Today.

Thus, which may affect people who have the massive investment in real estates.

• Unemployment, most companies keep their money mixed in equities. Stocks To Buy Today.
• And hence a rapid drop may dissolve their assets and so to make up for this.
• Companies would lay off employees to try to stay afloat.

Therefore, you can make a lot of money investing in stocks or trading in the stock market.

But it is not something for the new investors. Stocks To Buy Today.

Also, the investor must have a solid understanding of stocks.

And how they trade in the market or risk losing money in a volatile type of investment. Stocks To Buy Today.

Thus, this all the above necessary information are based on the fact.

Therefore, all of us know the stock market is subject to change every day, every hour, every minute, every second. Stocks To Buy Today.