Know The Company You Invest To Stay Ahead
What Differentiates winners from losers in a Stock Market?
1. Follow the recommendations of an experienced â€˜hitâ€™ stock broker
2. Analyse deeper to know about the company. (Annual reports/Business Magazines,Company website, above all website of â€œvijayfinancialservices.broker.myiris.comâ€.
3. The real winners will keep an eye on qualitative variables that affect stock prices. The qualitative variables are people,product,price and physical location.
a. People: you should know the promoters & the professional Managers who run the company. If the business is managed by first generation entrepreneur, check if the promoter is professionally & technically qualified to run the business. If the management consists of professionals, look at their employment history to understand their track record. For example, before setting up HDFC Bankâ€™s operations in 1994, Aditya Puri was a successful country head of Citibank in Malaysia. SAME is the promoter track history of yes bank & the recent change of guard at Indus Ind Bank.
Good Companyâ€™s do business with related parties at fair market prices. The same is disclosed in the annual report for the benefit of shareholders.
Promotors presence in the same business or related business which has under influence on main business is a dampener. The investor in the publicly-listed company runs the risk of promoter placing the cream business in the privately held entity.
SPIC-The Fertiliser Company in Tamilnadu is the classic example .The company which manufactures fertilizer in a potentially very rich belt of agriculture, had many associated companies for construction/Transport etc.The management have not acted transparently & siphoned out the cream profit generating business to associated companies and made the parent company sick & made investors to loose their investment.