How to make money in stocks market, for this it is very important that you choose the right stocks that can give you the best returns.
Unfortunately, this is one area where most investors stumble. Not only do they find it incredibly difficult to select good stocks to buy for themselves, they actually end up investing in the wrong stocks which lead to losses and unnecessary heartburn for them.
If you are also struggling with this then do not worry. There are simple and effective ways in which you can generate stock investment ideas.
If you have the inquisitiveness and the eye for the necessary details, then you can easily use these to generate some effective stock investment ideas.
News is what drives the stock markets, so this should be the first thing that you should be looking at.
Keep yourself updated about the economic and business environment by reading some renowned and reliable business newspapers, publications and magazines. You can also follow the blogs of some well-known investment experts.
All of these can give you stock investment ideas which you can really take a deep look at.
One big word of caution over here: Do not believe in every company-specific news that you come across, since some of them may be just rumors disguised as news.
Whenever you come across a news which is too good to be true, then it will be better to ignore them since in most of the cases they will not be actually true.
Evaluate every news that you get, crosscheck and use them to generate investment ideas only when you are very sure about the authenticity.
2. Practical observation:
One of the best ways to arrive at stock ideas is to observe the world around you. This is a great method in which you can identify growth stocks at an early stage and invest in them.
So, go ahead and research the companies whose products and services you actually use and are very satisfied with.
Warren Buffet, the guru of investing is known to have come up with several stock investment ideas in this way. When he was just 9 years old he used to count discarded caps from soda bottles to understand which brand has the highest sales.
Eventually, went on to invest USD 1 billion in coca-cola company in 1988, an investment with grew nearly 16 times over the next 27 years.
Also Read: 5 Things to Avoid in Current Stock Market
3. Annual reports:
If you are looking for some gems in your portfolio then you definitely have to look at the annual reports of as many companies as possible.
Though this might seem to be a rather boring and mundane job, it is one step which you should never ignore. Apart from looking at the hard financial numbers, you should also keep an eye on the commentaries and discussions by the management.
This will give you a clear idea about the vision and mission of the company and where it is headed in the future.
4. Stock Screeners:
With more than 1600 stocks listed in NSE and over 5700 in BSE, it is easy to get lost in the crowd. Many investors find it incredibly difficult to choose good stocks to buy from this huge list and they stop researching altogether.
Stock Screeners can help you out in such situations. They allow you to filter the stocks based on several predefined or custom criteria so that you can identify the list of stocks that should be on your radar.
For example, if you want to find out stocks which have A price to earnings ratio of less than 15, then you can easily create a filter to scan for those stocks.
Screener.in is an excellent stock screener that is available. You can create a free account and get started immediately.
It is highly recommended that you start using the stock screeners to filter out the noise and make your stock research process more systematic.
5. Beaten down stocks:
This might seem to be the least obvious of all the sources mentioned here but can be one of the most effective.
This involves buying stock which is best among the ones that have come down significantly from their highs or preferably the ones that might be trading at their 52-week lows.
Here you will need to understand that though most of the times stocks come down because of a bad news or bad performance, sometimes they fall because of no apparent reason at all.
For example, a general crash of the market or the sector to which the company belongs might cause the stock to come down.
Keep an eye on the ones that have fallen due to this, and or otherwise fundamentally very strong. Those who follow the contrarian style of investing actively look out for such stocks and many of them are known to have made loads of money through this process.
Apply these methods to generate the stock investment ideas and then gather enough information about each stock to know whether they are the right investment candidates or not. This will allow you to select the stocks which are the best of the breed and make good money through the markets in the long run.
So these were the 5 ways to generate stock investment ideas which will help you in buying stock
You can also check out this informative article on Top 20 Brokerage Companies in India
This Article is contributed by Raj Bhattacharjee. He is Digital Marketing Analyst working wit Kredent InfoEdge Pvt. Ltd.