How to choose right company for investment of money in share market?

Question

As a beginner if i want to invest money in share market:
How can i come to know that compony is growing or loosing?
Please tell me all important points which I should check before I invest in XYZ.... company.

Answer 1

It depends on a million things.

You need to start by researching the company. Remember, when you invest your money in a company, you become a part owner in that company. You'll need to know it like an owner does. After all, they are using your dollars.

Use sites like Yahoo!Finance to do some browsing through companies that you're interested in. Yahoo!Finance will show you ratings from various analysts and firms that you can use to weigh against your decision. You can also look at the beta of the security as a more objective statistical determination of risk.

Call the companies that eventually interest you so you can find out more. Any PUBLIC information is always available to you. Read up on press releases or media articles related to that company or the industry in which it conducts business. You need to be aware of the real potential of the company to turn a profit. If a firm is historically a strong performer, but is suddenly faced with having obsolete technology and competition with more advanced methods, that firm may be in danger of losing out in the near future. A firm that has had a long break-in period but suddenly stumbled upon a breakthrough may be in for a period of strong growth. Get acquainted with the management team, the products, the way the firm uses its funds, what the company's growth strategy is, etc. Much of this information will be available in the annual report. All other information you will have to just ask the investors rep. You will only have access to PUBLIC information.

You can't possibly know if a company is growing or losing. You can approach this one of two ways... 1) play it by the numbers and invest based on ratings or risk, or 2) do your due diligence and invest in a company or product you really believe in. I recommend the second.

Furthermore, before you begin investing in stock you need to be aware of the intricacies of the market and how it all ties together. It can be like putting a quarter in the gumball machine and hoping for a red ball. But if you do your research and conduct a ton of research you will be doing yourself a favor and making an educated decision. Nonetheless, there is no such thing as a crystal ball for the stock market.

Which leads to another separate but related discourse...

Making money on the stock market is the result of one of two things... 1) hard work or 2) blind luck. I'll tell you why.

Every different security has its own individual risk beta. As you diversify your portfolio, you also "diversify out" your risk. The more you diversify, the more your portfolio's beta will match that of the market. If you are diversified, your money will essentially grow at the same rate as the market. In other words, with a diversified portfolio, your money is not growing, it is merely keeping pace with the rest of the market. This is why you are so often urged to invest your dollars rather than keeping your benjamins underneath your mattress. A dollar in the mattress will depreciate in value over time because the market is generally a reliable growth instrument. But a truly diversified portfolio will match the risk and growth of the market. This means investing in a real diversified fund rather than individual stocks.

However... not everyone believes in the concept of the "efficient frontier."

If you want to make fast money, you will want to either invest in individual stocks and reduce your risk by doing as much research as you can, or you will want to invest in futures. If this is your goal, you want to do some more schooling. This is the equivalent of jumping into the deep end wearing a pair of concrete boots.

My advice, learn learn learn. Then start slow... diversify. When you get a handle on how to evaluate securities then give it a shot. Best of luck!

Answer 2

1 study
(beginners,fundamental analysis,technical analysis)
2 watch financial news &market movement
(ndtv profit )
3 do paper work for some time
(www.moneycontrol.com
1.open a portfolio a/c )
4 invest but dont trade
.................................best of luck

Answer 3

You don't. (That's my job)