But you picked good stock at the wrong time. Means when it started falling, you picked it then. So what will you see in a good stock, you will see negative returns. And I do not want that people promote one term a lot.
When you go to learn the stock market, the first term you will hear is value investing. This value investing is very important, but I will tell you from my experience as of now, value investing is nothing better in the long term.
I also believe that, but I will tell you one more thing. In value investing, I have my personal experience. Some stocks made a lot of money and some stocks, despite doing value investment, my returns are negative.
Means in some stocks, value investing did a great job. Now what is value investing? It is a very simple thing. Buy any stock when you are getting that stock at a lower value than its intrinsic value. Now what I am saying, maybe a new person is not understanding this, but it is a simple thing.
You go to buy T-shirt. You bought that T-shirt at 500. One day you saw that it is getting for₹ 300. You did not think that you bought it for 300. The next day, the store put more discount and made it for₹ 200.
Now what will you think, you will think that I bought it for 500 for 300, but you will not think that you bought it for 500 for 300.You will think that now it is getting for 200. So what will you think there that have lost it. Ultimately, whether there was a loss or not, we can debate about it for a long time, but how to understand the importance of the stock market.
Your money is limited. this is an important blog, so I will take some time because it is necessary to clear the concept. Suppose you have an amount of money. I will never tell you that you put all the money in the stocks. Why? There is a reason for that. You buy gold and bring it. The price of gold, whatever price you bought it at, and after that it is less, you know one thing that the price of gold will not be zero.
You put money in real estate, you bought land. I prefer land. You put money in land, so I will not say that the money will be over, but in stocks, the most important thing is that the price of the stock can be zero. Zero means almost all your money can be over. You bought a stock for 1000, it can be for 10.
So what is important is that if you put money in a falling stock, you thought it was fundamentally strong, butt is a company, but it can fall from 1000 and come to 10and here it came from ₹1000 to 10, so it means that all your money is over. So thesis not an example. I can take the name of many stocks that have fallen a lot. You have seen the example yourself. For example, let’s talk about Yes Bank.
So Yes Bank, I will show you the chart and explain it to you and then I will explain the concept to you that which stocks you have to buy and which stocks you are buying, so please stay with me because itis an important . So nblogow we take an example. So we are talking about Yes Bank. I will open the chart of Yes Bank here so that you can see.
So now we talk about Yes Bank. Now at one time you saw that Yes Bank was very high, but after that it kept falling and Theni will tell you that if you are still interested in Yes Bank, then what you have too. So at one time, when it was looking strong fundamentally, despite that, people suffered losses in it.
So we will talk about something which is highly important. So you are watching, we have comet 200, but 200 is not enough, but you will see this. Just see this. This is important, so I will show you. Look at this. So let’s talk from here when its price was almost 400, then the price of a stock which was at 400, today it is at 20.
The thing of 400 has become 20. People thought that thesis a good stock, let’s invest it. Now what does a value investor want? He wants that this thingy of 400, I should get it for 300, I should get it for 250.
Now how will you know that you are buying stock at a lower or higher value than its intrinsic value. I will give you an example. There is a free website that you can use. Its name is Tickertape. You will see heretic will just show this. So for example, you go to Ticker Tape and you can search for stock screener.
You will also get a stock screener. For example, let’s talk about Yes Bank. So in today’s rate, the whole score card has come. Here this whole score card shows you that if you want to invest in a stock, then these parameters, you can seethe.
So here is its performance, here it is out of 10, so the valuation is still high. It is not less than the intrinsic value, even at 20. So when someone was buying at 400, then according to the parameters of that time, he must have definitely given. For example, you say I want to buy Reliance.
Reliance is a popular stock, so I will talk about it. If you talk about Reliance, then the valuation of Reliance is now saying that it is very high. For example, you say that I want to invest in ITC. So were talking about the example of ITC, so the valuation is very high. Out of 10, there is one score, but if you talk about ONGC, then you see the valuation of ONGC is 8.6. So8.6 means you are getting less than the intrinsic value.
Now what I want to explain to you, we come to that point. So if you talk about value investors, suppose today I see ONGC, it is an example of ONGC that if I am getting its valuation fair, should I buy it? Knowhow to save yourself and when to buy it, let’s understand it and then we will talk about which stocks you will be investing.
So at one time, when Yes Bank, for example, on different websites, you calculate its Patio, calculate many ratios and after doing fundamental analysis, you buy this stock instead of 400, you buy it in 250. I agree with you, you say that I would have bought it at 250, so I would like to explain to you that it could have caused you loss at 250.
What is the reason for that? Now see the reason. Here this is typically the way I follow today, so understand it. Here I have used two indicators, which you should also do. One is pivot point and the other is super trend. So what I am trying to explains that you do not put your hand in any stock until it is in its uptrend.
Number one, you do not put your hand in the stock until it is in its uptrend. The second thing, if you see that it is in the uptrend, then it has changed the trend, then what is the pivot point important? It shows you support resistance. Now here we will understand it’s we will just understand this because this is important.
Support resistance is the base of technical analysis. If you do not know this, then you do not know technical. Now what happens is that the investors say that we do not need to do technical analysis. We are investors, we will forget it. See, if you are an investor, I tell you, if you are an investor, then what does investment mean?
That you are trading for a long time, you will sell it sometime, but you do not think that I will take it and give it to my children. So you are looking at a thing of400 for 20 rupees today, so it cannot be that if you are picking stocks, then you have to look at the technical there. I am repeating this to you.
Many people will say that just invest, invest, do not see, do not see, then you invest in mutual funds because then you really do not need to see. If you invest in mutual funds, then you do not even need to see your portfolio because the fund manager is managing here. He is investing in multiple stocks, so he will do a better analysis than you, but why do you invest in the stock by mutual funds?
Because you say that I have to get better returns from mutual funds. I have to get better returns from the index benchmark. The example of index is to get better returns from Nifty 50. If you do not want to use your brain, you invest in mutual funds.
In fact, you can invest in index funds. So this is your choice, this is your individual choice, but if you say that I have to invest in the stock, then what is the reason for investing in the stock? Understand my point.
Now, stocks are more volatile. If you look at the index, then you will see that in one day, half a percent has increased, 1% has increased, 1.5% has increased, but a stock can increase by 5%or 10% in one day and infect it can break by 10% in one day. So now the point is that if you invest in the stock, now your volatility increases because if you are invested in single or group of stocks. Now what people say to reduce volatility, they invest in 50 stocks.
If you are investing in 50 stocks, then you choose a mutual fund. You do not need mutual funds, you know how many stocks you have to invest in, maximum 10. If you are still thinking that I have to invest in more than 10 stocks, I will recommend you to goat. When you invest individually, for a mutual fund. Go for a mutual fund. Concentrate on 10 stocks.
in your portfolio, you will get good returns. Now you need more returns. The second question Maximum. Once you have 10 stocks will come, my time frame. See, the blog can be a little long, it doesn’t matter to me because am writing a blog for the person who actually wants to earn money. If you are thinking that will tell something in just a minute and finish the blog, then I am not doing any comedy here.
I am not writing any entertainment article. I am making an educational blog. Suit will take a little time to understand the concept. The concepts time frame. Now understand what this time frame is. I say how much time do you need returns. You say that I am such an investor who does not care about 1 month, 2 months, 3 months.
So I will tell you that you see the daily time frame. You have to put money for 1, 2,3 months and you want good returns, then you see the daily time frame. If you talk less than that, then you have come in the same category as a trader.
You are not in the investor category. If you say that I can think for a few months to a few years, then you see the weekly chart and you say that I can think for years, then you are actually a big investor who thinks that I will pass on my generations, then you see the monthly charts there. Now why did I say this, I will explain it to you.
See, if you look at the timeframe, then what do I have to see in the time frame, I have to see two important things. At this time frame, I am writing number one for you, which trend is going on. See, if you follow that trend, you will make money.
Money is made with the trend and if you are against the trend, then you can definitely do value investment against the trend. Because sometimes the trend will change, good company, I agree for this, but I would like to tell you that a value investor thinks that the thing should be found cheap.
Example, being value investor, my mindset was that I will buy things cheaply. So I bought ITC at that time when memes were made that it will not go above 200. So I bought ITC as a value investor when there was no potential movement in it. So I bought it at a price less than 200 and what was the benefit, when it went above 200, I made good money.
But in the same way, there are some companies where put money when the price fell as a value investor, but it fell more. The company is good, but it is important to see when it will rise. Because if you put money on a running horse, you will make money. I will give you an example. You got a race course and you bet which horse will win today.
I say you have two bets. Listen carefully, you have two bets. You can bet twice and you put money on the first bet of 50%, you put money on the strongest horse you see. So we are saying that you have put money on a fundamentally strong company. But when the race starts, the horse does not run in the race. It is very slow.
Now how do you know that? I will give you another example. Now we have to see according to whom it is running fast. So we say that there Isa very simple calculation that it is beating its benchmark. So beating the benchmark means that its alpha should be good. Now how does alpha come out?
For example, you go to stock screeners, you say that I want to see Nifty 50 and in Nifty 50, you do the ad filter. You go to technical, you can go to ticker tip and put technical indicators. You put alpha. So what does alpha mean? Alpha means that according to the benchmark of the stock, how much is the outperformance. The more alpha, the better. So we all know that the example ophidian will be good because it has beaten the index.
Similarly, the companies whose alpha you see in negative, it means that they did not perform well according to the index. So there are very simple things that you need to know. So we are making the assumption that were investing money in stock. We are investing money on a horse.
So what is my first choice? I am investing money on such a horse which is strong, but it is not running according to Nifty. The stock is not running. So now I have another bet. I have another bet that which horse should I bet on? The race is going on. So I bet on the horse that is running the fastest. The one who is running the fastest, it is not necessary that am the strongest, bathing is performing. He is running fast.
So who has the chances of winning? You see a race; a marathon is going on. The one who is running the fastest, has a chance that he will finish early. He will reach the destination first. So you always have this. This is a rule of the stock market.
You write it down and this is not a rule that have learned from someone, but this is a rule that I have observed over the years that invest money on a running horse. People feel that Adani is overvalued. Its P-E ratio is very high.
If I click on Adani and I will show you here, so you will say that its P-E ratios 546. So Adani’s P-Ratio is coming and this stock has not stopped for a year. You can see that the stock is running. So P-E ratio, we generally say that it is very good if it is less than 20. Itis not stopping at 500.
So here the thing is not only that I have chosen a good company. I am giving the example of Adani, but you have chosen any XYZ company. So there is nonstock recommendation. I would like to tell you that you have chosen any XYZ company. How will you do that?
I will tell you that too. You have seen the right fundamentals that when its P-E ratio was around 20-25-30, then you put money in it. You have seen sector; you have seen everything. You have seen the dividend yield, you have seen its income growth, you have seen its cash flow, you have seen everything.
After that, what did you see? Now come to the technical because this is important. So I told you that I will tell you the time frame. So the example of Yes Bank that I am giving, see here is the weekly time frame.
Now I will show Yes Bank again. Let’s take an example, let’s take a latest example. For example, you see Hindan, so now what do you see, I will open Hindan first. So you see Hindan and now you see that its P-E ratio is 7.97. So if you do fundamental analysis, then we say that if the P-E ratio is less than 20, then it is good. After this, what do you do? You also check the financials. Example is on the ticket tip; you can check the stock.
So I am giving an example, you choose the stock yourself. So you saw the financials, you thought everything is fine. Now what do you do? You are interested in this company. Now, as I want to tell you, you see two things here. You did fundamental analysis, you liked the company. I say after that, look at two things in the technical, whether that stock is running or not. Now what do you see, it has made an uptrend on the weekly chart.
When it made an uptrend, it broke its pivot. It made an uptrend, now the stock is in the uptrend. Even now, if you see, it has broken its pivot. When it breaks the pivot, then as a, now simply, it is the rule of technical analysis, after the pivot, it will go to R1, after R1, it will go to R2. So thesis how stocks perform.
If you invest in this stock, suppose you have done it, I am giving an example of this stock, you invest in any stock, you have invested in the uptrend, but now what you see, it has changed the trend, then you go out. Because when you ride the trend, when you ride the trend, you make good money.
A lot of money is made with the trend. You will make a lot of money with the trend, but if you invest against the trend, so we just do not know how much it will fall. If you simply see, it did not break itsR1, it got resistance and it broke its pivot.
After the pivot, it took support down. If it would have broken support, it would have gone down. So when we are talking about Yes Bank, when the technical of Yes Bank went wrong, fundamentally, if anyone is telling it that it is a good company at that time, we have to stay in it, it is of 400, after 400, it came to 300, it cameos 200, it came to 100. Now if you think again, what will happen if it goes from 100 to 400, but nobody imagined that it will come from 100 to 20. So people put money on 100 and after that it kept falling.
It went up to 5 rupees. So you think if the thing of 400has gone up to 5 rupees, that is a problem. But now if you Tellme that will you investing Yes Bank, so I will give you an answer to this.
So I tell you here that you caught it, you must have invested in the uptrend, your money has become in the uptrend, but when this price started to break, you were out. Now what is the problem, people have so many stocks, they cannot study it.
When I told you to choose10 stocks, when I told you here that you choose a maximum of 10 stocks, so you can study these 10 stocks. So what are you going to do, you will choose good stocks, you will choose fundamentally strong stocks, plus you will take such stocks that are in a good trend and after that you will also see their technical and then you will invest money.
How can this happen, you will not make money? If you are going to choose a stock yourself, then our objective is to beat Nifty. The money you are investing, invest it with a lot of thought that you are investing lot of money. I told you that there can be a big movement in stocks in a day.
For Nifty,5% increase and decrease is not a big thing in a day, but itis not a big deal for the world. If you invest money in stocks, then you will make money.an upper circuit. So you are choosing stocks, so after today you are blinded by the fact that the company is very good, it is available at a low price, buy it.
So nobody knows if you like Paytm very much. I don’t know if you have done its analysis or not,5% can increase in a day. It can increase in a day. It can have but if you have invested money in it, then the problem is that when you have to invest money. I am not saying that you have to invest money in Paytm. Definitely you will do its analysis, but when to invest money is important. You invest money then. Let me show you Paytm after this. I will show you Yes Bank first. So now I will talk about Yes Bank because of which I will open Paytm. So now I talk about Yes Bank. It is not that you cannot invest money in Yes Bank.
Definitely, its valuation is also poor. But if you go according to the technical, the valuation is also poor. But if you want to make money in the stock market, then a simple thing is said that the price is Good. The price is for any stock, now remember this thing and note it too. For any stock, no price is that it has become too much and there is no such price that has become too low. So the price can fall as much as it can and can increases much as it can.
This stock market is on demand and supply. If there is a lot of demand and supply, it can increase as much as it can. So Yes Bank can be 200 or 2000 again for 20rupees. It is totally dependent on demand and supply. This is the most important thing. So now someone will say that Tesla was running.
Why was it running? Demand and supply. Here you can see Yes Bank. I say a simple thing in today’s date. Here you can see the downtrend. I have kept the setting of the super trend as 2nd, so I always tell you to make it little faster. You can see the default setting length of 10, you can see the factor of 3.I have done it for 20 and 2, so use it for 20 and 2. So now youkan sees that there Isa downtrend here.
If it makes an uptrend and I say that it goes to break its resistance here, then if I see it technically, then it will be a potential buy because the trend will also go up from here and it will break its resistance from here.
So its next target can be R2, next target can be R3. So the thing of 20 rupees can reach 40, but you have to follow the trend and you have to follow the support resistance and if it falls from here, it breaks the pivot, then I will not even look at this stock. Why not? It will break the pivot and go to S1.
So the thing of 20 rupees can be of 13. You have to invest money with lot of thought. You don’t have any useless money. No matter how rich you are, but Isai that no one has useless money.
So finally, what were the most important things in this blog, we revise them. We said first that you choose good fundamentally strong companies. Now which companies do you want to choose in 2023? If you are a beginner, then I will give you a recommendation that you choose Nifty 50.
If you got Nifty 50 on Tickertape, then you will see 50 companies. Thesis point number one that you are seeing Nifty 50, you are seeing50 companies. You choose from the top 10 companies and maximum 10 companies. After that, if you want to increase the horizon a little, then I will say that you choose Nifty 100.
So here you will get India’s top 100 companies. Now you take out 10 companies from the top 100 companies. For that, you must do fundamental analysis first. I say do it that you have to go to the right valuation, right PE ratio and the complete playlist on fundamental analysis is available on the I button.
Learn for free how to do fundamental analysis. When you pick good fundamental companies, then you have to check a simple thing that what is the stock that has come in an uptrend and its support and resistance are basic things. For this, I have given you two indicators, pivot points and the second super trend.
Check this and then invest money. If you see that any stock has changed its trend or it is breaking its support and falling, then why do we have to sit in the falling car? We do not have to crash; we do not have to sit in the falling plane. If we have to fly, then you have to invest money on running horses. If you invest money on running horses, then you will make more money. What most people do is they see which stock has made its 52 weeks’ low.
Okay, it will recover. Let’s invest money in it because I told you that no price is so low that it can break. So you will see that there will be no more returns. On the contrary, when you invest money on running horses, you will make more money.