Once Bill Gates asked Warren Buffett that I think in the coming time, computers will change the whole world. The coming era is of technology companies. So why don’t you invest in the technology sector. Warren Buffett, until a few years ago, did not invest in the technology sector.
So you must know that once a dot com bubble came in the US. So when that bubble burst to a company’s to be, which was in the technology sector, Warren Buffett did not care. But when Bill Gates asked this question to Warren Buffett, then Warren Buffet tasked Bill Gates again, did a counter question. He says that the question is the answer.
So Warren Buffett asked that you believe that in the coming time, computers will change the whole world. But will people stop drinking Coca-Cola with the change? Will chewing gum stop eating? So Bill Gates said that it will not happen. So Warren Buffett said that it will not make any difference to me.
My business will still run and the money I have invested; my investment will grow. And exactly this has happened. Today we follow Warren Buffett. There are many other investors who are following Warren Buffett’s words and making a lot of money and you can also follow this simple strategy. In this blog, we are going to talk about four such success rules that will give you a lot of profiting the stock market.
And the first rule of that we have just discussed exactly. The rule says that if you are a beginner, especially then, invest in such companies that are simple. Investing simple companies. Don’t complicate things.
Don’t think that today is a new company that you are seeing that its share price is going up a lot. But just by looking at the share price, it is going up. It can be stupid to invest your money.
Such companies that will run today and will run tomorrow. Which companies can be like this, you have to identify. Let’s do a little experiment with you here. Let’s do a thought experiment. You will tell yourself which companies are there that will run in the future. See, the lockdown happened, people were at home.
Okay, it could be your dream car. It could be any of your dream car. It could have a difference in its sale because people did not gout, so they did not buy cars. Now people have not gone out, you are also understanding this. But there are so many things that people have done at home, like brushing every morning. What do you need for that? You need toothpaste.
So will the toothpaste company be affected by the lockdown or will it be affected in the future? Just think about it. Just think that you were at home, but you were eating food. Which brand of flour were you eating? Which brand of lentil were you using? Which brand of spices were you using? Which brand of ghee, butter?
Just think that milk was coming to your house regularly. You focus on these things, the products you are using and the simple products that you will do today and in the future. If those companies are listed, you can buy their shares and that is the safest game plan. Simple companies that can give you regular profits, then start with simple companies.
These simple companies will grow and will give you profits. That is the rule number-one. Complicate as mochas you can. What used to happen in the US? Before the dotcom bubble, the company that had dotcom in front of it, people did not think, they just bought the shares of that company.
It seemed to them that I do not know how much profit we are going to have; how much will we benefit. Just they were going on the name, on the fancy names. This happens to us many times. We see if there is an English name, then it will be good, but it is nutlike that. It is not necessary that a fancy name is a very good company.
Have you ever read about the full form of MRF? Do you know what is the full form of MRF? MRF is a very big company. The share price has gone up to 80,000. The full form of MRF is Madras Rubber Factory. Its name is so simple and if people go above the name, then they get confused.
But a company like MRF, whose name is simple, Madras Rubber Factory, will become such a big company. Maybe people did not like it in the starting and that is why they did not invest. But simple business, people will drive a car and the tire will be put in theca again and again. Once you buy a car, you will buy a tire again and again. MRF has gone up.
Someone must have seen the web series of Arshad Mehta. Heist going in the lift. The liftman asks where to invest money. So invest money in the tire before the car.
I am not giving you a stock recommendation, but I am telling you that simple companies have given a lot of profit to people. Similarly, the second point here is very important. Were ad about dividends and get very attracted that we will buy the shares of the company.
Now what do companies do? Companies want that if you are buying share of a company, you are investing in stocks. You bought a share, you do not sell that share. Companies want this. Now if you do not sell, they will give you something. Then companies give you dividends. You stay, do not sell their shares. Think about the long term.
In the long term, the share price will also increase. You are also getting dividends regularly. So what do people think? I take such companies that I buy a stock of 100 rupees and I get a dividend of10 rupees. You think what you are thinking. I am not saying that it is realistic. People want me to get as much dividends as possible.
Now if you are investing in stocks for the sake of dividends, then you can lose. I will show you a real-life example. If you search on the internet, you will find many companies. Now one company is very famous, Coal India Limited, it gives very good dividends. I am telling you straight, it gives very good dividends. The company’s turnover is also good.
The market cap is also good, but here the share price of a company above 88000 crores, if you look here, it is continuously falling. Almost here you can see the high above 400 rupees, the high of 440 rupees, where is its stock price now?
140 rupees, 120 rupees, 130 rupees, this is its rate, around140, so where 400, where 140, you are just above the dividend. The company gives very good dividends. Her ewe is showing 8.69% dividend yield.
Now if the company is giving so much dividend, then people are attracted and invest money, but I will give you one more example. Let’s search here about Alphabet. You have heard the name of Google, so I will show you the share price of Alphabet. The share price of Alphabet is 2697 USD, but now look here, the company does not give dividends.
Why doesn’t the company give dividends? Google does. We will give you dividends when we do not know what to do with that money. We know very well what to do with that money. Weill give you returns on your shares. Look at this, you are seeing these returns. The share is going up continuously and why not?
Today I feel that Google is running the whole world. Now whether to invest in technology-based companies or not, you invest in Warren Buffet for example. It is not like what he used to say before, now his standing on that point. He has also changed himself over time. It is not that you should not invest in technology-based companies.
Do it. I am saying that first invest in simple companies, which you think that your capital is safe and when you become a little pro, if you buy Alphabet share today, you feel that it is very high, but I tell you that in the coming time it will go up again, but just by saying me, you invest in it. I tell you again and again that you have to identify yourself.
You have to do the analysis yourself. You cannot say that it has gone too high. People always talk about gold. When they see it, it seems that it has gone too high, but it will go up because the company is growing. Snoot on the dividend, but on the growth of the company, on the business model of the company, you always trust and invest in that company.
Let’s move forward. So I have given you very good example. I hope you understand. The third point here is that we want to make money that we live life of peace and happiness. Yes, or yes, 100% we want to make more money that we are happy. We live a peaceful life.
If you invest your money, your hard-earned money in such place that your sleep at night is lost, then what is the use of such money. So you do not invest in such a place at all, which you think is making me impatient. I am getting tensed, where did I invest my money? So don’t invest money in place of tension.
You walk little safe. Because of more returns, I say that you may get more returns, but if your sleep at night is lost, then these returns are of no use. So it is very important that you do not disturb your sleep for small profits. If you are making more profit, then your sleep at night is very important. This is not just what I am saying. Even Warren Buffet says the same. Do not disturb your sleep.
Next and the final rule in this blog that we will discuss is the rule of success in the stock market and that is. that you invest in such companies that are generating consistent profits. Now here Aim telling you a few more things.
Such companies that are generating consistent profits, such companies whose management is very good and such companies whose brand has been established in the market, these companies will give you a lot of profits in the long term. I am giving you an example, not a stock recommendation. Invest with your own mind.
So here we come to Asian Paints. Now you see Asian Paints, as you have seen that Alphabet, in fact Google has given a return to its shareholders. Similarly, Asian Paints was actually a multi-bagger. This is actually a multi-bagger stock. Now in the coming time, will Asian Paints give more returns?
Now let’s come to the financials of Asian Paints. So I am not saying that you invest today, you can invest when you feel right, but let’s see all the financials of the company here. So you see year by year, here you can see the company’s profits because this is very important. This is highly important. I say again and again that the main focus of businesses is to generate profits.
The business is not generating profits, so why are they into the business? You can see the profits from 2010. So the net profit of the company is 836, 843,989, 1114, 1200, 1300,1700, 1900, 2000, 2100, 2700, 3000, almost a profit of 3500 crores. Year by year, the company’s profit is increasing.
Such a company that is producing profit every year, such company whose management is very good, such a company whose brand is established in the market, you can invest money by trusting such companies, but what is the right time to invest, you have to do the analysis yourself.
I have taken the name of Asian Paints for example. Again it is not stock recommendation. You have to see where you have to invest your money. The money is yours. It is your hard-earned money, but the four rules you have learned today in the stock market, I hope you will never forget them today and in your lifetime.
Let’s start with four here. Your revision will be done that we have to invest money in such companies that are producing profits. Management is good and their brand is good.
Now here, do not suddenly think that multi-bagger returns will come. We have to identify new companies, but in that too, we have to see that their brand is good, management is good and they are producing profits. There are listed companies above 5000. It is important that you invest money in one company.
You find Warren Buffett himself says that if I get one or two good companies in a year, I think I have done my research very well. So it is important to take a little time. You have to give it and you have to find such companies. Second, you have to see that the profits do not disturb my sleep at night.
So do not be impatient, do not disturb your sleep. Apart from this, our second point was that do not focus on the companies that give dividends. It is a good thing to give dividends, but you see that their growth is good. Profits, management, brand and very first point, we have come to the starting that you investing simple companies when you are starting. Simple companies, so you have to find that.