Factors to consider – stock market buying

I have been into investing for a while. I have an adviser for my stock market investing.  Apart from that I subscribed to Economic Times newspaper and finding the content in that newspaper very interesting.  I am summarising my learnings here.

  • Long Term Vision (2-5 years horizon) is very important while picking up the stock. We need to continuously validate the prospects of it on a quarterly base.
  • Some financial parameters to look for
    • Clearly understand balance sheets, Quarterly and yearly financial results.
    • PE (price to earnings = Share price / EPS) over period of 6 quarters is key to measure the growth of the company.  This along with the Revenue growth is important.
    • Another aspect is the debt pile over 6 quarters. I am still in the process of understanding this parameter.  (with respect to revenues and asset growth)
    • Cash reserves + asset growth over 6 quarters.
  • Other macroeconomics
    • Sector growth
    • Unique position in the sector.  The company may be the early comer or has a unique product to offer. (iPhone, Tesla cars)
    • Restructuring efforts.
    • up to date with the technology.
    • Social, Climate and political factors that influence the sector
    • are there any disruptive technologies in the pipeline. what is the company doing about it?
    • Inflation and consumer interests.
  • Accumulation of shares when the mood is not good but the growth prospects are intact.