Ten Golden Rules of Equity Investing
welcome to Invest and Earn , In this article we will tell you very important “Ten Golden Rules of Equity Investing“.
Rule one: Demand fair treatment of shareholders. When considering an investment, the first question to ask is: Who controls the company?
The second is: Do you trust them? A good company demands having someone you can trust in control. Rule Two Be mindful, companies are not about assets… …they are about people. No matter how good the hardware, a business is worthless without high quality people. No need to show off!
Rule Three Remember, balance sheet strength is critical. Companies typically fail because they are weakly financed. Weak finance means weak foundations, means a weak company. But firm foundations and a strong balance sheet tell you many things – most importantly, that the company is unlikely to fail.
Rule Four: Understand what you’re buying. Some investment opportunities are hard to understand, but the golden rule is… …if something looks too good to be true… …it probably is. So, if there’s something about an investment that doesn’t make sense… …just walk away.
Rule 5 Be wary of over-ambition. It’s often tempting for a business to expand, or to try something outside of its area of expertise… … So watch out when investing, as companies that do this inevitably end up… … in trouble. I think we all saw that coming. And that.
Rule Six: Think long term. Unless you need to get your money back soon, you should think long term and avoid getting caught up in the daily noise of markets. Don’t worry about short-term price swings, good investments generally just need time to grow.
Rule Seven: Benchmarks are just measuring devices. As an investor, it’s always tempting to follow the crowd, but you should never do something just because everyone else does. Successful investing requires thinking differently. Putting it simply, to beat the benchmark you must deviate from it.
Rule Eight: Take advantage of irrational behavior. Markets are driven by humans. And humans are irrational. So it doesn’t take me to point out, therefore, that markets are irrational. Uh, for goodness sake! So when investing, rather than joining the stampede, you should take advantage of such utter silliness.
Rule Nine: Do your own research. There will always be standard broker research… …but there is no substitute for doing your own analysis. So, if you want to be ahead of the herd, Jolly well think for yourself.
Rule Ten: Make sure that any competitive advantage is sustainable. Some businesses produce more profit than others… It may be that one company has found a way of getting ahead of its competitors… However, this will be of no value at all… …if its advantage cannot be sustained.
So, there you have it: Ten Golden Rules of Equity Investing , We can’t predict the markets, but understanding these rules Will make it easier for you to invest with confidence. Off you go!