Choosing the Right Equity

This is a truly tricky decision to make for most. But if you are willing to study and follow fundamental principal for investment, it should be a good decision.

Let me look at some salient factors that you must keep in mind:

Pinpointing a Company:

All companies in a particular industry earmarked for investment may not be uniformly good. You have to pick the right company or companies based on fundamental criteria and non-financial aspects such as management  reputation , past track record , future plans , etc.

 Deciding on the Right Price:

Having chosen a company, you need to decide , whether its stock is attractive at the prevailing price. Is it overpriced, is it under priced , or is the price just right.  Whether a price is right or not essentially depends not so much on a company’s asset base but upon its earning power. If the earnings are good and growing, a high price may be justified ; otherwise not.

 Deciding on the Right Time:

In a way, the time and price issues are interlinked and may be examined together. A good understanding of share price movement chart may help in timing your purchase. Here to perception of an investor and trader is different.  An investor has more freedom here than a trader. Investor can survive a fall in price better than a trader.