ilmscore | 5 less discussed points to consider before investing in Stock Market | CA Rachana Ranade

5 less discussed points to consider before investing in Stock Market | CA Rachana Ranade

Published: 2024-02-16
Status: Analyzed

Predictions from this Video

Total: 4
Correct: 4
Incorrect: 0
Pending: 0
Prediction
Topic
Status
Even if a stock has fallen significantly (70-80%), it may continue to decline if fundamental aspects of the company, such as product issues, management, or underlying problems, have not changed or been resolved. Investors should look for fundamental changes before considering averaging in or taking a contra bet.
"always remember that if nothing has changed in the company even if the stock has corrected like 70-80% there are great chances that the stock might fall further, so before you think about averaging in that stock or before you think about taking a contra bet on that stock try to see if something has changed in the stock or not, try to to see whether the problem because of which the stock started to see the downfall whether some sort of solution is in picture for that stock or not, if it was about some problem in the product whether the there is some solution that has been found for that product or not if there was a problematic management whether these people are now being replaced or not"
Falling stocks and potential for further decline
Correct
Investors should avoid stocks of companies where the management has questionable governance, integrity, or is involved in litigations, as these factors can negatively impact the company's performance.
"The moment you feel that this management is such where governance is at stake, where governance can be questioned, when their integrity can be questioned, where there are certain litigations on the management, ideally you should stay away from such stocks."
Questionable management and governance
Correct
Stocks bought immediately after listing that trade at significantly high valuations (high PE ratio compared to industry average) are most vulnerable to sharp declines when market sentiment turns bearish. Investors should check valuations before investing in such stocks.
"if this be so the moment the market mood changes if market starts turning bearish these are the stocks which ones which are absolutely high in PE as compared to the industry PE stocks which are high in valuations they are the ones which take the beating first okay so whenever you are buying post listing just be aware just check whether the valuations are not sky high and then only invest."
Post-listing stock valuations
Correct
Investors should not buy stocks that are rapidly declining without fundamental changes in the company, as they risk further losses.
"just because the stock is falling don't catch that falling knife your hands are going to bleed."
Catching falling knives
Correct