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Rules for stock selection

I think stock selection is an art. More you practice, more you get mastery on it. While selecting stocks prior concern must be given to securing your fund or capital. So that you never get thrown out of market. Although there is nothing like fundamental rules for stock selection but there a some ways though which we can avoid greater risk or which ensures some safety to our hard earned money. These are methods which i follow in my investment, do your own research before putting your money into any stocks or investments. Never put all your money into single stock: To what extent you have been researched? and how professional you are in this field didn't matter, it will not ensure guaranteed success. And there always  be some risk in the stock market so never over evaluate your ability. When you put all your money in single stock there always be risk loosing all your money if stock price goes against you. Diversify your portfolio.Not excessive diversification:- At one hand diversifi…
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Key differences between shareholders and debentures holders

As soon as you buy shares in company you become partial owner in that company,whereas debenture holder is creditor of company.Shareholders earn their dividend only when company earns profit, whereas interest on debentures must be paid, didn’t matter company is making profit or not.Investment in shares is like unsecured investment whereas debenture are generally secured through assets of company.Shareholders are authorized to take part in general meeting of company whereas debenture holder have no right to attend, unless any decision affection their interest is taken.Through election of board of directors shareholders control affairs of the company. Debenture holders not concern about management and control of the company.During winding up of a company debenture holders have better claim over shareholders. Debenture holder must be paid before shareholders.

Important ratios for stock analysis

Important ratios for stock analysis PE ratio:- PE ratio also known as the price to earning ratio and very famous between the investors. Investors use this ratio with other ratios or data to find out undervalued stocks. Read moreEarning per share:- In simple meaning it means “distribution of company’s profit between each shares” it can be used as the indicator for determining company’s profitability. It is best to use PE ratio and Earning per share comparatively.Return on Assets:- Is company using its assets effectively to generate income, yes or not? This ratio tells us the truth. This ratio gives us idea about management efficiency or capability to run company profitably. It compares company’s earnings as compare to its assetsDividend payout ratio:- It means “amount of dividends paid to stockholders relative to the amount of total net income of a company” Dividend payout ratio = Dividends / Net Income.Retention Ratio:- What company will do with its earnings, either it distribute to it…

Kinds of Shares

Kinds of SharesMost of the investors didn’t concern in which type of share they were investing and because of that sometime they ends in wrong place. It is best for every investor to know about all type of shares because different shares are subject to different risks. Every investor can tolerate different level of risk and by knowing that they can chose according to their risk potential.
The Share-capital of a company limited by shares, formed after the commencement of the companies Act, 1956 or issued thereafter consists of two kinds of shares: Preference shares:- Such shares enjoy preferential rights like payment of dividend at a fixed rate during the life of the company, and  the return of capital on winding up of the company. Normally preference share holders do not enjoy voting rights like equity (common share) holders but they have voting right in distinguish circumstances. Read MoreEquity Shares (also known as ordinary shares):- It’s a very common form of shares and first choice…

Equity Shares

Equity Sharesit’s a very common form of shares and first choice for most of the investors. They have full right over surplus profit on winding up of the company after preference shares and creditors. In the matter of dividend, directors have sole right to decide whether equity share holders receive dividend or not? It’s directors choice. The fortune of the equity shareholders is tied up with the ups and downs of the company that reflect on its share price. Equity share holder earn by buying and selling of that shares. It is also known as the “Risk Capital” because if company fails then holders of these shares may end up with nothing in their hands.
Equity shares are of two kinds. These are–
Equity Shares with Voting Rights:- the holders of any such equity shares have normal voting rights on every resolution placed before the company at any general meeting, his voting right on a poll shall be in proportion to his shares of the paid up equity capital of the company.Equity Shares with Diff…