Common Sense Investing

Some people keep on telling that they are new in stock market and they don't know much about the market and are sometimes worried about their investment. Most of the time they invest in companies of which they don't have any idea.

Here is a small investment strategy which they can use to select stocks and keep them in their portfolio.

This is the general method which doesn't require any professional degree in market. You just have to keep your five sense active, do some basic analysis and invest in the companies which you look around.

Here is the set of question which you should answer and also keep a note of it:

1. You wake up in the morning, then which tooth paste you use? 2. You go for a bath, then which soap, shampoo and shaving kit do you use? 3. In breakfast which brand of tea or coffee do you drink, which company makes your biscuit? 4. Stand in front of mirror and look for the brand of apparels, shoes and watch which you use? 5. Which company jewellery your family or you prefer? 5. At home you use electrical and kitchen appliances so which company you prefer in that? 6. If you drive an automobile, then which company you automobile you use? 7. What brand of soft drink do you prefer, and which company makes it? 8. Which company makes your cigarette? 9. Where do you go for shopping regularly?

There would be many basic questions which you can note and answer. After that, look for all those companies which are listed on the exchange.

Then a simple thing which you have to do is some research on the company. You can visit the company website and view what products do they make. Also, while roaming around on your street look for the brand which people prefer. Look for the brand which your friends or relatives use.

Look for the company which is preferred by most of the people around and including you. And then you can invest in that company for the long term.

One of the major investment of Warren Buffet Sir is in Coca Cola, and Rakesh Jhunjhunwala Sir is in Titan. So these are the companies which make basic cold drink and watches or jewellery. Peter Lynch had created his wealth by investing in Candy and Chewing Gum companies.

Also remember one of the major industry of any country is consumers and the company which serves their product directly to consumers is good in the long run.

A small quote by Peter Lynch is shared. And it simply means that invest in easy business which doesn't require any rocket science. A normal guy should be able to run that business.

So novice people shouldn't prefer any company which is complex rather they should go for the sectors or companies which they are familiar with and also use their product in their day-to-day life.

So some of the company related to the shared post and are also listed on the exchange are as follows:

1. FMCG: Colgate, Dabur, HUL, Tata Consumer

2. Personal care: Gillette, Emami, Godrej Consumers, P&G, Marico

3. Beverages: Varun Beverages, United Spirits, United Breweries

4. Cigarette: ITC, Godfrey Philips, VST

5. Jewellery: Titan

6. Footwear: Relaxo, Bata

7. Electrical Appliances: Bajaj Electricals, Havells India, Voltas, Blue Star, Butterfly

8. Automobile: TVS Motors, Maruti, Hero Motocorp, Bajaj Auto

9. FMCG Retail: DMart

10. Sim Card: Reliance Jio, Bharti Airtel

11. Adhesives: Pidilite (Fevicol)

12. Banks: Hdfc Bank, ICICI Bank, Axis Bank

Don't look at their returns in 1 day, 1 month or 1 year but look for their past returns in last 10 years or 20 years how much CAGR they have delivered.

Some Note of Cautions and Basic Check Points for all the investors:

1. Look for Debt free companies with zero borrowing so in case because of a slowdown in business these company won't have any liability on their head.

2. If a company is having Debt, then look for companies that have Reserves twice that of Borrowing, i.e. Reserves = 2*Borrowing.

3. Promoters Pledging should be 0%.

4. Company should be net profitable and is paying dividend.

5. Company and Promoters should not be in bad news frequently.

If any of these 5 points are violated then avoid or exit that company if you are holding.

There would be many good sectors and many good stocks which I might have missed it. So please create your own list like this and invest in good stock. Above mentioned stocks are also good and people can use it as reference.

Now who can follow this strategy:

Anyone and doesn't know much about charts, core fundamentals analysis and is looking for compounding his savings in the long term by doing investment in common businesses.

"Simplify your investment strategy and sit tight with patience to create wealth."

Thank You all for giving your precious time to read this blog.

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