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Sunday, December 31, 2017

Portfolio Management in 2017

I had a book called "Intelligent Investor" from 2015 but couldn't get time to read it. Due to which my portfolio get good punishment in till the end of 2016. Here are the stats
  • Started investing from July 2015
  • Till Dec 2016. If my invested amount was x, it's market value was 0.9x
  • Means I was in overall loss of 10%.
  • Started reading investing books from Jan 2017.
  • After much juggling here are the stats after a year ie at the end Dec 2017.

    • Total amount invested, Y =1.8x
    • Total current market value= 2.25x (1.23Y)
    • Total dividends recvd      =  3.3% of x (1.8 % of Y=3.3% of yearly return)
    • Total profit booked          =8.6% of x   (4.7 % of Y=9% of yearly return)
    • Total profit perceived      =23%+1.8%+4.7%=29.5% of Y =34% of yearly return

As you can see this year I started with -10% return at the start of year to +30% overall return at the end of year. This may be a luck or hard work, I don't know. But I surely know one thing that "At the start of year I gave a target to myself that my portfolio's dividend should be around saving account's interest given by bank. And see I am pretty close to it. This 3.3% vs 3.5%. Where as you have to give 10% tax on saving account interest while dividends are tax free. If you give tax on 3.5% then effectively interest earned by saving account would be 3.15% which is less than what I earned in dividends. This was what wanted from my portfolio and I am happy to get it.

The purpose of this article is motivate people to come to financial knowledge. I am not suggesting to jump into share market by reading few books unless you want to keep track of your portfolio by yourself. Share market has been historically beaten inflation as well as Fixed deposit income. If you want to dive into it. Then I would prefer you to start with mutual funds. I have taken some mutual funds which gave me return more or less than mine. So why take the burden on yourself, study few mutual funds and start with small amount. Take long term approach in the share/equity market.

And last but not the least- Keep learning.

Saturday, August 26, 2017

God A.I. and Humans

There is a question which is centuries old and still asked by many. The question is- "Is there any God? If yes, does he cares about us?"

The same question was asked me to myself several times. To get the answer, I started digging many old and new books- From scientific books like "the theory of everything by Stephens Hawkin" to religious books like Bhagwad Geeta,Quran and Bible.

As you can imagine, finding this answer is not straight forward. I keep searching for this. Then one day I started comparing A.I. to the human mind. In normal case one would try to compare A.I. advancement while keeping human mind as base. I did the comparison in reverse way. Means, I kept the A.I. advancement as base and compared human mind with it.

A.I. enables us to feed the data and it gives output only based on previous experience or predefined rules. A.I. can also help find the pattern out of scattered data. A.I. usually has multiple stages through which data passes and get transformed, one stage's output feed data to next stage as input. This process can be reversed to get interesting results too.

Doesn't our human mind works like this, actually A.I. tries to mimic to human brain. Am I making any sense?

A.I. improves with number of iterations or say time so does human. If we code to penalise A.I. for its mistakes it will learn from mistakes so does human.

So what is a perfect A.I. - which can take situational decisions without being biased and without taking external help. How much time we can take to built such perfect A.I. - that's debatable. My prediction is never for a generic A.I. . Although we can create A.I. for specific tasks but creating a generic A.I - I will wait and watch.

My question to myself was - Can God program such a perfect A.I.? God can do anything right? Thus he created us(human mind per se) which is an example of perfect A.I.

The best thing about perfect AI is that it doesn’t need changes to its program to reach a sensible output in a changed condition.

Take example of Tesla autonomous driving as an example- in its earlier phase people find it buggy to take decision by itself. Turns and lane changing were not smooth. But even without software update it got better.

Similarly human makes mistake, God is not here to guide us - what to do next? We have to figure it out by ourselves. And as we know God makes no mistakes - he has given us inherit capabilities to learn and guide ourself in almost every condition. If you get hurt physically, you learn to avoid the same mistake. Simple!

So there is a God who built us so beautifully that we can guide can ourself to achieve anything. Buddha, Muhammad and Mahavir got their learning and lessons by themselves and tried to make this world a better place to live in.

Eventually, we can do the same. We need not to follow what our traditions and religions say. Following those only fall in supervised learning, which is not a big deal to code. What matters is - unsupervised learning, we are built for that. If we used to follow what is said before- there would no no new inventions. Take any modern product and show it to 200 year old guy - he would say all these inventions as magic or trick. This is the beauty of our human mind that we can think what other haven't thought of till date. Take Einstein as  an example - " His special theory of relativity" was a matter of debate that. He thought of himself and today we are just enough capable of proving his various theories through experiment because at that these experiment were not possible.

God probably is busy doing some other stuffs than monitoring our human life every once here and there. If he has not created the best version of A.I., he would have launched A.I. V2.0 long back then- you never know which version you are. As God is the perfect maker - I don't think he need to maintain any version. Otherwise, versioning is itself a complicated tool. But do you think God has made a mistake so he needs to bring version V2.0?? Not, right??

I believe in him. He created us directly the best version and revolution and evolution lies within us. It is our capabilities what we want to learn and achieve from this infinite universe.

Remember, you can be Tesla - driven by itself or a Chevy - driven by some human. [Sorry Chevy I have to take your name till you reach a good level of AI].

Sunday, April 9, 2017

Rehauling Higher Education in India

We know that current state of higher education in India is not in top form. Here are some points which I want to highlight..
*** Current Scenario
1. Theory based University Education.
2. More weight-age to theoretical papers.
3. Poor Infrastructure.
4. Severe negligence to intelligent students who are very good a particular subject not in all subject.
5. Lack of experienced teacher in terms of industrial exposure.
6. Government funding is not sufficient or funding is mismanaged.
7. Syllabus is not upto-date. 
8. Student feedback system is absent or not known.
9. NPTEL course material is good enough but not known to all university.
10. Some university sessions run late due to which a degree course takes more time than required.
*** What can be done::
1. Training of faculty members to
1.1 update about current industrial standards
1.2 update about current industrial trends
1.3 appreciate the efforts of students who want to go beyond the syllabus and want to invent/develop something.
1.4 having proper practical knowledge of subject.
1.5 conduct workshops relevant to their majors
2. Time to time inter university or Intra- University initiatives, competitions and workshops
3. Universities should have special fund to invest in an idea or project if found promising.
4. Proper infrastructure so that students can do their hands-on effectively and efficiently.
5. Keeping the practical tool updated: e.g: TurboC is still used in universities whereas it's support has been withdrawn from 2009. Similarly Adobe Flash is going to be absolute so there is no need to put efforts in learning that.
6. Although arrangement of guest faculties is norm in universities/colleges, but still not very popular form of teaching. We can do this arrangement for specific topics instead of subject specific.
7. Free availability of research papers are available for few universities only, government can make some arrangements that small colleges and universities get same kind of benefits also.
8. In every universities we can have an IP(Intellectual Property) Panel, which help to expedite to get patents for the innovations done by students during their college term.
9. Government can put some incentive program for universities who keep on publishing new research papers. This will increase competitive environment.

Monday, March 20, 2017

Investment mistakes I made and how I corrected it

I was a Doordarshan guy, ummm ... rather, I am still a Doordarshan guy. Since my childhood whenever I used to see news there was stock news on a daily basis. I couldn't understand how it worked. But, the only thing I knew that we gamble in it and we can earn or lose the money quickly there.

But anyway, I was curious about it and I was sure I will enter into it someday. When I started or rather before starting I made some big mistakes, like

  1. I was sure I will start investing in it, but when ? This was not decided, this is where I failed miserably. I should have started just after job joining i.e. Nov 2011. Rather I started in July 2015. I have taken some sample stocks I invested in 6 months after July 2015. So, I have taken an example of average price from May 2012(which I missed) and Jan 2016 after 6 months from July 2016. So if you notice due to delay, I have to spend almost 70% more on same stocks. If I factor inflation and my stock weightage, I have paid around 80% more money for the same stocks. In reverse way you can think that if I would have started investing around Dec 2011. My profit would have been more than 80% till Jan 2016. Moral: Start as early as possible and invest regularly.

    May 2012
    Jan 2016
    Increased Cost %
    Adani 46 85 84.78
    Apollo 67 140 108.96
    Arvind Mills 75 313 317.33
    boi 300 100 -66.67
    CG 130 130 0.00
    cipla 300 600 100.00
    grasim 500 734 46.80
    HDFC Bank 500 1050 110.00
    IndiaBulls 200 720 260.00
    Infosys 600 1150 91.67
    ITC 160 203 26.88
    JP Associate 70 9 -87.14
    JK Tyre 15 120 700.00
    Mohit Indus 40 60 50.00
    MOIL 271 217 -19.93
    Morepen 3 37 1133.33
    Muthoot 123 193 56.91
    NMDC 164 93 -43.29
    Pidilite 171 555 224.56
    Powergrid 100 140 40.00
    Rallis 113 172 52.21
    REC 108 92 -14.81
    SCI 58 91 56.90
    SIB 22.1 19.1 -13.57
    SBI 190 209 10.00
    TataMo 301 370 22.92
    TVS 39 281 620.51
    Total 4666.1 7883.1 68.94
  2. Not having financial knowledge before investing. If you want to invest in equities for long term then you must have some knowledge beforehand. This was my second biggest mistake. If you analyse the above portfolio the P/E is close to 25. This is what exactly Benjamin Graham is put as a upper level. So I am still at high risk. And all this happened because the book "The Intelligent Investor" was sitting idle on shelf when I started investing. Moral: If you want to invest in equity by yourself read some investment books and do some dummy trading/investment. See the graph what happens when you invest without knowledge. More down than up. 
  3. Ignored the value of SIP and mutual funds. I knew that I am not good enough to know market. Despite this fact I didn't go SIP route initially. This was because I never had someone who recommended it and those quick ads like "Mutual Funds are subjected to market risk and blah blah. " This kept me away from it till long time and missed golden opportunity to make some money. Moral:  Start investing in mutual funds through if you are not an expert.
  4. Going after quantity instead of quality. Although this point can be covered under point No. 2. But I find it a separate issue. There may be chances that you can find a great stock with high price tag and low P/E and a good enough stock at pretty low price per stock but at high P/E. Moral: Don't go after quantity rather invest in quality but make sure you don't pay a premium price i.e. higher P/E. Like if I would have invested in MRF in Mar2012 @10k.  Today's value is close to 56k and at this price P/E is still under 16. Having lots of penny stocks is no good.
  5. This 5th point is actually the first point, the mistake I made was - purchasing an endowment life insurance plan, in which I was able to get double the return in 15 years which was accumulated in those 15 years. This sounded reasonable at that time whereas I was not able to calculate the return percentage for the same. Let's talk about the figures- I paid around 260000  and returned the policy in 4 years, if I had done some SIPs or even bank's RD it would become 4 lakh and 3.5 lakhs respectively. But I returned the policy and got only 160000. My overall loss is around 200000. Again around 80%  of loss :( . Moral: Don't go for endowment insurance plan, its returns are pretty poor and your money remains stuck with your insurer. Keep an SIP or RD for investments.
  6. Not having stop loss on my investments. This was one of the early days mistakes for which my portfolio is showing losses. Always put stop loss according to your risk appetite and companies fundamentals so that your hard earned money doesn't go waste.
These are a few mistakes made till date, however I tried to correct it one by one as soon as I realised them. Here are course correction steps:
  1. Completed reading few investment books before investing much. ("The Little Book That Beats the Market" and "The Intelligent Investor"). See my portfolio vs benchmark report as of now. 
  2. Started few SIPs.
  3. Invested in quality stocks. (Read large cap and Companies with strong fundamentals).
  4. I keep buying stocks at regular interval (averaging) and especially at dips like Brexit and Demonetization.
  5. Tried to lower brokerage charge by buying in bulk.
  6. If  you have quality share, don't book profit from selling all the it. Book only to take out the 50-60% of capital invested in that particular share . 
  7. Booked profit in the Bulls run. When market gives you profit of 30-40% in a month or two. 
  8. Keep listening some market experts and matched their suggestions with my existing knowledge and then deciding what to do.
  9. Diversified my portfolio through investing in different sectors.
Learn here to start investing 

declaimer : "I am a fairly new investor(less than 2 years old in market), so my view will be fairly limited to my experience of market as well as studies done by me. 

Saturday, March 11, 2017

Colgate and Aliens

My nephew is one of the naughty and crazy kid around. I never knew the creative side of him. When I was shortlisted for the Colgate magic stories, I thought I will let him play with it and see where it goes. When the gift arrived, he was already aware about this series. He was very happy that all of three unique cards have arrived.
He cut the pack with great zeal. I also helped him a bit to expedite.  He even corrected me when I put one card in wrong base.

He was reluctant to make story at first. So I had to blackmail him. I put the condition that he can take away those cards only if he writes the story. I handed him a paper and pen and I left the room.
Here is the storyline by my nephew - “Ashutosh”.
“”Once there were two scientist, one’s name was Jack and other’s name was John. They had listen that there are aliens on Mars.  So one day they decided to travel a long journey. (To find aliens maybe!!!). They started making their own spaceship. After many months their spaceship got ready to fly.

They dressed in astronauts suite and launched the spaceship. After an hour they were in space, they decided first not to go to Mars but to Neptune. They were going at the speed of light for Neptune. After reaching there they didn’t find any alien there. So they went to Urenus but no luck then move to Saturn then Jupitor but no luck there also. Finally they landed on Mars, as they had listened that there were aliens on Mars. 

Jack and John parted in different directions in search of aliens. Jack gone in the west and John gone in the east. They both taken a gun with themselves for safety. Walking and walking Jon had gone in the area where aliens lived.

When an alien saw a strange person in its area he got very angry. It fired on John but target got missed. John got scared what was happening!  At that moment a UFO came flying in front of him. He quickly understood that it was an alien attack. He called Jack to help him and destroy the alien.

Jack quickly took the spaceship and reached where John was fighting with aliens. John was in real trouble but Jack went and saved John. After that both fought with the aliens and destroyed them.””

I am quite impressed by Ashutosh's imagination, I will shamelessly use him more. :P 
“I’m blogging my #ColgateMagicalstories at BlogAdda in association with Colgate.

Sunday, February 5, 2017

Robots are coming next door, Are you prepared?

If you read even a bit of recent technological news, you may have fair idea where it all going! And besides all the advancement, the main concern of our era is quick and revolutionary advancement of AI.

Before going into further detail, let's discuss some progresses already achieved in AI.

  1.  You can be uniquely identified by your voice with 90% of accuracy. Link
  2. Voice recognition has been as good as human being. These first two points jointly identifies who you are and what you are talking about. Link
  3. Face recognition accuracy has been reached to 97%, where as human accuracy has been around 96%. More or less AI is reaching there where your one image can be identified at different places with certainty. Link
  4. Letter scanning technology has been improved so far that it can identify your cursive handwriting with 99% of accuracy. Scan any image containing any text, it will identify and highlight texts within it. Be it a machine text or human text AI is now able to extract the textual information. Link (Read Conclusion)
  5.  Google's AI Deep Mind is able to defeat world's Go Champion Lee in 4-1. This is done through AI without much computation as supposed earlier with such game's complexity. Link
  6. Driverless cars are now a reality. Tesla is one such good example. Google has been running it's driverless cars for 2 years successfully. Link
  7. News story can be created in real time with the help of AI. This puts news editor's job in danger. Link1 Link2
  8. Book review is pipelined for AI.
  9. Chatbots to help or chat with them.  Link
  10. Poetry and music creation is now possible. Link1 Link2
  11. It is getting better day by day in poker game even. Link
  12. Able to create paintings. Link
  13. Movie script writing. Link
  14. Spam Filtering. Link
  15. Movie and product recommendations. Link
Some further links
The AI Threat Isn’t Skynet. It’s the End of the Middle Class
Elon Musk: artificial intelligence is our biggest existential threat

AI works best where there is certain rules to follow and need little human intervention, but it is not limited to above use case only. It can learn almost all of human skills in quick manner if it is programmed that way whether it is a labour intensive job or requires a creative thinking.
Knowing the recent speed and efforts companies are putting in AI, there is no surprise there will be AI for all kind of job, in that scenario what will human left to do is a big question to think!!!
Now you got the fair idea that AI is reading at human level or at par with human in some or other fields. In today's internet world it will take no longer to reach such technology to other part of planet. (Read developed world to developing world). We will see more and more applications based on AI in near future at a rapid rate. Everything that can be automated will be automated.
But there is a catch for you, once automation will be in place, it will be hard to bypass/trick an AI based robot. Let's see some hypothetical examples:

  • Suppose there is a Robotic Traffic Police Man which controls traffic as well as gives challan to traffic rule violators. Can you manage to bribe that Robo Cop? There is a 100% surety that it can't be bribed and 99% chance that it can't be fooled.
  • Similarly if you have evaded some taxes then some Robot based income tax inspector will come to arrest you, can you bribe him?

In coming 5 to 10 years, it will be hard to evade from your wrong karma and if you are able to escape from God's punishment make no mistake. AI will punish you for sure. He will track your current record as well as previous records and will do the needful.  

Friday, January 27, 2017

The magic of warmth

 We both were working in the same company. And after getting into relationship we came to know that both of us never thought of joining this company, rather we didn't even know the company name. Joining this very company itself a long story for both of us. So skipping this company joining part. So I joined this company on 1 st of Nov 2011. And she joined 21st of Nov 2011 with another girl[Let's call this another girl Any]. But destiny has different plans for us[better plans for us-we realized later].
      So, I started training Any and my colleague started training her. At first look she was like Ok type [in boys language]. I had hardly any conversation with her and I hardly gave any special attention to her. Time kept passing , we usually used to talk in the lunch time , because she used to eat my lunch after finishing her lunch.[note: rare girl found here]. And then we used to have little walk after the lunch. After some time I kinda like the idea of walk after the lunch.

     Till this time , I used to like another girl[Say Any2] in the office and we had good time in office, Me and Any2 became good friends . Our HR and Manager were jealous of our friendship. I  could  easily recognize their expressions. So this continues for 2 months . Now then a new project came and resource allocation was planned by my managers. I don't know out of jealously or what neither Any nor Any2 came into my Project.

    So,in this project there were 5 peoples. I ,she and 3 more guys. These 3 guys were senior to me in the company so they were good friends . That how we came closer,because

1. Our nearest metro station was same to our client side
2. We were left out by those three.
So travel time+lunch time + project discussions brought her close to me . After three months working together I fell in love with her. But every time I used to think,no this can't be true. I just like her .
So I kept ignoring my feelings. And then this project ended and I was moved to some other projects.

      Now I was in another project with another beautiful and cute girls in [July-Oct 2012]. So I thought now feelings for her should vanish. But no it gets stronger and stronger . The more I try to look towards another girls, the more my heart remembers her. So finally I got to know beta Rahul- now your mind and heart have the chemical locha. You can't ignore it. So I finally decided to propose her. And I wrote all my feeling in form of so called love letter and planned to give her with proposal.

    Now the proposal[22-09-12] day,we planned to meet after her interview at Sec-18 noida , it was pretty hard to get a date with her so I said after interview we can meet easily. Interview started at 10:00 , so I expected to end it around 11 or 11:30. So I reached KFC at 11:00 and  called her but the phone got Busy that means interview is still going. So, I kept waiting there with flowers, 3 small gifts and with my love letter . During the wait of 4 hours I almost tried all drinks of KFC with the lowest possible intake rate. First time ever I was not able to enjoy any of the drinks due combination of nervousness and excitement. So finally I got a call around 15:00 and she told that interview was not that good[meri to lag gayi - I thought beta mood to sahi nhi hoga iska aaj, aur tu propose karega aaj,tera pitna pakka hai chhore] . She then said ki cancel KFC and let's go to CP, we will have some food. I agreed instantly as I had no time to lose or wait.

  Now, we were in the CCD of Rajiv Chauk. Here even after a good cup of coffee, she easily traced my nervousness and asked ki ghadi to 4 bajaa rahi hi tumhaare chehre pe 12 kyun baje hain. I couldn't reply anything, just said bas aise hi. There were several things happening in my mind . I was not able to think where should I start and how should I start. So , to ease her mood [mine as well] I gifted her one of the gift to her. She liked it very much. But still I couldn't figure out how I should I start. I couldn't propose her at CCD. So we went up to Central Park.

  Now, we were in the CP talking all the random stuff, but still I couldn't have the enough courage to say her. Then my best friend Ruchi 's call came that she will be at Rajiv Chauk in 10 mins. I went to metro again to bring her in the CP. In the meantime I conveyed all feeling for her to Ruchi and ask her if she can help me .

During the conversation Ruchi tried to figure out what's going inside her mind. I asked Ruchi in the language of eyes . Ruchi clearly indicated that I have no chance.[Meri to lagg gayi]. But I was determined that this is the day, I won't find any other day or life to propose her. Thinking all of this the time passed and girls planned to leave for the day. I was like NOOOOOOOOOOO..... Then as soon as she/they started to move from CP , I bent on my knees and gave the second gift which was a keychain of heart inside heart[ meaning for me was - I will keep your heart safe inside my heart.] and said that Please take my heart. She was not expecting a proposal from me so she thought it was some kind of joke or prank, but after looking my serious face she asked are you serious ..? I said "Yes, aur Tujhe kya lagta hai? subah se mere face pe 12 aiwe hi baja hua tha.? ". She then said as you proposed me, there shouldn't be any change between us. We were friends and we will be friends. I said i have no issues.[ In my mind I wanted to hear the same].

 Now, we were inside the metro,Ruchi left us at Central Secretariat and we continued the same metro. Now to light up the mood. I gave the flowers and showed her the third gift . And said if u had accepted my proposal I would have gave the third one also.But I won't give you now. I will give this to you whichever comes earlier either your acceptance or your birthday.[Don't know why I kinda blackmailed her]

    Time passed and an office trip was planned . I clearly said to her if you are not coming , I am not going too. Then she agreed to come , but along with her elder sister . Mai to fas hi gya ab naa to haan bol paaya naa naa. So we all (7 colleagues) started our journey in an Innova around 8 pm. I was in last row with her and  her sister. As expected  her sister was sitting between us.Then we stopped for dinner around 10 pm . After dinner her sister gave the chance to sit her with me [Don't know if she did intentionally or not]. We had awesome Antakshari till 1 a.m. then all of them got sleepy except me. As she was just sitting beside me her head used to come to my shoulder time to time, but as soon as she got to know she just kept her straight, but it was long journey. After one hour her head finally landed to my shoulder for the long time as she was in deep sleep. This feeling was out of the world. At this time all I wanted was may this head remain on my shoulder forever and ever. I made sure that she don't feel the jerk of vehicle. She woke up in the morning and saw me awaking and asked if I was awake whole night . I lied that no I just woke up. But yes she got to know that whole night her head was on my shoulders.

 Now we were still inside that Innova. In the morning after her waking up , I gathered some courage and hold her hand. Due to shock or some running thoughts she parted her hand after 2 or 3 minutes.

I thought that this was the end of my love story and suddenly a miracle happened and now she was holding my hand . I kept holding her hand for the whole office trip in front of all 4 other colleagues without fearing all possible gossip ,rumors and taunts. This was my experience of Magic of Warmth in the cold night as an acceptance came silently without uttering a word. Sometimes we don't need to tell what we feel, the person whom you love can get to know your feelings very easily. Every time I meet her it seems that this is the best day ever. And I am fortunate to that I still feel the Magic Warmth touch everyday, as she is my wife now. :).

 “I’m blogging about my #MagicOfWarmth moment at BlogAdda in association with Parachute Advansed Hot Oil”.

Sunday, January 1, 2017

Pointers to Stock Investment

Investing in stock market is risky- we all know this fact. But how risky ? - This is the question which we all want to know or some people don't want to know just because being risky is enough for them to stay away from the market.

Before reading further let me put this declaimer : "I am a fairly new investor(1 and half year old in market to be precise), so my view will be fairly limited to my experience of market as well as studies done by me.

This article is all about how to learn and start investing in market without taking much risk. Let's start. (Earlier you start, better the returns):-

  • If you don't want to track stock market on daily or monthly basis and fluctuations make your heart beat faster then go for Balanced Mutual Funds(Open ended with growth option).
  • If you can bear the fluctuations and ready to take some risks go for Equity Mutual Funds
  • If you want to save taxes as well while investing in Mutual Funds go for ELSS.
Note: Prefer Open Ended Mutual Funds with Growth Options only. Choose dividend Mutual Funds when you need regular returns from Mutual Funds.

If your risk appetite is still little higher than that and want to make your hands dirty with manual selections of stocks, go ahead with following steps in mind. These steps are meant for long term investment horizon.

  • Start with small amount. Limit 5-10% of your annual income in first year.
  • Purchase only quality stocks companies which you know and their annual turnover is respectable.(Nifty 100 or BSE S&P 200)
  • Search for unpopular large companies, there may be some companies which may be part of S&P 100 or 200 but not so popular in masses due to their business model, such companies can be bought at bargain.
  • Maximum price to be paid for any share should not reach more than 25 times their P/E.
  • Search for the stocks which are at low due to some temporary issues. Like- Flood or some natural disaster affecting their business.
  • Never buy a share which has been subjected to some lawsuits.
  • Keep buying at regular interval. This will average your buying price and help in good return in long term.
  • A great company may not be a great investment if you buy it overprices.(refer to P/E rule)
  • Don't put all of your eggs in a basket. Means diversify your investment but not too much. Purchase different sectors.
  • If you get chance to put your money in foreign market don't put more than 1/3 of your portfolio.
  • Don't rely much on market forecasts and market experts.
  • Never sell all of your stocks no matter how much market is overvalued.
  • When you think market is overvalued sell the stocks and keep the money in bonds and repurchase when you feel market is undervalued.
  • Never buy after a substantial rise or fall of market.
  • Make sure company has paid regular dividend from last 5 to 10 years.
  • Don't try to beat the market, try to make return close to market returns.
  • Index funds does the best job as they don't try to beat the market.
  • See cashflow statement of company and see if their income from operations is increasing through out the years.
  • Look for the debt on company it should be less than 50% of their capital. (D/E should be less than 0.5)
  • Start your investment from ETFs and Mutual Funds to understand market sentiments.
  • Make a virtual portfolio from sites like and add your favourite stocks in it and match market return.
  • Don't frequently buy and sell as brokerage charges and taxes can make your actual gain less.
  • Take benefits of 1 year lock advantage for equity as capital gain is free from taxes. 

Hope this helps. Keep investing.