Question

.If you are an investor in the stock market which approach would you prefer and why? On what information would you base you investing decisions for a particular stock?

Answer 1

Note: This question has not single correct answer

If I am an investor in the stock market, I will prefer a conservative approach. This approach is based heavily on the belief that I don't want to loose my hard earned money & thus, long term wealth building is the first priority.

For a particular stock, there can be a lot of factors which need to be considered for investing:

1. Past stock performance: This can be considered an option to invest in a stock. Whether the company has declaring its dividends at the steady rate or increasing rate should also be considered.

2. Stock Price: This is relevant since our existing capital can be allocated towards some limted amount of stocks.

3. Industry: Technology has experienced a revolutionary shift in the past few years. That is why, tech industry growth is always fascinating. Industry is one of the fundamental factor to consider.

4. Financial Position of the company: There may be a chance that the company which is considered an option to invest in, is borrowing heavily and resultantly, its debt ratio is increasing faster as compared to the peers. The company having a comparitive less debt ratio can be preferred.

5. CFS: Cash Flow statement of the company needs to be analysed. This is done in order to check whether the major inflows are due to the increased operations, sale of investments or increase in capital.

The above are some of the factors which can be considered. The above list is not exhaustive.