Lalu's Management Principles for Equity Investing.
1) We all purchase the vegetables & fruits of the season. For example, if it is the season of Tomatoes, we buy tomatoes more and not Brinjals. This way we get fresh tomatoes at a cheap price. Similarly, in Equities also, we should buy the Equities of the season. I mean equities plentily available in that season. If Banking Sector stocks are beaten down in a particular season, then we should buy banking stocks in that season. That way we get such banking stocks cheap and can cherry pick blue chips of Banking Sector at a cheap price (like fresh tomatoes for a cheap price in the season).
2) Growth is good and welcome at a young age. A child will be thrilled for growing-up. Growth is not so welcome at a middle age and old age. Middle & Old-aged people are scared of growing up and ageing. Before paying a fancy price for any stock for growth, you should consider this rustic rule. Only if the sector is in a nascent stage of growth and the child (company) is healthy, then only you should pay a high price for any growth stock.
3) Even if the tomatoes are fresh, cheap and plentily available in the season, we buy maximum a week's requirement or fortnight's appetite. If you buy more than your appetite (requirement)
1) We all purchase the vegetables & fruits of the season. For example, if it is the season of Tomatoes, we buy tomatoes more and not Brinjals. This way we get fresh tomatoes at a cheap price. Similarly, in Equities also, we should buy the Equities of the season. I mean equities plentily available in that season. If Banking Sector stocks are beaten down in a particular season, then we should buy banking stocks in that season. That way we get such banking stocks cheap and can cherry pick blue chips of Banking Sector at a cheap price (like fresh tomatoes for a cheap price in the season).
2) Growth is good and welcome at a young age. A child will be thrilled for growing-up. Growth is not so welcome at a middle age and old age. Middle & Old-aged people are scared of growing up and ageing. Before paying a fancy price for any stock for growth, you should consider this rustic rule. Only if the sector is in a nascent stage of growth and the child (company) is healthy, then only you should pay a high price for any growth stock.
3) Even if the tomatoes are fresh, cheap and plentily available in the season, we buy maximum a week's requirement or fortnight's appetite. If you buy more than your appetite (requirement)
4) While selecting a groom, the parents not only see the boy's earnings, but also his lineage, education, honesty etc., Similarly, while selecting a company for equity investment, we have to not only see its earnings (P/E ratio) but also see its lineage (promoters), its education (corporate governance) and its honesty (fair sharing of riches with all the stakeholders) etc.,
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