Stocks & Investing

My Last post about stocks are optimistic. I still am. US market has already had a good hit, if we are in a recession we are probably half way through it.

I started investing in July, August last year. Everything was Green then.. Then the tumble started and everything started going Red. Some of the mistakes I did are as follows:

1: I invested in NAVR. Simply because it was below $10 and there were buy ratings by some analysts. I did not check fundamentals (at least not well enough.) Should have done more research.
2: Second mistake I did was to invest too quickly in it and the knife kept on falling. I wanted to average out so that when it rises my overall investments are fine.
3: Should be more uptoday on research. Jim Cramer's rule of investing "Invest 1 hour per week per stock".
4: Another stock I made a mistake with by following my rules of investing. Rule: "If you trust the stock, you know the company, you have some idea of future; if stock falls more than 5% in a day buy IT". I knew INFY as I worked there knew it was a solid company but will have challenges in the coming year so i was not planning on invest BUT it dropped 5% in a day and I thought hmm thats a buying opportunity. And I did. Result. It kept on falling. So threshold of 5% is not enough these days. Don't invest unless you are totally convinced about fundamentals, future growth, valuation, reports from S&P or Reuters or other reputed agency, looked at financial blogs for any negative news about the stock.

My Rules of investing now :

1. Fundamentals - Business, Industry, Outlook etc.
   
2. Future growth - From reports, etc.
   
3. Valuation - P/E ratio etc.
   
4. Reports from S&P or Reuters or other reputed agency , also check CNN Money, AOL Financial news, Yahoo Finance
   
5. Looked at financial blogs for any negative news about the stock.
   
6. Invest regularly (monthly is good).
   
7. Invest on a bad day (but for a good stock which fulfills criteria above). A bad day would be a day followed by 2-3 days of upside in the market. If you follow the trend some days are growth days and they are immediately followed by down days when people book profits or have a bad news (which results in panic but does not affect individual stocks in long run).
   
8. Buy in the later part of the day. I check out prices over 1 yr, 6 month, 3 months, 1 month and 5 days. And based on all inputs above check out a decent low price, give my Buy decision on a stock.
   
9. Diversify. Own large caps, small caps, medium caps, mutual funds, Index Funds, growth countries like BRIC.