1.Which is a good stock to buy?.
2. I want to do SIP in quality stocks as a long term investment, which are the good stocks to choose from?
3. Please help me identify some good stocks to buy.
These are some of the commonly asked questions that is being asked in some of the web forums that I have been visiting.
There are many enthusiastic people who reply with answers like
1. Choose L&T, HDFC bank, Asian paints , etc. These stocks have multiplied many times over the past decade, so they will continue to grow
2. Buy Eicher Motors, this stock has been a multibagger and Vanguard or someone has recently bought a stake in this company
3. Buy Company XX because ace investor YY has acquired stakes in it.....
such answers go on!....
This takes me to some discussion a few years back (2006- 2007/08) like
1. Reliance power IPO is a great investment because the stock of the group companies have always made investors wealthy.
2. Unitech has yielded X times return in short span of time. That has been a jackpot!.
I am not trying to say that the answers mentioned above are correct or wrong. The post is not to compare the quality of stocks mentioned here and do a performance analysis of the past or prediction for the future.
The message is to say that nobody knows how any stock will perform in the future. Saying that investment in a particular company "can never go wrong" is foolish .
Making an investment decision purely based on suggestions from a web forum can prove to be disastrous. If stock picking was so easy, then you would have had billionaires all over!
Return of capital is more important than return on capital. So, please make right choices with your money.
If you ask me " How to make the right choices"... my answer is " I don't know the perfect answer" :-) !
This is not a recommendation to Buy-Sell-Hold any of the stocks mentioned above.