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What Is The Safest Way To Invest In Stock Market?
The CANSLIM investment methodology, devised by our founder, William J. O’Neil, is one of the safest methods of investment. It factors in fundamental and technical analysis to help pick out stocks that are most likely to become growth stocks.
C – Current Quarterly Earnings
A growth of at least 25% for the past 2 quarters. Also watch for quarterly sales and profit margins that are growing.
A – Annual Earnings
A growth of at least 25% each for the past 3-5 years. Also watch for return on equity (ROE) of at least 17%
N – the New Factor
Look for companies, new services, new conditions in the industry, new management, or new price highs.
S – Supply and Demand
Look for big volume increases on days of upside trading.
L – Leader of Laggard
Look for the top stocks, both fundamentally and technically, in the very best performing sectors and industry groups.
I – Institutional sponsorships
Watch what pension funds, mutual funds, banks and other institutions are buying. The institutions research the stock market extensively before investing in ...
... any stock. Hence, these investments are pretty reliable and safe.
M – Market Direction
Three out of four stocks follow the market, therefore make sure the market is in a confirmed uptrend. Do not try to outsmart a bear market.
Along with knowing when to buy, another important factor in safe investing is knowing when to sell. You cannot become a master at growth investing without knowing when to sell. Here are some key points to be noted, while selling your stocks :
Protecting capital is very important. Hence we, at MarketSmith India recommend selling a stock, if it shows weakness after it’s breakout, specifically if it falls 8% below your purchase price.
Be wary of big price declines along with heavy trading volumes. That’s an indication that the institutions are dumping shares, most probably due to loss of confidence in the stock.
Take profits on a stock that has risen 20% - 25% since you purchased it. Our research has shown that successful stocks tend to move up 20% - 25% from a proper buy point, then decline and build new bases.
For more stock market tips and tricks, visit www.marketsmithindia.com .
Investment advisory product based on William O’Neil’s CAN SLIM method with model portfolio, pattern recognition, idea lists powered by institutional quality data
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