Lalu's Management Principles For Equity Investing

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) , they will rot away.
Similarly, in the stock market also, even if the shares are available
cheap, you should not buy more than your appetite (pocket), by heavily
leveraging. Otherwise, you will rot away.
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.,