A report by ETMarkets.com for the list of stocks that destroyed the most wealth from march 2011 to December 2016.
So let us use this report to analyze each stock on the process I follow to invest in my open portfolio using fundamental analysis.
If I would have invested in these companies in 2011 or not if no then what could be the possible reason from my investment checklist.
Company | If avoided, Why |
---|---|
MMTC | PSU, Operational efficiency |
JP Associate | Group of company |
Jindal Steel | Commodity, No unique product |
Unitech | Real Estate |
JayPee Infratech | High Debt |
JP Power Ven | Power Sector, No pricing power |
KSK Energy Ven | Power sector, No pricing power |
Hind Copper | Commodity, No unique product |
Alok Inds. | High Debt |
GVK Power | Power sector, No pricing power |
Shree Renuka Sugar | Commodity, No unique product |
Amtek Auto | High Debt |
Punj Lloyd | high Debt |
BHEL | PSU, Operational efficiency |
SAIL | Commodity, No unique product |
Rel Power | Power sector, No pricing power |
NMDC | PSU, Operational efficiency |
Rolta India | High Debt |
HDIL | Real Estate |
Rel Comm | Telecom Sector |
Jai Corp | Group of company |
IDFC | High Debt |
MTNL | Telecom sector |
Luckily all 23 companies would have been avoided and this gives me a sigh of relief. Let me explain the above short answers in detail.
Let us classify the above 23 companies.
Debt is the biggest reason for companies that perform badly.
If we combine commodity, power sector and telecom companies under one roof of no pricing power, it becomes the single biggest reason of wealth destruction.
When the market corrects, portfolios are in losses and it is the time when you should validate the process of identifying stocks to see if you can find any false positive in your approach.
Investment can flourish if and only if we can identify good future businesses and two most important aspects of safe investing are low debt and how well the company can price their products or if it is a commodity company, are they the lowest producer of the commodity.
Understand US banking crisis. What Happened to SVB Bank? How Safe Are Indian Banks? Can…
The business analysis of Divis Lab in a 3-step process and understand why the share…
Calculate the fair price of stocks with an easy-to-use Google sheet with intrinsic value and…
Pre-Investing Checklist - the three most important ratios that you should be looking for when…
Should I redeem or switch from my existing mutual funds if they are not the…
How to Find Stocks with Hidden PE ratio of Under 1 - The Mohnish Pabrai…