I have been getting this question in my inbox and on Quora often. So I will answer the question but don’t expect a list of stock in the article to directly invest into.
Right Stock at Right Price for Right Time
Have you ever invested in a stock on someone's advice to make profit and then has to wait for months, maybe years, to recover capital? Not anymore.
I have been getting this question in my inbox and on Quora often these days because of the correction in the broader market.
So I will answer it but don’t expect a list of stock in this answer to invest directly. I will re-iterate what I believe in:
Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.- Maimonides
So instead of sharing the list of stocks, I will share the list of things you should be looking in the stocks in a falling or rising market that will help you identify the right and possibly multi-bagger stocks.
So instead of giving you a list of stocks to invest in 2018, I will share some insights I use to find these stocks now and how you can use the same process to identify the right stocks to buy now in the falling market.
Why Pick the Right Stocks?
Right stock is the first step towards investing and in a volatile market of 2018, we should go with stocks that are going to have better earnings visibility in the coming quarters.
The market is in the corrective mode with rallies fizzling out early. This is how the stock market works and not like 2017 which was a stellar year. Such years are far and few in between.
It can’t just be a mere coincidence that 5 of my stocks from 2016 are hitting an all-time high in 2018 despite market is showing a good sign of correction. Ashok Leyland, Jubilant Foodworks, Britannia Industries, Pidilite Industries, Zydus Wellness.
Yes, I have booked profit in some of the above stock as well but then the move to other stocks has also done much the same like Divis Lab. The point I am trying to make isn’t about boosting what I manage to achieve but the importance of selecting the right stock.
I had shared why I selected each of those stocks and this is what the most important part of the equation is. So if you are in the right stocks, you will avoid the volatility.
Once your process of selection of right stock is on, you may have a dull or lull period with your investments but over a period of time, the compounded returns are more likely to beat the mutual funds and the market as a whole by a considerable margin. This is exactly what we see when I compared my stock portfolio with the mutual funds.
How to Identify the Right Stocks?
The process I follow to selecting the right stock is a 3 step process:
- The business should pass all the 9 Investment Checklist.
- The fundamentals of the company should be inline.
- Management should pass these business parameters.
Once stock passes all the 3 tests, one can add the above stock to the list of stocks to be invested in the future.
After You Identify the Right Stock
Technical analysis catches the day to day sentiments of traders and investors in the market and it helps you identify the right price for taking the call to go for the stock even at the higher than normal valuation or not.
I prefer to invest in growth stocks at good valuations than trying to be a value investor. I use technical analysis with the right price action chart patterns to invest in these stock at the right price.
So if you ask me what are the best stock to buy in the current market conditions or what are the best sectors to invest in the current market scenario, the evergreen stocks and evergreen sectors will always be my choice. If you are able to find some of those stocks that aren’t correcting in the current market conditions, go for those stocks.
What Should the Mutual Fund Investors Do?
If you are one of those investors who like to avoid the stock market volatility and deal only with mutual funds can go for the best funds to invest in 2018.
The important aspect of these best funds is the process to choose the best fund and not the name of the fund itself.
- Best Small Cap Fund for 2018
- Best Midcap Fund 2018
- Best Large Cap Fund 2018
- Best Multi-Cap Fund 2018
- Best ELSS tax Saving Fund of 2018
Hope it helps.