Indian Ticker : Choose Right Stocks that Ticks Money

Secret #1: Invest in quality businesses, not stock symbols
For most people, investing in a stock is little more than watching the
trail left by the stock symbol as its price wanders along some drunken path.
They know that the symbol is associated with a company while not being too
sure what is expected of this company to ensure that its share price will rise. It is
a case of let’s sit back and hope for the best.

Then there are others who deliberately do not want to know anything about the
activities of the company. They want to study the “pure” movement of the stock
price with the belief that they can use this information to make forecasts about
the future movements of the price. Warren Buffett refers to this as trying to play
bridge without looking at the cards.
It just makes no sense to ignore the fact that the stock symbol is attached to a
company. And it makes no sense not to apply sound business principles to
analyze these companies. The more we know about the company, then the more
confident we can be about the price of the stock. Not on a day to day basis, but
over time.
“When I buy a stock,” Warren Buffett said, “I think of it in terms of buying a
whole company, just as if I were buying a store down the street.” If you were
buying a store you would want to know all about it. What were its products?
How consistent are the sales? Do they keep trying new products or do their
products stay fairly constant? What competitors does the store have and what
distinguishes it from them? What would be the most worrying thing about
owning such a store?
This leads to the idea of looking for companies that have a strong and durable
economic moat. Just as castles have moats to protect them from invaders, so
companies can have economic moats to protect them from challenges of
competitors and changes in consumer preferences. The moat can be made up of
attributes such as brand name, geographical position or patents and licences.
All these principles about purchasing businesses are equally applicable to
purchasing shares. It becomes one of the most enjoyable parts of investing to
look into the “business” aspects of any company that you are considering adding
to your portfolio.

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