Principles of investing: Whether bears are prowling or bulls are ruling, stay with the 9 basic principles, especially when investing in mid- and small-cap stocks

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Synopsis

If you had to randomly pick just two stocks, which sector would you pick them from? Sugar, auto, banks, pharma, IT, capital goods, or metals? While investing, if you are able to take into account a few small things, it will make a big difference to the returns you make both in the medium and long term. Now, because the market is bearish, you may tend to be more careful while investing. But the fact is that the need to apply filters is greater when the market is controlled by bulls, as the probability of making mistakes is higher.

Each time there is a correction, especially one that extends a few weeks, we see investors getting divided into two distinct sets. The first will justify buying wrong stocks by calling themselves “long-term investors”. The rest, genuine long-term investors, will remain focused on buying the correct business. Now what is a “correct business”? Simple: One with a track record of growth; one that does not require constant doses of capital; and where

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