According to warren buffet

Never count on making an excellent sale. Have a purchase or retail price be so attractive that even a mediocre or broker sale gives good results. The better sales will be the frosting on the cake.

Our business is making excellent purchases – not making extraordinary sales.

Business must have two characteristics:

(1) The ability to increase prices rather easily without fear of significant loss of either market share or unit volume, and

(2) The ability to accommodate large dollar volume increases in business with only small  additional investment of funds.

Accounting numbers, obvious, are the language of business and as such are of enormous help to anyone evaluating the worth of a business and tracking its progress.

Great companies = Float + Investment + Cash with higher return ratio

The very ends of the two 'wicks or tails' (the thin lines extending towards either end) are the highest and the lowest prices a stock hit during the trading. The ends of the coloured block part represent the beginning price and closing price for the day. If the block is in green color  then the stock closed above the day's start. If it is in red color, then the stock closed below the day's start.

How to know when to sell or buy?

If we go by trends, which is what almost all of technical analysis like studying candlestick charts are all about, you have to look for a continued trend of either green candles or red candles. If there are multiple green candles one after the other, there's an up-trend in the price and it may be a god time to buy. On the other hand, if red candles follow each other in droves, there's a down-trend and you may want to sell.

There are 2 types of assets

1. Non-current assets
2. Current assets. (Call it by any name, the intent here is to classify assets on the basis of its duration,

Generally assets which are held for more than 1 year are non-current, otherwise, they are called current)

The significance of assets:

Non-current assets: Major component of this head is PPE( property, plant and equipment), PPE are assets which are held by a co. For running a corporation may be for production it includes other assets such as furniture and fixtures, So PPE can be compared with Turnover to know how well company is utilizing its assets.

Current assets: These assets generally include those assets which will be converted into cash within a year, also they depict the liquidity position of an organisation.
It includes Stock, Debtors, Short term investments etc.

The significance of liabilities:

As like Assets, Liabilities can also be classified into two part:

1. Liabilities which are to be paid within a year time
2. Labilities which will be paid off after a year or more.

Now which are to be paid within one year directly impacts liquidity position and which are to be paid later on depicts the Sources through assets have been acquired (Obviously other than Owners funds).

When you will run through the liability side you will come across Payables to Vendors (Raw material suppliers) , Bank OD, Payables to Employees (You can get to know how good it is paying in to employees because most of the time major component of it will be the Last month of Financial year's Salary) and then the major component of the liabilities will be the loans obtained from various financial institutions.

Equity:

This represents the owner's fund i.e. Investor's share in the Company.

How to identify Profits?

Two sources (Ignoring the documents other financial statements prepared by a Company): Profit and Loss a/c and balance sheet.

In P/L a/c you will find multiple types of profits and the most significant are:

1. Operating Profits: This shows the profits earned after the considering expenses of manufacturing (Obviously if the company is not a Service provider), So this shows how well the company is performing its operations.
2. PBT/PAT: Profit after tax/Profit before tax shows the profits earned after deducting every expenditure such as Administrative expenses, Marketing expenses and other expenses.

Another source to determine Profit (Precisely Net profit after tax) is through the balance sheet, although It will get a lil bit complex anyhow it will answer your query. So, you have understood the equity portion and any change in the equity from the last year will be my profit, provided I haven't issued any more equity in the current year.

If you really wanna know how well company is performing better go through the Cash flow statement which shows the actual cash inflow (After all that matters, in the end, is how much money I have in my pocket).

As P/L account includes many non-cash expenses such as Depreciation and amortization and they don't result in cash outflow but reduces the profits

Why assets and liabilities are always equal?

One simple example: You go to a bank and borrow Rs. 500, So now you have an asset, rather I would say Current asset of Rs. 500 (Cash) and A liability as well of Rs. 500 (Loan from the bank), So Asset=Liability=500.

Now you purchase a Machine worth Rs. 250 and now the equation is Asset (Cash=250+ Machine=250)=500=Liability (Still the whole amount is payable to the bank).

Assets = Liability + Capital

So now you take any transaction and any combination, Assets will be always equal to liabilities.

Source Quora

Reviewed

Earning money is never easy if you want to earn it in the right way. Although term “easy” and “right way” both are subjective.

Stock market demands a lot of investment, more so of time than money. You need to monitor the market continuously, and you need to have knowledge regarding financial market research.

If you don't want to invest a lot of time in learning stock market analysis, you can always take help from a mentor.

My advice will be to learn stock market, stock analysis like fundamental analysis and technical analysis, when you are done with this part, you will be better understand the intrinsic value of the stock and hence buy or sell.

One important thing that one needs to remember is it is always challenging at the start, but as one gets more experience, it takes less time in analyzing the balance sheet of the company. Moreover, there are market sentiments also involved in the stock market, and through experience one learn how to take that into consideration.

source quora

reviewed by mentors

FINANCIAL FRIDAYS: THE WTF! ON THIS STOCK MARKET 'CRASH'

I just want to tell people how much BS the news vomits every day and how it's affected the markets.

Instead of the 20 reasons I wrote this month, let me give the 3 or 4 most important (all 20 took up 5000 words, with another 5000 words on angel investing).

A) CHINA

China growth is slowing. So the Wall Street Journal, which I used to write for, is saying "Chinese economy reeling".

China is GROWING. It used to grow 10% per year because it was communism and 2 billion people were farmers.

Now it's "going down" to 7% growth.

Horrors! The world is over.

But what if it continues?

Who cares!?

Guess how much we "sell" to China per year. I put "sell" in quotes because newspapers make it sound fancy and say we "export". BS economics writers.
Less than 1% of our Gross National Product is sales is to China.

So even if CHINA DISAPPEARED COMPLETELY the US would still have a growing economy.

Oh, did I mention China is not disappearing? It's GROWING. At a faster rate than the United States.

B) INTEREST RATES MIGHT RISE

The Fed lends money to banks. When the Fed rate is low, savings rates are low.

When savings rates are low, people put money in higher risk stocks than in savings.

When savings rates are high (7%+) people put money in their savings account because its safer (it really is).

That's why people say "when interest rates go up, stocks go down."
Oh my god! (sorry for the repeat).

The Fed Rate is at 0.25% and has been for six years.

They SHOULD raise it to 0.5% or even 2%. Nobody is saying, "Oh, now I should move out of the stock market and get 2% savings rates.

And, by the way, the Fed only raises rates when every indicator suggests that companies are growing at a fast rate.

Let's look at recent times the Fed raised rates. Through most of the 90s (the markets went straight up). 1999, the Nasdaq 100 went up almost 100% over the next year (and value stocks continued to go higher ever after the crash).
From 2002-2007 the Fed raised rates every chance it could get. The market went constantly up.

And none of that was from such a low base of 0.25%.

So newspapers, PLEASE STOP LYING

C) IS THIS LIKE 2009?

In March 2009, the market hit an all-time low.

Fortunately, I ended it and saved the world. No kidding.

I lived at 40 Broad Street, directly across from the New York Stock Exchange.

On March 9 I went out and bought 100s of Hershey's chocolate bars.

Chocolate encourages people to take risks and makes people happy.

Chocolate makes people feel like they are in love.

And willing to take risks.

All of the traders walking into the exchange were depressed. They were all looking at the ground.

I started to approach with my chocolates. At first the guards stood up and gripped their guns. Dogs were barking.

But then I handed out chocolates. Traders would look up, smile, and take the chocolate. Nobody refused me.

And yes, that day was the bottom of the market. I documented on Twitter before I started handing out and when I was done.

It's not bragging if it's true.

BUT, I can't take all the credit.

People blame the 2009 crash on the housing crash. This is not true.

Housing prices peaked in 2006. The housing crash was only one small piece of the puzzle in the 2009 crash.

I won't get into all the details of how banks account for mortgage debt.

But basically, the FASB (financial accounting services board) changed the rules mid-flight on how banks should account for their debt. It was a horrendously strict rule change that forced banks out of business.

When did they make this rule change? Late 2007, at the peak of the market. Then the real crash happened: the banking crisis.

Everyone begged them to change the rules back. When did they change it back? March 2009. Coincidence? The market went straight up.

But three is enough. We covered the main issues: China, Interest rates, and the post-traumatic stress everyone is feeling about 2009.

But here's what we know at the very least:

A) It's not about China!
B) It's not about the Federal Reserves Interest Rate!
C) And it's nothing like 2009!

The world is a hard place to live in.

People always say, "you're the average of the 5 people you spend time with".
But this is true also: "you're the average of the five things you read".

If all you do is read newspapers (and the major ones like the most) then you will be misinformed and in a constant state of anxiety.

I know I was until I STOPPED reading them. Then I felt free.

----

by James Altucher

reviewed by mentors

These are some of the most crucial rules to stay PROFITABLE in the stock market -

1. When you open trade you should make sure that it ends in the following 4 ways.

• A Small Profit
• A Big Profit
• A Small Loss
• Break-even

You should be absolutely sure to avoid big losses at any cost. As long as you avoid big losses you can be profitable in the long run.

2. You should have a good entry as well as an exit strategy. Almost each and every trader concentrates all their attention towards improving their entries into the trade and no one seems to care about when to exit. I’ve experienced that having a good exit strategy is more important than entry strategy and the best way to improve your exit strategy is to have a good Risk-Reward ratio. For implementing this use Target and Stop-loss for each and every trade. If you enter a trade without placing a stop-loss then trust me you are digging your own grave!

Personally, I use 1:2 as my Risk to Reward ratio and it seems to really suit my trading style.

3. Use proper Money Management. It takes lots of losses to understand this crucial point. Unless and until you don’t implement good money management you are going to lose money no matter how good your strategy is. Basically, good money management implies undertaking a certain amount of risk that you can afford to take. Use stop-loss and place it at a price you can afford to lose.

If you really follow these 3 rules with proper discipline then I can vouch that you will perform well in the long run. I consider myself lucky that I’ve learnt these things without facing much losses and at a very young age. I hope this answer proves to be helpful!

1. Read Good Books

2. Learn Technical Analysis

3. Read articles and blogs

4. Virtual trading is important

5. Market Psychology

6. Follow good traders

7. Opt for Professional degree