How to get rid of a bad investment decision..??

Investment in equities involves lots of risks & once an investor plays off such risks, can be rewarded with a lump some amount of return. Henceforth, it is essential to get rid of these risks to ensure a relishing return. Although we can’t mitigate the risk totally, can be taken to a minimum level on account of certain attributes such as..

PE ratio: Price Equity Ratio is determined taking EPS ( Earning per Share) in terms of current market price of that particular equity. This ratio signifies the extent of variance in valuation of an equity corresponding to it’s book value. As such, it is always apprehensive to invest in those equities having a lower PE ratio as these stocks are appeared much safer in times of market downturn.

ROI: Return on Investment is another vital consideration in order to be assure that the equity of the company, in which the investment to be made, having sufficient earnings over it’s total cost of capital. In this aspect, the gradual trend in ROI over the following years are also significant. An usual fluctuation of earnings for several years makes a suspicious sense upon it’s performance. Further, a common check in to consistency & growth in NP ratio can give more comprehensive picture.

Moving Averages: Moving average in price of equity for a certain period (generally 50 & 200 days) also depicts a rough idea upon its further movement. If a stock falls below it’s moving averaged price, it would be advisable to avoid that stock at least for a certain period. In this context, another relevant aspect could be comparing the movement of that particular equity in accordance with index performance.

Trading Volume: The amount of transaction took place in a day for that particular equity is another material consideration. Trading volume also hints up on the extent of happenings going on for that stock.

Information Relevancy: Any positive updates relative to the equity of that company blows further buzz among the investors.